Unassociated Document


     

    
      
        	
                Documentary
      stamp taxes in the amount of $17,151.40
      and intangible taxes in the amount of $9,800.80,
      based on the Loan Amount of $27,250,000.00
      secured hereby, have been paid upon the recording of this
      Mortgage

              


      

      


      NOTE AND MORTGAGE MODIFICATION
AGREEMENT EVIDENCING RENEWAL PROMISSORY NOTE INCLUDING FUTURE ADVANCE AND
AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT AND FIXTURE
FILING

       

       

      LVP ST.
AUGUSTINE OUTLETS LLC, 

       

       

      BORROWER

       

       

      IN FAVOR
OF

       

       

      WACHOVIA
BANK, NATIONAL ASSOCIATION,

      LENDER

       

       

      DATED: AS
OF MARCH ____, 2006

       

       

      Property
Address

      2700
State Road 16

      St.
Augustine, Florida

       

      Record and Return
to:

       

      Winston
& Strawn LLP

      200 Park
Avenue

      New York,
New York 10166

      Attention:
Corey A. Tessler

      St.
Augustine

      Loan. No.
1000045

       

      
        
          
          

        

        
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      THIS NOTE
AND MORTGAGE MODIFICATION AGREEMENT EVIDENCING RENEWAL PROMISSORY NOTE INCLUDING
FUTURE ADVANCE AND AMENDED AND RESTATED MORTGAGE, SECURITY AGREEMENT AND FIXTURE
FILING (this
“Security
Instrument”) dated
as of March ____, 2006, by LVP ST.
AUGUSTINE OUTLETS LLC, a Delaware limited liability company (“Borrower”),
having their chief executive offices c/o The Lightstone Group, 326 Third Street,
Lakewood, New Jersey 08701, to
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association
(“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:

       

      WHEREAS,
Lender is the present owner and holder of (i) that certain Promissory Note dated
June 30, 1998 executed in favor of Nationsbank of Tennessee, N.A. (n/k/a Bank of
America, N.A.) in the amount of $32,000,000.00, as amended and reduced by that
certain Assumption and Release Agreement and as assigned to Wells Fargo Bank,
N.A. (formerly known as Wells Fargo Bank Minnesota, N.A.), as Trustee for the
Registered Holders of GE Capital Commercial Mortgage Corporation, Commercial
Mortgage Pass-Through Certificates Series 2002-3 and in its capacity as Lead
Lender on Behalf of the Holders of the Related Companion Loans (the
“Original
Lender”) in the
original principal amount of TWENTY FOUR MILLION and 00/100 Dollars
($24,000,000.00) (the “Existing
Note
").

       

      WHEREAS,
the Existing Note is secured by that certain Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing dated June 30, 1998, encumbering
certain lands in St. John’s County, Florida, recorded in Official Records Book
1333, Page 498, together with an Assumption and Release Agreement dated
September 24, 1999 recorded in Official Records Book 1443, Page 1645, as
assigned to Original Lender pursuant to that certain Assignment of Mortgage
recorded in Official Records Book 1586, Page 247 (the “Existing
Mortgage”).

       

      WHEREAS,
the Existing Note and the Existing Mortgage were previously assigned by Original
Lender to Lender pursuant to that certain Assignment of Mortgage (the
“Assignment”) recorded immediately prior to this Agreement, and pursuant to the
Assignment, the Lender is the current owner and holder of the Existing Note and
Existing Mortgage.

       

      WHEREAS,
the current aggregate principal balance of the Existing Note is $22,349,685.19
(the "OPB");

       

      WHEREAS,
Borrower has applied to Lender for a future advance in the amount of
$4,900,314.81 pursuant
to the future advance clauses in the Existing Mortgage, which Lender has agreed
to provide in consideration of the modification and amendment of the Existing
Note and the modification, amendment and restatement of the Existing Mortgage by
Borrower as set forth herein;

       

      WHEREAS,
Lender and Borrower desire to replace, modify, amend, spread, consolidate and
restate the Existing Mortgage as set forth herein.


      
        
          
          

        

        
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      NOW
THEREFORE, in consideration for the mutual covenants and agreements contained in
this Mortgage, the parties covenant and agree as follows:

       

      1. All the
foregoing statements are true and correct.

       

      2. This
Mortgage contains a waiver of defenses and estoppel language from Borrower as to
the continuing enforceability of the Existing Mortgage.

       

      3. Contemporaneously
herewith, Borrower has executed and delivered to Lender that certain Renewal
Promissory Note Including Future Advance which will have a maturity date of
April 11, 2016 (such promissory note, together with any renewals, modifications,
consolidations and extensions thereof, is hereinafter referred to as the
"Note") dated
the date hereof in the original principal amount of $27,250,000, which
combines, consolidates, amends and restates the terms of the Existing Note. The
terms and conditions of repayment of the Existing Note shall, from and after the
date of this Mortgage, be governed by the terms and conditions of the Note and
shall be secured by this Mortgage, as modified hereby. The principal sums
advanced or to be advanced pursuant to the terms of the Note consist of: (i) the
OPB and (ii) $4,900,314.81 of new
loan proceeds (hereinafter referred to as the "Future Advance"). The
Note is given, in part, to renew the Existing Note. As to the renewal of the
Existing Note, the Note is intended to comply with the requirements of 201.09,
Florida Statutes, and is intended to be exempt from Florida documentary stamp
taxation thereunder. Accordingly, pursuant to 201.09, Florida Statutes, Florida
documentary stamp taxes in the amount of $17,151.40 based
upon the amount of the Future Advance, have been paid and affixed to this
Mortgage.

      


      4. Pursuant
to F.S. 697.04 and the terms of the Existing Mortgage, as modified and restated
herein, this Mortgage is modified and amended to change the principal sum that
is secured hereby from the OPB to $27,250,000 Borrower
covenants that it has not executed or delivered any documentation or made any
promises or covenants to limit the maximum principal amount that may be secured
by the Existing Mortgage as authorized by F.S. 697.04.

       

      5. The
Existing Mortgage is modified and amended to modify and restate the terms of the
Existing Mortgage in its entirety as follows:

       

      Lender
has authorized a loan (hereinafter referred to as the “Loan”) to the
Borrower in the maximum principal sum of TWENTY SEVEN MILLION
TWO HUNDRED FIFTY THOUSAND and NO/100 DOLLARS ($27,250,000)
(hereinafter referred to as the “Loan
Amount”),
together with interest as therein provided, with a maturity date of April 11,
2016, which Loan is evidenced by the Note;

       

      WHEREAS,
in consideration of the Loan, the Borrower has agreed to make payments in
amounts sufficient to pay and redeem, and provide for the payment and redemption
of the principal of, premium, if any, and interest on the Note when
due;


      
        
          
          

        

        
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      WHEREAS,
Borrower desires by this Security Instrument to provide for, among other things,
the issuance of the Note and for the mortgage by Borrower with, and the creation
of a security interest in favor of, Lender, as security for the Borrower’s
obligations to Lender from time to time pursuant to the Note and the other Loan
Documents, but specifically excluding the Guaranty (as hereinafter defined);
and

       

      WHEREAS,
Borrower and Lender intend these recitals to be a material part of this Security
Instrument.

       

      WHEREAS,
all things necessary to make this Security Instrument the valid and legally
binding obligation of Borrower in accordance with its terms, for the uses and
purposes herein set forth, have been done and performed. 

       

      NOW
THEREFORE, to secure the payment of the principal of, prepayment premium (if
any) and interest on the Note and all other obligations, liabilities or sums due
or to become due under, or advanced in accordance herewith to protect the
security of, this Security Instrument, the Note or any other Loan Document,
including, without limitation, interest on said obligations, liabilities or sums
(said principal, premium, interest and other sums being hereinafter referred to
as the “Debt”), and
the performance of all other covenants, obligations and liabilities of the
Borrower pursuant to the Loan Documents but specifically excluding the Guaranty,
and any and all other indebtedness now owing or which may hereafter be owing by
Borrower to Lender, now existing or hereafter coming into existence, 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, Borrower has
executed and delivered this Security Instrument; and Borrower has irrevocably
mortgage, warrant and grant a security interest in favor of Lender, forever in
trust WITH POWER OF SALE, all right, title and interest of Borrower in and to
all of the following property, rights, interests and estates, whether now owned
or hereafter acquired, together with the rights, privileges and appurtenances
thereto belonging:

       

      (a) the
plot(s), piece(s) or parcel(s) of real property described in Exhibit A attached
hereto and made a part hereof (individually and collectively, hereinafter
referred to as the “Premises”);

       

      (b) (i) all
buildings, foundations, structures, fixtures, additions, enlargements,
extensions, modifications, repairs, replacements and improvements of every kind
or nature now or hereafter located on the Premises (hereinafter collectively
referred to as the “Improvements”); and
(ii) to the extent permitted by law, the name or names, if any, as may now or
hereafter be used for each Improvement, and the goodwill associated
therewith;


      
        
          
          

        

        
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      (c) all
easements, servitudes, rights-of-way, strips and gores of land, streets, ways,
alleys, passages, sewer rights, water, water courses, water rights and powers,
ditches, ditch rights, reservoirs and reservoir rights, air rights and
development rights, lateral support, drainage, gas, oil and mineral rights,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
belonging, relating or pertaining to the Premises or the Improvements and the
reversion and reversions, remainder and remainders, whether existing or
hereafter acquired, and all land lying in the bed of any street, road or avenue,
opened or proposed, in front of or adjoining the Premises to the center line
thereof and any and all sidewalks, drives, curbs, passageways, streets, spaces
and alleys adjacent to or used in connection with the Premises and/or
Improvements and all the estates, rights, titles, interests, property,
possession, claim and demand whatsoever, both in law and in equity, of Borrower
of, in and to the Premises and Improvements and every part and parcel thereof,
with the appurtenances thereto;

       

      (d) all
machinery, equipment, fittings, apparatus, appliances, furniture, furnishings,
tools, fixtures (including, but not limited to, all heating, air conditioning,
ventilating, waste disposal, sprinkler and fire and theft protection equipment,
plumbing, lighting, communications and elevator fixtures) and other property of
every kind and nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon, or in, and located on the
Premises or the Improvements, or appurtenant thereto, and all building
equipment, materials and supplies of any nature whatsoever owned by Borrower, or
in which Borrower has or shall have an interest, now or hereafter located upon,
or in the Premises or the Improvements or appurtenant thereto (hereinafter, all
of the foregoing items described in this paragraph (d), along with all
replacement and additional items installed as contemplated in Section 8.01(e),
are collectively called the “Equipment”), all
of which, and any replacements, modifications, alterations and additions
thereto, to the extent permitted by applicable law, shall be deemed to
constitute fixtures (herein, collectively, the “Fixtures”), and
are part of the real estate and security for the payment of the Debt and the
performance of Borrower’s obligations. To the extent any portion of the
Equipment is not real property or Fixtures under applicable law, it shall be
deemed to be personal property, and this Security Instrument shall constitute a
security agreement creating a security interest therein in favor of Lender under
the UCC;

       

      (e) all
awards or payments, including interest thereon, which may hereafter be made with
respect to the Premises, the Improvements, the Fixtures, or the Equipment,
whether from the exercise of the right of eminent domain (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
said right), or for a change of grade, or for any other injury to or decrease in
the value of the Premises, the Improvements or the Equipment or refunds with
respect to the payment of property taxes and assessments, and all other proceeds
of the conversion, voluntary or involuntary, of the Premises, Improvements,
Equipment, Fixtures or any other Property or part thereof into cash or
liquidated claims;


      
        
          
          

        

        
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      (f) all
leases, tenancies, licenses and other agreements affecting the use, enjoyment or
occupancy of the Premises, the Improvements, the Fixtures, or the Equipment or
any portion thereof now or hereafter entered into, whether before or after the
filing by or against Borrower of any petition for relief under the Bankruptcy
Code and all reciprocal easement agreements, license agreements and other
agreements with Pad Owners (hereinafter collectively referred to as the
“Leases”),
together with all cash or security deposits, lease termination payments, advance
rentals and payments of similar nature and guarantees or other security held by,
or issued in favor of, Borrower in connection therewith to the extent of
Borrower’s right or interest therein and all remainders, reversions and other
rights and estates appurtenant thereto, and all base, fixed, percentage or
additional rents, and other rents, oil and gas or other mineral royalties, and
bonuses, issues, profits and rebates and refunds or other payments made by any
Governmental Authority from or relating to the Premises, the Improvements, the
Fixtures or the Equipment plus all rents, common area charges and other payments
now existing or hereafter arising, whether paid or accruing before or after the
filing by or against Borrower of any petition for relief under the Bankruptcy
Code (herein, collectively, the “Rents”) and
all proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt;

       

      (g) all
proceeds of and any unearned premiums on any insurance policies covering the
Premises, the Improvements, the Fixtures, the Rents or the Equipment, including,
without limitation, the right to receive and apply the proceeds of any
insurance, judgments, or settlements made in lieu thereof, for damage to the
Premises, the Improvements, the Fixtures or the Equipment and all refunds or
rebates of Impositions, and interest paid or payable with respect
thereto;

       

      (h) all
deposit accounts, securities accounts, funds or other accounts maintained or
deposited with Lender, or its assigns, in connection herewith, including,
without limitation, the Security Deposit Account (to the extent permitted by
law), the Engineering Escrow Account, the Central Account, the Basic Carrying
Costs Sub-Account, the Basic Carrying Costs Escrow Account, the Debt Service
Payment Sub-Account, the Recurring Replacement Reserve Sub-Account, the
Recurring Replacement Reserve Escrow Account, the Reletting Reserve Sub-Account,
the Reletting Reserve Escrow Account, the Operation and Maintenance Expense
Sub-Account, the Operation and Maintenance Expense Escrow Account, the
Curtailment Reserve Escrow Account and the Curtailment Reserve Sub-Account, the
Holdback Reserve Escrow Account, the Holdback Reserve Sub-Account, the Debt
Service Reserve Escrow Account, the Debt Service Reserve Sub-Account, the Yield
Maintenance Reserve Escrow Account, the Yield Maintenance Reserve Sub-Account,
and all monies and investments deposited or to be deposited in such
accounts;

       

      (i) all
accounts receivable, contract rights, franchises, interests, estate or other
claims, both at law and in equity, now existing or hereafter arising, and
relating to the Premises, the Improvements, the Fixtures or the Equipment, not
included in Rents;


      
        
          
          

        

        
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      (j) all now
existing or hereafter arising claims against any Person with respect to any
damage to the Premises, the Improvements, the Fixtures or the Equipment,
including, without limitation, damage arising from any defect in or with respect
to the design or construction of the Improvements, the Fixtures or the Equipment
and any damage resulting therefrom;

       

      (k) all
deposits or other security or advance payments, including rental payments now or
hereafter made by or on behalf of Borrower to others, with respect to (i)
insurance policies, (ii) utility services, (iii) cleaning, maintenance, repair
or similar services, (iv) refuse removal or sewer service, (v) parking or
similar services or rights and (vi) rental of Equipment, if any, relating to or
otherwise used in the operation of the Premises, the Improvements, the Fixtures
or the Equipment;

       

      (l) all
intangible property now or hereafter relating to the Premises, the Improvements,
the Fixtures or the Equipment or its operation, including, without limitation,
software, letter of credit rights, trade names, trademarks (including, without
limitation, any licenses of or agreements to license trade names or trademarks
now or hereafter entered into by Borrower), logos, building names and
goodwill;

       

      (m) all now
existing or hereafter arising advertising material, guaranties, warranties,
building permits, other permits, licenses, plans and specifications, shop and
working drawings, soil tests, appraisals and other documents, materials and/or
personal property of any kind now or hereafter existing in or relating to the
Premises, the Improvements, the Fixtures, and the Equipment;

       

      (n) all now
existing or hereafter arising drawings, designs, plans and specifications
prepared by architects, engineers, interior designers, landscape designers and
any other consultants or professionals for the design, development,
construction, repair and/or improvement of the Property, as amended from time to
time;

       

      (o) the
right, in the name of and on behalf of Borrower, to appear in and defend any now
existing or hereafter arising action or proceeding brought with respect to the
Premises, the Improvements, the Fixtures or the Equipment as set forth herein
and to commence any action or proceeding to protect the interest of Lender in
the Premises, the Improvements, the Fixtures or the Equipment as set forth
herein;

       

      (p) all
agreements, grants of easements and/or rights-of-way, reciprocal easement
agreements, permits, declarations of covenants, conditions and restrictions,
disposition and development agreements, planned unit development agreements,
management or parking agreements, party wall agreements or other instruments
affecting the Property and all proceeds or income received with respect thereto;
and

       

      (q) all
proceeds, products, substitutions and accessions (including claims and demands
therefor) of each of the foregoing.


      
        
          
          

        

        
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      All of
the foregoing items (a) through (q), together with all of the right, title and
interest of Borrower therein, are collectively referred to as the “Property”.

       

      PROVIDED,
ALWAYS, and these presents are upon this express condition, if Borrower shall
well and truly pay and discharge the Debt and perform and observe the terms,
covenants and conditions set forth in the Loan Documents, then these presents
and the estate hereby granted shall cease and be void.

       

      AND
Borrower covenants with and warrants to Lender that:

       

      ARTICLE I:
DEFINITIONS

       

      Section
1.01. Certain
Definitions. 

       

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

       

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

       

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

       

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

       

      “Adjusted Net Cash
Flow” shall
mean on any determination date, the Pro-Forma Net Operating Income less (a) the
Recurring Replacement Monthly Installment multiplied by twelve (12), (b) the
Reletting Reserve Monthly Installment multiplied by twelve (12), and (c) Net
Capital Expenditures to be incurred (as estimated by Lender, in its reasonable
discretion) for the subsequent twelve (12) month period. The Adjusted Net Cash
Flow shall be calculated by Lender in accordance with the terms of this Security
Instrument.

       

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

       

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

       

      “Appraisal” shall
mean the appraisal of the Property and all supplemental reports or updates
thereto previously delivered to Lender in connection with the Loan.

       

      “Appraiser” shall
mean the Person who prepared the Appraisal.


      
        
          
          

        

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

       

      “Approved Manager
Standard” shall
mean the standard of business operations, practices and procedures customarily
employed by entities which possess the Minimum Manager Credentials.

       

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

       

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

       

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

       

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

       

      “Basic Carrying
Costs” shall
mean the sum of the following costs associated with the Property: (a) Real
Estate Taxes and (b) insurance premiums.

       

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


       

      “Basic Carrying Costs Monthly
Installment” shall
mean Lender’s reasonable estimate of one-twelfth (1/12th) of the annual amount
for Basic Carrying Costs. “Basic Carrying Costs Monthly Installment” shall also
include, if required by Lender, a sum of money which, together with such monthly
installments, will be sufficient to make the payment of each such Basic Carrying
Cost at least thirty (30) days prior to the date initially due. Should such
Basic Carrying Costs not be ascertainable at the time any monthly deposit is
required to be made, the Basic Carrying Costs Monthly Installment shall be
determined by Lender in its reasonable discretion on the basis of the aggregate
Basic Carrying Costs for the prior Fiscal Year or month or the prior payment
period for such cost. As soon as the Basic Carrying Costs are fixed for the then
current Fiscal Year, month or period, the next ensuing Basic Carrying Costs
Monthly Installment shall be adjusted to reflect any deficiency or surplus in
prior monthly payments. If at any time during the term of the Loan Lender
determines that there will be insufficient funds in the Basic Carrying Costs
Escrow Account to make payments when they become due and payable, Lender shall
have the right to adjust the Basic Carrying Costs Monthly Installment such that
there will be sufficient funds to make such payments.

       

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

       

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


      
        
          
          

        

        
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      “Borrower
Account” shall
mean an Eligible Account maintained in the name of Borrower.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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


      
        
          
          

        

        
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      “CPI” shall
mean “The Consumer Price Index (New Series) (Base Period 1982-84=100) (all items
for all urban consumers)” issued by the Bureau of Labor Statistics of the United
States Department of Labor (the “Bureau”). If
the CPI ceases to use the 1982-84 average equaling 100 as the basis of
calculation, or if a change is made in the term, components or number of items
contained in said index, or if the index is altered, modified, converted or
revised in any other way, then the index shall be adjusted to the figure that
would have been arrived at had the change in the manner of computing the index
in effect at the date of this Security Instrument not been altered. If at any
time during the term of this Security Instrument the CPI shall no longer be
published by the Bureau, then any comparable index issued by the Bureau or
similar agency of the United States issuing similar indices shall be used in
lieu of the CPI.

       

      “Current
Month” shall
mean the period from the eleventh (11th) day of
each month through and including the tenth (10th) day of
the following month.

       

      "Curtailment Reserve Escrow
Account" shall
mean the Escrow Account maintained pursuant to Section 5.11 hereof into which
sums shall be deposited during an O&M Operative Period.

       

      "Curtailment Reserve
Sub-Account" shall
mean the Sub-Account of the Central Account established pursuant to Section 5.02
hereof.

       

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

       

      “Debt Service
Coverage” shall
mean the quotient obtained by dividing Adjusted Net Cash Flow for the specified
period by the sum of the aggregate payments of interest and principal due for
such specified period under the Note (determined as of the date the calculation
of Debt Service Coverage is required or requested hereunder). 

       

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

       

      “Debt Service Reserve Escrow
Account” shall
mean the Escrow Account maintained pursuant to Section 5.16 hereof relating to
the payment of debt service on the Loan.

       

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

       

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

       

      “Default
Rate” shall
mean the lesser of (a) the highest rate allowable at law and (b) five percent
(5%) above the interest rate set forth in the Note.


      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

       

      “Default Rate
Interest” shall
mean, to the extent the Default Rate becomes applicable, interest in excess of
the interest which would have accrued on (a) the Principal Amount and (b) any
accrued but unpaid interest, if the Default Rate was not
applicable.

       

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

       

      “Eligible
Account” shall
mean a segregated account which is either (a) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
long term unsecured debt obligations of which are rated by each of the Rating
Agencies (or, if not rated by Fitch, Inc. (“Fitch”),
otherwise acceptable to Fitch, as confirmed in writing that such account would
not, in and of itself, result in a downgrade, qualification or withdrawal of the
then current ratings assigned to any certificates issued in connection with a
Securitization) in its second highest rating category at all times (or, in the
case of the Basic Carrying Costs Escrow Account, the long term unsecured debt
obligations of which are rated at least “AA” (or its equivalent)) by each of the
Rating Agencies (or, if not rated by Fitch, otherwise acceptable to Fitch, as
confirmed in writing that such account would not, in and of itself, result in a
downgrade, qualification or withdrawal of the then current ratings assigned to
any certificates issued in connection with a Securitization) or, if the funds in
such account are to be held in such account for less than thirty (30) days, the
short term obligations of which are rated by each of the Rating Agencies (or, if
not rated by Fitch, otherwise acceptable to Fitch, as confirmed in writing that
such account would not, in and of itself, result in a downgrade, qualification
or withdrawal of the then current ratings assigned to any certificates issued in
connection with a Securitization) in its second highest rating category at all
times or (b) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution is
subject to regulations substantially similar to 12 C.F.R. § 9.10(b), having in
either case a combined capital and surplus of at least $100,000,000 and subject
to supervision or examination by federal and state authority, or otherwise
acceptable (as evidenced by a written confirmation from each Rating Agency that
such account would not, in and of itself, cause a downgrade, qualification or
withdrawal of the then current ratings assigned to any certificates issued in
connection with a Securitization) to each Rating Agency, which may be an account
maintained by Lender or its agents. Eligible Accounts may bear interest. The
title of each Eligible Account shall indicate that the funds held therein are
held in trust for the uses and purposes set forth herein.

       

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

       

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

       

      “Engineering
Report” shall
mean the engineering report for the Property and any supplements or updates
thereto, previously delivered to Lender in connection with the
Loan.

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

       

      “Environmental
Problem” shall
mean any of the following:

       

      (a) the
presence of any Hazardous Material on, in, under, or above all or any portion of
the Property;

       

      (b) the
release or threatened release of any Hazardous Material from or onto the
Property;

       

      (c) the
violation or threatened violation of any Environmental Statute with respect to
the Property; or

       

      (d) the
failure to obtain or to abide by the terms or conditions of any permit or
approval required under any Environmental Statute with respect to the
Property.

       

      A
condition described above shall be an Environmental Problem regardless of
whether or not any Governmental Authority has taken any action in connection
with the condition and regardless of whether that condition was in existence on
or before the date hereof.

       

      “Environmental
Report” shall
mean the environmental audit report for the Property and any supplements or
updates thereto, previously delivered to Lender in connection with the
Loan.

       

      “Environmental
Statute” shall
mean any federal, state or local statute, ordinance, rule or regulation, any
judicial or administrative order (whether or not on consent) or judgment
applicable to Borrower or the Property including, without limitation, any
judgment or settlement based on common law theories, and any provisions or
condition of any permit, license or other authorization binding on Borrower
relating to (a) the protection of the environment or the health of persons
(including employees) from actual or potential exposure (or effects of exposure)
to any actual or potential release, discharge, disposal or emission (whether
past or present) of any Hazardous Materials or (b) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of any
Hazardous Materials, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
§9601 et seq., the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976, as amended by the Solid and Hazardous Waste Amendments of 1984, 42
U.S.C. §6901 et seq., the
Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977,
33 U.S.C. §1251 et seq., the
Toxic Substances Control Act of 1976, 15 U.S.C. §2601 et seq., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §1101
et seq., the
Clean Air Act of 1966, as amended, 42 U.S.C. §7401 et seq., the
National Environmental Policy Act of 1975, 42 U.S.C. §4321, the Rivers and
Harbors Act of 1899, 33 U.S.C. §401 et seq., the
Endangered Species Act of 1973, as amended, 16 U.S.C. §1531 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §651
et seq., and the
Safe Drinking Water Act of 1974, as amended, 42 U.S.C. §300(f) et seq., and all
rules, regulations and guidance documents promulgated or published
thereunder.

       

      “Equipment” shall
have the meaning set forth in granting clause (d) of this Security
Instrument.


      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

       

      “ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as amended from time
to time, and the regulations promulgated thereunder. Section references to ERISA
are to ERISA, as in effect at the date of this Security Instrument and, as of
the relevant date, any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.

       

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

       

      “Escrow
Account” shall
mean each of the Engineering Escrow Account, the Basic Carrying Costs Escrow
Account, the Recurring Replacement Reserve Escrow Account, the Reletting Reserve
Escrow Account, the Holdback Reserve Escrow Account, the Operation and
Maintenance Expense Escrow Account, the Debt Service Reserve Escrow Account, the
Yield Maintenance Reserve Escrow Account and the Curtailment Reserve Escrow
Account, each of which shall be an Eligible Account or book entry sub-account of
an Eligible Account.

       

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

       

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

       

      “Fiscal
Year” shall
mean the twelve (12) month period commencing on January 1 and ending on December
31 during each year of the term of this Security Instrument, or such other
fiscal year of Borrower as Borrower may select from time to time with the prior
written consent of Lender.

       

      “Fixtures” shall
have the meaning set forth in granting clause (d) of this Security
Instrument.

       

      “Force
Majeure” shall
mean strikes, lockouts, labor disputes, acts of God, governmental restrictions,
regulations or controls, enemy or hostile governmental actions, terrorist acts,
civil commotion, insurrection, revolution, sabotage or fire or other casualty or
other events beyond the reasonable control of Borrower and/or its Affiliates,
but Borrower’s and/or its Affiliates’ lack of funds in and of itself shall not
be deemed a cause beyond the control of Borrower and/or its
Affiliates.

       

      “GAAP” shall
mean generally accepted accounting principles in the United States of America,
as of the date of the applicable financial report, consistently
applied.


      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

       

      “General
Partner” shall
mean, if Borrower is a partnership, each general partner of Borrower and, if
Borrower is a limited liability company, each managing member of Borrower and in
each case, if applicable, each general partner or member of such general partner
or managing member. 

       

      “Governmental
Authority” shall
mean, with respect to any Person, any federal or State government or other
political subdivision thereof and any entity, including any regulatory or
administrative authority or court, exercising executive, legislative, judicial,
regulatory or administrative or quasi-administrative functions of or pertaining
to government, and any arbitration board or tribunal, in each case having
jurisdiction over such applicable Person or such Person’s property and any stock
exchange on which shares of capital stock of such Person are listed or admitted
for trading.

       

      “Guarantor” shall
mean any Person guaranteeing, in whole or in part, the obligations of Borrower
under the Loan Documents.

       

      “Guaranty” shall
mean that certain Guaranty executed and delivered by Lightstone Holdings, LLC,
dated as of the date hereof.

       

      “Hazardous
Material” shall
mean any flammable, explosive or radioactive materials, hazardous materials or
wastes, hazardous or toxic substances, pollutants, asbestos or any material
containing asbestos, molds, spores and fungus which may pose a risk to human
health or the environment or any other substance or material as defined in or
regulated by any Environmental Statutes.

       

      “Holdback Release
Amount” shall
mean, at any time of any request, the positive different between the Supported
Loan Amount and $24,250,000.00 (plus the amounts which may have been previously
released from the Holdback Reserve Escrow Account).

       

      "Holdback Reserve Escrow
Account" shall
mean the Escrow Account maintained pursuant to Section 5.15 hereof.

       

      "Holdback Reserve
Sub-Account" shall
mean the Sub-Account of the Central Account established pursuant to Section 5.02
hereof in which the Initial Holdback Reserve Deposit shall be
maintained.


      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

       

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

       

      “Improvements” shall
have the meaning set forth in granting clause (b) of this Security
Instrument.

       

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

       

      “Independent” shall
mean, when used with respect to any Person, a Person who (a) is in fact
independent, (b) does not have any direct financial interest or any material
indirect financial interest in Borrower, or in any Affiliate of Borrower or any
constituent partner, shareholder, member or beneficiary of Borrower, (c) is not
connected with Borrower or any Affiliate of Borrower or any constituent partner,
shareholder, member or beneficiary of Borrower as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions and (d) is not a member of the immediate family of a Person defined in
(b) or (c) above.

       

      "Initial Debt Service Reserve
Deposit" shall
equal the amount set forth on Exhibit B attached hereto and made a part
hereof.

       

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

       

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

       

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



      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

       

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

       

      “Initial Recurring Reserve
Deposit” shall
equal the amount required to be deposited by Borrower into the Recurring
Replacement Reserve Escrow Account on the Closing Date as set forth on Exhibit
B.

       

      "Initial Yield Maintenance
Reserve Deposit" shall
equal the amount set forth on Exhibit B attached hereto and made a part
hereof.

       

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

       

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

       

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

       

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

       

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

       

      “Late
Charge” shall
have the meaning, subject to the provisions of Section 21.02(g) hereof, set
forth in Section 13.09 hereof.


      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

       

      “Leases” shall
have the meaning set forth in granting clause (f) of this Security
Instrument.

       

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

       

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

       

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

       

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

       

      “Loan
Documents” shall
mean this Security Instrument, the Note, the Assignment, and any and all other
agreements, instruments, certificates or documents executed and delivered by
Borrower or any Affiliate of Borrower in connection with the Loan.

       

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


       

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


       

      “Major Space
Lease” shall
mean any Space Lease of a tenant or Affiliate of such tenant where such tenant
or such Affiliate leases, in the aggregate, in excess of 6,000 square feet.


       

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

       

      “Manager” shall
mean Borrower and any other Person, other than Borrower, which manages the
Property on behalf of Borrower.

       

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

       

      “Material Adverse
Effect” shall
mean any event or condition that has a material adverse effect on (a) the
Property, (b) the business, profits, management, operations or condition
(financial or otherwise) of Borrower, (c) the enforceability, validity,
perfection or priority of the lien or security interest of any Loan Document or
(d) the ability of Borrower to perform any material obligations under any Loan
Document.


      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      “Minimum Manager
Credentials” shall
mean (i) the employment of a senior executive who has the responsibility for
oversight of the Property and has at least seven (7) years’ experience in the
management of outlet shopping centers and (ii) the management of not less than
five (5) outlet shopping center properties having an aggregate leasable square
footage of not less than the lesser of (a) one million leasable square feet and
(b) five (5) times the leasable square feet of the Property.

       

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

       

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

       

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

       

      “Net
Proceeds” shall
mean the excess of (a)(i) the purchase price (at foreclosure or otherwise)
actually received by Lender with respect to the Property as a result of the
exercise by Lender of its rights, powers, privileges and other remedies after
the occurrence of an Event of Default, or (ii) in the event that Lender (or
Lender’s nominee) is the purchaser at foreclosure by credit bid, then the amount
of such credit bid, in either case, over (b) all costs and expenses, including,
without limitation, all attorneys’ fees and disbursements and any brokerage
fees, if applicable, incurred by Lender in connection with the exercise of such
remedies, including the sale of such Property after a foreclosure against the
Property.

       

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

       

      "O&M Operative
Period" shall
mean the period of time commencing upon the determination by Lender that the
Debt Service Coverage (tested quarterly except during the continuance of an
O&M Operative Period, in which event Debt Service Coverage shall be tested
monthly and shall be calculated based upon information contained in the reports
furnished to Lender pursuant to Section 2.09 hereof) is less than 1.05:1.0 for
the preceding fiscal quarter and terminating, in each case, on the Payment Date
next succeeding the date upon which Lender has determined that the Debt Service
Coverage has been 1.05:1 or greater for the immediately preceding two fiscal
quarters.


      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      “Operating
Expenses” shall
mean, in each Fiscal Year or portion thereof during the term hereof, all
expenses directly attributable to the operation, repair and/or maintenance of
the Property including, without limitation, (a) Impositions, (b) insurance
premiums, (c) management fees, whether or not actually paid, equal to the
greater of the actual management fees or expenses and four percent (4%) of
annual “base” or “fixed” Rent due under the Leases and (d) costs attributable to
the operation, repair and maintenance of the systems for heating, ventilating
and air conditioning the Improvements and actually paid for by Borrower.
Operating Expenses shall not include interest, principal and premium, if any,
due under the Note or otherwise in connection with the Debt, income taxes,
Capital Expenditures, any non-cash charge or expense such as depreciation,
amortization or any item of expense otherwise includable in Operating Expenses
which is paid directly by any tenant except real estate taxes paid directly to
any taxing authority by any tenant or contributions by Borrower to any reserve
funds required under the Loan Documents.

       

      “Operating
Income” shall
mean, in each Fiscal Year or portion thereof during the term hereof, all revenue
derived by Borrower arising from the Property including, without limitation,
rental revenues (whether denominated as basic rent, additional rent, escalation
payments, electrical payments or otherwise) and other fees and charges payable
pursuant to Leases or otherwise in connection with the Property, and the
proceeds of business interruption, rent or other similar insurance. Operating
Income shall not include (a) Insurance Proceeds (other than proceeds of rent,
business interruption or other similar insurance allocable to the applicable
period) and Condemnation Proceeds (other than Condemnation Proceeds arising from
a temporary taking or the use and occupancy of all or part of the applicable
Property allocable to the applicable period), or interest accrued on such
Condemnation Proceeds, (b) proceeds of any financing, (c) proceeds of any sale,
exchange or transfer of the Property or any part thereof or interest therein,
(d) capital contributions or loans to Borrower or an Affiliate of Borrower, (e)
any item of income otherwise includable in Operating Income but paid directly by
any tenant to a Person other than Borrower except for real estate taxes paid
directly to any taxing authority by any tenant, (f) any other extraordinary,
non-recurring revenues, (g) Rent paid by or on behalf of any lessee under a
Space Lease which is the subject of any proceeding or action relating to its
bankruptcy, reorganization or other arrangement pursuant to the Bankruptcy Code
or any similar federal or state law or which has been adjudicated a bankrupt or
insolvent unless such Space Lease has been affirmed by the trustee in such
proceeding or action, (h) Rent paid by or on behalf of any lessee under a Space
Lease the demised premises of which are not occupied either by such lessee or by
a sublessee thereof unless the lessee thereunder has a long-term unsecured debt
rating of not less than “BBB+” (or its equivalent) from the Rating Agency, (i)
Rent paid by or on behalf of any lessee under a Space Lease in whole or partial
consideration for the termination of any Space Lease, (j) rent paid by or on
behalf of lessees under month-to-month Space Leases for lessees which have been
in occupancy for less than six (6) months, (k) rent paid by or on behalf of any
lessee under a Space Lease that is more than thirty (30) days in arrears in its
obligations under such Space Lease, (l) Rents paid by or on behalf of lessees
who have given notice that they will be vacating the premises demised under
their respective Space Leases more than thirty (30) days prior to the stated
expiration date set forth in such Space Leases, or (m) sales tax rebates from
any Governmental Authority.


      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      

       

      “Operation and Maintenance
Expense Escrow Account” shall
mean the Escrow Account maintained pursuant to Section 5.09 hereof relating to
the payment of Operating Expenses (exclusive of Basic Carrying
Costs).

       

      “Operation and Maintenance
Expense Sub-Account” shall
mean the Sub-Account of the Central Account established pursuant to Section 5.02
hereof into which sums allocated for the payment of Cash Expenses, Net Capital
Expenditures and approved Extraordinary Expenses shall be
deposited.

       

      “Pad
Owners” shall
mean any owner of any fee interest in property contiguous to or surrounded by
the Property who has entered into or is subject to a reciprocal easement
agreement or other agreement or agreements with Borrower either (a) in
connection with an existing or potential improvement on such property or (b)
relating to or affecting the Property. 

       

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

       

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

       

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

       

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

       

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

       

      “Premises” shall
have the meaning set forth in granting clause (a) of this Security
Instrument.

       

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

       

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


      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      

       

      “Pro-Forma Operating
Expenses” shall
mean projected annualized Operating Expenses based on a trailing twelve
(12)-month period as reasonably adjusted by Lender to take into account, among
other things, anticipated increases or decreases in Operating
Expenses.

       

      “Pro-Forma Operating
Income” shall
mean the lesser of (i) projected Operating Income for the immediately subsequent
12-month period and (ii) actual Operating Income for the immediately preceding
12-month period, as increased by scheduled rent increases set forth in the Space
Leases and rent anticipated from tenants under Space Leases relating to any
portion of the Premises which was previously not occupied provided such tenants
are then in occupancy pursuant to Space Leases entered into in accordance with
the terms of this Security Instrument and have paid all rents due under the
Space Lease without abatement, suspension, deferment, diminution, reduction or
other allowances for at least one full calendar month, in each case as
determined by Lender based on the most recent rent roll and such other
information as is required to be delivered by Borrower pursuant to Section 2.09
hereof and as reasonably adjusted by Lender to take into account, among other
things, a vacancy factor equal to the greater of (x) anticipated vacancies for
the succeeding 12-month period and (b) actual vacancies during the immediately
preceding 12-month period. 

       

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

       

      “Property” shall
have the meaning set forth in the granting clauses of this Security
Instrument.

       

      “Property
Agreements” shall
mean all agreements, grants of easements and/or rights-of-way, reciprocal
easement agreements, permits, declarations of covenants, conditions and
restrictions, disposition and development agreements, planned unit development
agreements, management or parking agreements, party wall agreements or other
instruments affecting the Property, including, without limitation any agreements
with Pad Owners, but not including any brokerage agreements, management
agreements, service contracts, Space Leases or the Loan Documents.

       

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

       

      “Real Estate
Taxes” shall
mean all real estate taxes, assessments (including, without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not commenced or completed
within the term of this Security Instrument), water, sewer or other rents and
charges, and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, or foreseen or unforeseen, of every
character in respect of the Property (including all interest and penalties
thereon), which at any time prior to, during or in respect of the term hereof
may be assessed or imposed on or in respect of or be a lien upon the Property or
any part thereof or any estate, right, title or interest
therein.


      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      

       

      “Realty” shall
have the meaning set forth in Section 2.05(b) hereof.

       

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

       

      “Recurring Replacement
Monthly Installment” shall
mean the amount per month as set forth on Exhibit B attached hereto and made a
part hereof.

       

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

       

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

       

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

       

      “Reletting Reserve Escrow
Account” shall
mean the Escrow Account maintained pursuant to Section 5.07 hereof relating to
the payment of Reletting Expenditures.

       

      “Reletting Reserve Monthly
Installment” shall
mean (a) the amount set forth on Exhibit B attached hereto and made a part
hereof plus (b) all sums received by Borrower in connection with any
cancellation, termination or surrender of any Lease, including, without
limitation, any surrender or cancellation fees, buy-out fees, or reimbursements
for tenant improvements and leasing commissions.

       

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

       

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

       

      “Rents” shall
have the meaning set forth in granting clause (f) of this Security
Instrument.

       

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


      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

        

      

       

      “Required Debt Service
Coverage” shall
mean a Debt Service Coverage of not less than 1.20:1.0.

       

      “Required Debt Service
Payment” shall
mean, as of any Payment Date, the amount of interest and principal then due and
payable pursuant to the Note, together with any other sums due thereunder,
including, without limitation, any prepayments required to be made or for which
notice has been given under this Security Instrument, Default Rate Interest and
premium, if any, paid in accordance therewith.

       

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

       

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

       

      “Securities
Act” shall
mean the Securities Act of 1933, as the same shall be amended from time to
time.

       

      “Securitization” shall
mean a public or private offering of securities by Lender or any of its
Affiliates or their respective successors and assigns which are collateralized,
in whole or in part, by this Security Instrument. 

       

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

       

      “Security
Instrument” shall
mean this Security Instrument as originally executed or as it may hereafter from
time to time be supplemented, amended, modified or extended by one or more
indentures supplemental hereto.

       

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


       

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


      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      “Substantial
Casualty” shall
have the meaning set forth in Section 3.04(a)(iv) hereof.

       

      “Supported Loan
Amount” shall
be determined by dividing Pro-Forma Net Operating Income by 1.20 (the required
debt service coverage ratio) (which amount must support a loan to value ratio of
at least 80%) and then dividing the quotient by a mortgage loan constant
associated with 6.09% which is 7.2641881%.

       

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

       

      “Transfer” shall
mean the conveyance, assignment, sale, mortgaging, encumbrance, pledging,
hypothecation, granting of a security interest in, granting of options with
respect to, or other disposition of (directly or indirectly, voluntarily or
involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) all or any portion of any legal or beneficial
interest (a) in all or any portion of the Property; (b) if Borrower or, if
Borrower is a partnership, any General Partner, is a corporation, in the stock
of Borrower or any General Partner; (c) if Borrower is a limited or general
partnership, joint venture, limited liability company, trust, nominee trust,
tenancy in common or other unincorporated form of business association or form
of ownership interest, in any Person having a legal or beneficial ownership in
Borrower, excluding any legal or beneficial interest in any constituent limited
partner, if Borrower is a limited partnership, or in any non-managing member, if
Borrower is a limited liability company, unless such interest would, or together
with all other direct or indirect interests in Borrower which were previously
transferred, aggregate 49% or more of the partnership or membership, as
applicable, interests in Borrower or would result in any Person who, as of the
Closing Date, did not own, directly or indirectly, 49% or more of the
partnership or membership, as applicable, interests in Borrower, owning,
directly or indirectly, 49% or more of the partnership or membership, as
applicable, interests in Borrower and excluding any legal or beneficial interest
in any General Partner unless such interest would, or together with all other
direct or indirect interest in the General Partner which were previously
transferred, aggregate 49% or more of the partnership or membership, as
applicable, interests in the General Partner (or result in a change in control
of the management of the General Partner from the individuals exercising such
control immediately prior to the conveyance or other disposition of such legal
or beneficial interest) and shall also include, without limitation to the
foregoing, the following: an installment sales agreement wherein Borrower agrees
to sell the Property or any part thereof or any
interest therein for a price to be paid in installments; an agreement by
Borrower leasing all or substantially all of the Property to one or more Persons
pursuant to a single or related transactions, or a sale, assignment or other
transfer of, or the grant of a security interest in, Borrower’s right, title and
interest in and to any Leases or any Rent; any instrument subjecting the
Property to a condominium regime or transferring ownership to a cooperative
corporation; and the dissolution 

       

      
        
          
          

        

        
          -25-

          
            

          

        

        
          
          

        

      

       

      or
termination of Borrower or the merger or consolidation of Borrower with any
other Person. Notwithstanding the foregoing, “Transfer” shall not include (I) a
transfer which would otherwise be a Transfer pursuant to clause (c) above with
respect to Borrower if David Lichtenstein (“Original
Principal”) or one
or more of David Lichtenstein’s family members or a trust formed for the benefit
of such family member, as provided in clause (III)(A) of this sentence,
continues to own not less than twenty percent (20%) of Borrower (whether
directly or through one or more Persons), if provided all of the following
conditions are satisfied if (i) written notice of any transfer pursuant to this
proviso is given to Lender together with such documents relating to the transfer
as Lender may reasonably require, (ii) control over the management and operation
of the Property is retained directly or indirectly by Original Principal, (iii)
in the event that any Person (a “Principal
Transferee”) who
does not, as of the Closing Date, own or Control, directly or indirectly, 49% or
more of the partnership or membership, as applicable, interests in Borrower
acquires, directly or indirectly, 49% or more of the partnership or membership,
as applicable, interests in Borrower, Lender is furnished an opinion, in form
and substance and from counsel reasonably satisfactory to Lender, substantially
similar to the Insolvency Opinion which discusses the substantive
non-consolidation of Borrower with the Principal Transferee, (iv) no such
transfer has any adverse effect either on the Single Purpose Entity status of
Borrower under the requirements of any Rating Agency or on the status of
Borrower as a continuing legal entity liable for the payment of the Debt and the
performance of all other obligations secured hereby, (v) Borrower has delivered
a letter from each Rating Agency confirming that any rating issued by the Rating
Agency in connection with a Securitization will not, as a result of the
transfer, be downgraded from the then current ratings thereof, qualified or
withdrawn, (vi) in the event that any Person (together with its Affiliates)
acquires a twenty percent (20%) or greater interest, directly or indirectly, in
Borrower or there is a change in Control of Borrower, as a result of such
transfer, Lender shall have consented to such transfer in its sole and absolute
discretion, (II) transfers made by devise or descent or by operation of law upon
the death of a partner, member or shareholder of Borrower or General Partner or
any Person owning a direct or indirect legal or beneficial interest in Borrower
or General Partner if: (i) written notice of any transfer pursuant to this
proviso is given to Lender together with such documents relating to the transfer
as Lender may reasonably require, (ii) control over the management and operation
of the Property is retained by the Original Principal at all times prior to the
death or legal incapacity of the Original Principal and is thereafter assumed by
Persons who are acceptable in all respects to Lender in its sole and absolute
discretion, (iii) no such transfer by the Original Principal will release the
respective estate from any liability as a Guarantor, and (iv) no such transfer,
death or other event has any adverse effect either on the Single Purpose Entity
status of Borrower under the requirements of any Rating Agency or on the status
of Borrower as a continuing legal entity liable for the payment of the Debt and
the performance of all other obligations secured hereby, nor (III) subject to
the provisions of clauses (I)(i) through (I)(iv) above and provided, that (i)
any inter vivos transfer of all or any portion of the Property or any inter
vivos transfer or issuance of capital stock (or other ownership interests) in
Borrower or General Partner is made in connection with Original Principal’s bona
fide, good faith estate planning, (ii) Original Principal does not transfer in
excess of 49% of its direct or indirect ownership interest in Borrower or, if
Original Principal does transfer in excess of 49% of its direct or indirect
ownership interests in Borrower, Lender is furnished an opinion, in form and
substance and from counsel reasonably satisfactory to Lender, substantially
similar to the Insolvency Opinion which discusses the substantive
non-consolidation of Borrower with the proposed transferee, and (iii) the
Person(s) with Control of Borrower or the management of the Property are (x) the
same Person(s) who had such Control and management rights immediately prior to
the transfer in question, or (y) reasonably acceptable to Lender, (A) an inter
vivos or testamentary transfer of all or any portion of the ownership interest
in Borrower to one or more family members of Original Principal or a trust in
which all of the beneficial interest is held by one or more family members of
Original Principal or a partnership, limited liability company, corporation or
other legal entity in which a majority of the capital and profits interests are
held by one or more family members of Original Principal, or (B) any inter vivos
or testamentary transfer or issuance of capital stock (or other ownership
interests) in the General Partner to one or more family members of Original
Principal, a trust in which all of the beneficial interest is held by one or
more family members of Original Principal or a partnership, limited liability
company, corporation or other legal entity in which a majority of the capital
and profits interests are held by one or more family members of Original
Principal. As used herein, “family members” shall include spouses, children and
grandchildren. For purposes of this definition, “Borrower” shall mean
individually and/or collectively any of the limited liability companies
comprising Borrower. 

       

      “UCC” shall
mean the Uniform Commercial Code as in effect from time to time in the State in
which the Property is located. 

       

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

       

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

       

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

       

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

       

      “Yield Maintenance Reserve
Escrow Account” shall
mean the Escrow Account maintained pursuant to Section 5.17 hereof relating to
the payment of certain prepayment fees.


      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

        

      

       

      “Yield Maintenance Reserve
Sub-account” shall
mean the Sub-Account of the Central Account established pursuant to Section 5.02
hereof into which the Initial Yield Maintenance Reserve Account shall be
deposited.

       

      ARTICLE II:
REPRESENTATIONS, WARRANTIES


       

      AND COVENANTS OF
BORROWER

       

      Section
2.01. Payment of
Debt.
Borrower will pay the Debt at the time and in the manner provided in the Note
and the other Loan Documents, all in lawful money of the United States of
America in immediately available funds.

       

      Section
2.02. Representations, Warranties
and Covenants of Borrower.
Borrower represents, warrants and covenants to Lender:

       

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

       

      (b) Power.
Borrower and, if applicable, each General Partner has full power and authority
to execute, deliver and perform, as applicable, the Loan Documents to which it
is a party, to make the borrowings thereunder, to execute and deliver the Note
and to grant to Lender a first lien on and security interest in the Property,
subject only to the Permitted Encumbrances.

       

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


      
        
          
          

        

        
          -27-

          
            

          

        

        
          
          

        

      

       

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

       

      (e) Intentionally
Deleted.

       

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

       

      (g) Maintenance of
Existence.
Borrower and, if applicable, General Partner at all times since their formation
have been duly formed and existing and shall preserve and keep in full force and
effect their existence as a Single Purpose Entity.

       

      (ii) Borrower
and, if applicable, General Partner, at all times since their organization have
complied, and will continue to comply, with the provisions of its certificate
and agreement of partnership or certificate of incorporation and by-laws or
articles of organization and operating agreement, as applicable, and the laws of
its jurisdiction of organization relating to partnerships, corporations or
limited liability companies, as applicable.

       

      (iii) Borrower
and, if applicable, General Partner have done or caused to be done and will do
all things necessary to observe organizational formalities and preserve their
existence and each Borrower and, if applicable, General Partner will not amend,
modify or otherwise change the certificate and agreement of partnership or
certificate of incorporation and by-laws or articles of organization and
operating agreement, as applicable, or other organizational documents of
Borrower and, if applicable, General Partner without the prior written consent
of Lender. 

       

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


      
        
          
          

        

        
          -28-

          
            

          

        

        
          
          

        

      


      (v) Borrower
and, if applicable, General Partner, have at all times paid, and will continue
to pay, their own liabilities from their own separate assets and shall each
allocate and charge fairly and reasonably any overhead which Borrower and, if
applicable, General Partner, shares with any other Person, including, without
limitation, for office space and services performed by any employee of another
Person.

       

      (vi) Borrower
and, if applicable, General Partner, have at all times identified themselves,
and will continue to identify themselves, in all dealings with the public, under
their own names and as separate and distinct entities and shall correct any
known misunderstanding regarding their status as separate and distinct entities.
Borrower and, if applicable, General Partner, have not at any time identified
themselves, and will not identify themselves, as being a division of any other
Person.

       

      (vii) Borrower
and, if applicable, General Partner, have been at all times, and will continue
to use commercially reasonable efforts to be, adequately capitalized in light of
the nature of their respective businesses; provided, however, in no event shall
any direct or indirect member, partner or principal of Borrower be required to
make additional capital contributions to any Borrower.

       

      (viii) Borrower
and, if applicable, General Partner, (A) have not owned, do not own and will not
own any assets or property other than the Property and any incidental personal
property necessary for the ownership, management or operation of the Property,
(B) have not engaged and will not engage in any business other than the
ownership, management and operation of the Property, (C) have not incurred and
will not incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than (X) the Loan, and (Y) unsecured trade
and operational debt which (1) is not evidenced by a note, (2) is incurred in
the ordinary course of the operation of the Property, (3) does not exceed in the
aggregate two percent (2%) of the Allocated Loan Amount for the Property and (4)
which is, unless being contested in accordance with the terms of this Security
Instrument, paid prior to the earlier to occur of the forty-fifth (45th) day
after the date incurred and the date when due, (D) have not and will not pledge
their assets for the benefit of any other Person, and (E) have not made and will
not make any loans or advances to any Person (including any
Affiliate).

       

      (ix) Neither
Borrower nor, if applicable, any General Partner will change its name or
principal place of business without giving Lender at least thirty (30) days
prior written notice thereof.

       

      (x) Neither
Borrower nor, if applicable, any General Partner have, and neither of such
Persons will have, any subsidiaries.

       

      (xi) Borrower
will preserve and maintain its existence as a limited liability company as of
the Closing Date, which is organized and existing under the laws of the State in
which it is organized as of the Closing Date and all material rights,
privileges, tradenames and franchises.


      
        
          
          

        

        
          -29-

          
            

          

        

        
          
          

        

      

       

      (xii) Neither
Borrower, nor, if applicable, any General Partner, will merge or consolidate
with, or sell all or substantially all of its respective assets to any Person,
or liquidate, wind up or dissolve itself (or suffer any liquidation, winding up
or dissolution). Neither any Borrower, nor, if applicable, any General Partner
will acquire any business or assets from, or capital stock or other ownership
interest of, or be a party to any acquisition of, any Person.

       

      (xiii) Borrower
and, if applicable, General Partner, have not at any time since their formation
assumed, guaranteed or held themselves out to be responsible for, and will not
assume, guarantee or hold themselves out to be responsible for the liabilities
or the decisions or actions respecting the daily business affairs of their
partners, shareholders or members or any predecessor company, corporation or
partnership, each as applicable, any Affiliates, or any other Persons. Borrower
has not at any time since its formation acquired, and will not acquire,
obligations or securities of its partners or shareholders, members or any
predecessor company, corporation or partnership, each as applicable, or any
Affiliates. Borrower and, if applicable, General Partner, have not at any time
since their formation made, and will not make, loans to its partners, members or
shareholders or any predecessor company, corporation or partnership, each as
applicable, or any Affiliates of any of such Persons. Borrower and, if
applicable, General Partner, have no known contingent liabilities nor do they
have any material financial liabilities under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such Person is a
party or by which it is otherwise bound other than under the Loan
Documents.

       

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

       

      (xv) If
Borrower is a limited partnership or a limited liability company, the General
Partner shall be a corporation or limited liability company whose sole asset is
its interest in Borrower and the General Partner will at all times comply, and
will cause Borrower to comply, with each of the representations, warranties, and
covenants contained in this Section 2.02(g) as if such representation, warranty
or covenant was made directly by such General Partner.

       

      (xvi) Borrower
shall at all times cause there to be at least two (2) duly appointed members of
the board of directors or board of managers or other governing board or body, as
applicable (an “Independent
Director”), of,
if Borrower is a corporation or single member limited liability company formed
in the State of Delaware, Borrower, and, if Borrower is a limited partnership or
multi-member limited liability company, of the General Partner, reasonably
satisfactory to Lender who shall not have been at the time of such individual’s
appointment, and may not be or have been at any time (A) a shareholder, officer,
director, attorney, counsel, partner, member or employee of Borrower or any of
the foregoing Persons or Affiliates thereof, (B) a customer or creditor of, or
supplier or service provider to, Borrower or any of its shareholders, partners,
members or their Affiliates, (C) a member of the immediate family of any Person
referred to in (A) or (B) above, D) a Person Controlling, Controlled by or under
common Control with any Person referred to in (A) through (C) above. A natural
person who otherwise satisfies the foregoing definition except for being the
Independent Director of a Single Purpose Entity Affiliated with Borrower or
General Partner shall not be disqualified from serving as an Independent
Director if such individual is at the time of initial appointment, or at any
time while serving as the Independent Director, an Independent Director of a
Single Purpose Entity Affiliated with Borrower or General Partner if such
individual is an independent director provided by a nationally-recognized
company that provides professional independent directors.


      
        
          
          

        

        
          -30-

          
            

          

        

        
          
          

        

      

       

      (xvii)
 Borrower
and, if applicable, General Partner, shall not cause or permit the board of
directors or board of managers or other governing board or body, as applicable,
of each Borrower or, if applicable, General Partner, to take any action which,
under the terms of any certificate of incorporation, by-laws or articles of
organization with respect to any common stock, requires a unanimous vote of the
board of directors of Borrower, or, if applicable, the General Partner, unless
at the time of such action there shall be at least two members who are
Independent Directors.

       

      (xviii) Borrower
and, if applicable, General Partner shall pay the salaries of their own
employees and maintain a sufficient number of employees in light of their
contemplated business operations.

       

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

       

      (h) No
Defaults. No
Default or Event of Default has occurred and is continuing or would occur as a
result of the consummation of the transactions contemplated by the Loan
Documents. To the best of Borrower’s knowledge, Borrower is not in default
beyond any applicable notice and/or grace periods in the payment or performance
of any of its Contractual Obligations in any respect.

       

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

       

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

       

      (k) Compliance with
Law. (i)
Except as previously disclosed to Lender in writing, Borrower has received no
notice of violation of any Legal Requirements and (ii) except for such
violations which would not, individually or in the aggregate, have a Material
Adverse Effect, Borrower is in compliance in all material respects with all
Legal Requirements to which it or the Property is subject, including, without
limitation, all Environmental Statutes, the Occupational Safety and Health Act
of 1970, the Americans with Disabilities Act and ERISA. No portion of the
Property has been or will be purchased, improved, fixtured, equipped or
furnished with proceeds of any illegal activity and to the best of Borrower’s
knowledge, no illegal activities are being conducted at or from the
Property.


      
        
          
          

        

        
          -31-

          
            

          

        

        
          
          

        

      

       

      (l) Financial
Information. To the
best of Borrower’s knowledge, all financial data that has been delivered by
Borrower to Lender (i) is true, complete and correct in all material respects,
(ii) accurately represents the financial condition and results of operations of
the Persons covered thereby as of the date on which the same shall have been
furnished in all material respects, and (iii) to the extent prepared by an
independent certified public accounting firm, has been prepared in accordance
with GAAP (or such other accounting basis as is reasonably acceptable to Lender)
throughout the periods covered thereby except as disclosed therein. As of the
date hereof, neither Borrower nor, if applicable, any General Partner, has any
contingent liability, liability for taxes or other unusual or forward commitment
not reflected in such financial statements delivered to Lender. Since the date
of the last financial statements delivered by Borrower to Lender except as
otherwise disclosed in such financial statements or notes thereto, there has
been no change in the assets, liabilities or financial position of Borrower nor,
if applicable, any General Partner, or in the results of operations of Borrower
which would have a Material Adverse Effect. Neither Borrower nor, if applicable,
any General Partner, has incurred any obligation or liability, contingent or
otherwise not reflected in such financial statements which would have a Material
Adverse Effect.

       

      (m) Transaction Brokerage
Fees. Neither
Borrower nor Lender have dealt with any financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Security Instrument. BORROWER HEREBY AGREES TO INDEMNIFY
AND HOLD LENDER HARMLESS FOR, FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES,
COSTS AND EXPENSES OF ANY KIND IN ANY WAY RELATING TO OR ARISING FROM (I) A
CLAIM BY ANY PERSON THAT SUCH PERSON ACTED ON BEHALF OF BORROWER IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED HEREIN OR (II) ANY BREACH OF THE FOREGOING
REPRESENTATION. THE PROVISIONS OF THIS SUBSECTION (M) SHALL SURVIVE THE
REPAYMENT OF THE DEBT.

       

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

       

      (o) Pending
Litigation. Except
as previously disclosed in writing to Lender, there are no actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or the Property in any court or before any Governmental
Authority which if adversely determined either individually or collectively has
or is reasonably likely to have a Material Adverse Effect. 

       

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


      
        
          
          

        

        
          -32-

          
            

          

        

        
          
          

        

      

       

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

       

      (r) Tax
Filings.
Borrower and, if applicable, each General Partner, have filed all federal, state
and local tax returns required to be filed and have paid or made adequate
provision for the payment of all federal, state and local taxes, charges and
assessments payable by Borrower and, if applicable, each General Partner.
Borrower and, if applicable, each General Partner, believe that their respective
tax returns properly reflect the income and taxes of Borrower and said General
Partner, 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.

       

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

       

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

       

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

       

      
        
          
          

        

        
          -33-

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      (iii) Borrower
shall not knowingly engage in or permit any transaction in connection with which
Borrower, Guarantor or any ERISA Affiliate could be subject to either a civil
penalty or tax assessed pursuant to Section 502(i) or 502(l) of ERISA or Section
4975 of the Code, permit any Welfare Plan to provide benefits, including without
limitation, medical benefits (whether or not insured), with respect to any
current or former employee of Borrower, Guarantor or any ERISA Affiliate beyond
his or her retirement or other termination of service other than (A) coverage
mandated by applicable law, (B) death or disability benefits that have been
fully provided for by paid up insurance or otherwise or (C) severance benefits,
permit the assets of Borrower or Guarantor to become “plan assets”, whether by
operation of law or under regulations promulgated under ERISA or adopt, amend
(except as may be required by applicable law) or increase the amount of any
benefit or amount payable under, or permit any ERISA Affiliate to adopt, amend
(except as may be required by applicable law) or increase the amount of any
benefit or amount payable under, any employee benefit plan (including, without
limitation, any employee welfare benefit plan) or other plan, policy or
arrangement, except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not result in a
material increase in benefits expense to Borrower, Guarantor or any ERISA
Affiliate.


      
        
          
          

        

        
          -34-

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      (w) Compliance with
Anti-Terrorism, Embargo and Anti-Money Laundering Laws. (i)
None of Borrower, General Partner, any Guarantor, or any Person who owns any
equity interest in or Controls Borrower, General Partner or any Guarantor
currently is identified on the OFAC List or otherwise qualifies as a Prohibited
Person, and Borrower has implemented procedures, approved by General Partner, to
ensure that no Person who now or hereafter owns an equity interest in Borrower
or General Partner is a Prohibited Person or Controlled by a Prohibited Person,
and (ii) none of Borrower, General Partner, or any Guarantor are in violation of
any Legal Requirements relating to anti-money laundering or anti-terrorism,
including, without limitation, Legal Requirements related to transacting
business with Prohibited Persons or the requirements of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the related
regulations issued thereunder, including temporary regulations, all as amended
from time to time. No tenant at the Property currently is identified on the OFAC
List or otherwise qualifies as a Prohibited Person, and, to the best of
Borrower’s knowledge, no tenant at the Property is owned or Controlled by a
Prohibited Person. Borrower has implemented procedures to ensure that no tenant
at the Property is a Prohibited Person or owned or Controlled by a Prohibited
Person.


      
        
          
          

        

        
          -35-

          
            

          

        

        
          
          

        

      

       

      Section
2.03. Further Acts,
etc.
Borrower will, at the cost of Borrower, and without expense to Lender, do,
execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, deeds of trust or deeds to secure debt, as applicable,
assignments, notices of assignments, transfers and assurances as Lender shall,
from time to time, reasonably require for the better assuring, conveying,
assigning, transferring, and confirming unto Lender the property and rights
hereby mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, pledged, assigned and hypothecated, or which Borrower may
be or may hereafter become bound to convey or assign to Lender, or for carrying
out or facilitating the performance of the terms of this Security Instrument or
for filing, registering or recording this Security Instrument and, on demand,
will execute and deliver and hereby authorizes Lender to execute in the name of
Borrower or without the signature of Borrower to the extent Lender may lawfully
do so, one or more financing statements, chattel mortgages or comparable
security instruments to evidence more effectively the lien hereof upon the
Property. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of protecting, perfecting, preserving and
realizing upon the interests granted pursuant to this Security Instrument and to
effect the intent hereof, all as fully and effectually as Borrower might or
could do; and Borrower hereby ratifies all that Lender shall lawfully do or
cause to be done by virtue hereof; provided that Lender shall not exercise such
power of attorney unless and until Borrower fails to take the required action
within five (5) Business Days of demand unless the failure to so exercise it
could, in Lender’s reasonable judgment, result in a Material Adverse Effect.
Upon receipt of an affidavit of an officer of Lender as to the loss, theft,
destruction or mutilation of the Note or any other Loan Document which is not of
public record, and, in the case of any such mutilation, upon surrender and
cancellation of such Note or other applicable Loan Document, Borrower will
issue, in lieu thereof, a replacement Note or other applicable Loan Document,
dated the date of such lost, stolen, destroyed or mutilated Note or other Loan
Document in the same principal amount thereof and otherwise of like
tenor.

       

      Section
2.04. Recording of Security
Instrument, etc.
Borrower forthwith upon the execution and delivery of this Security Instrument
and thereafter, at the request of Lender, from time to time, will cause this
Security Instrument, and any security instrument creating a lien or security
interest or evidencing the lien hereof upon the Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in order to publish
notice of and fully perfect and protect the lien or security interest hereof
upon, and the interest of Lender in, the Property. Borrower will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Security Instrument, any mortgage, deed of
trust or deed to secure debt, as applicable, supplemental hereto, any security
instrument with respect to the Property and any instrument of further assurance,
and all federal, state, county and municipal taxes, duties, imposts, assessments
and charges imposed on, or arising out of or in connection with the execution,
delivery and recording of this Security Instrument, any mortgage, deed of trust
or deed to secure debt, as applicable, supplemental hereto, any security
instrument with respect to the Property or any instrument of further assurance,
except where prohibited by law to do so, in which event Lender may declare the
Debt to be immediately due and payable. Borrower shall hold harmless and
indemnify Lender, and its successors and assigns, against any liability incurred
as a result of the imposition of any tax on the making and recording of this
Security Instrument.

       

      
        
          
          

        

        
          -36-

          
            

          

        

        
          
          

        

      

       

      Section
2.05. Representations and
Warranties as to the Property.
Borrower represents and warrants with respect to the Property as
follows:

       

      (a) Lien Priority and
Perfection. This
Security Instrument is a valid and enforceable (and, upon recordation in the
Official Records, will be a perfected) first lien on the Property, free and
clear of all encumbrances, security interests, and liens having priority over
the lien and security interest of this Security Instrument, except for the items
set forth as exceptions to or subordinate matters in the title insurance policy
insuring the lien of this Security Instrument, none of which, individually or in
the aggregate, materially interfere with the benefits of the security intended
to be provided by this Security Instrument, materially affect the value or
insurability of the Property, impair the use or operation of the Property for
the use currently being made thereof or impair Borrower’s ability to pay its
obligations in a timely manner (such items being the “Permitted
Encumbrances”).

       

      (b) Title.
Borrower has, subject only to the Permitted Encumbrances, good, insurable and
marketable fee simple title to the Premises, Improvements and Fixtures
(collectively, the “Realty”) and to
all easements and rights benefiting the Realty and has the right, power and
authority to mortgage, encumber, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, pledge, assign, and hypothecate the Property. Subject to
Permitted Encumbrances, 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 made by, through or under Borrower and will forever warrant and
defend the validity and priority of the lien and security interest created
herein against the claims of all Persons whomsoever claiming by, through or
under Borrower. The foregoing warranty of title shall survive the foreclosure of
this Security Instrument 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. In addition, there are no outstanding options or rights of first
refusal to purchase the Property or Borrower’s ownership thereof.

       

      (c) Taxes and
Impositions. Other
than those being contested in accordance herewith, all taxes and other
Impositions and governmental assessments due and owing and not delinquent in
respect of, and affecting, the Property have been paid. Other than those being
contested in accordance herewith, Borrower has paid all Impositions which
constitute special governmental assessments in full, except for those
assessments which are permitted by applicable Legal Requirements to be paid in
installments, in which case all installments which are due and payable have been
paid in full. There are no pending, or to Borrower’s best knowledge, proposed
special or other assessments for public improvements or otherwise affecting the
Property, nor are there any contemplated improvements to the Property that may
result in such special or other assessments.

       

      (d) Casualty; Flood
Zone. Except
as set forth in the Engineering Report and Environmental Report, the Realty is
in good repair and free and clear of any damage, destruction or casualty
(whether or not covered by insurance) that would materially affect the value of
the Realty or the use for which the Realty was intended, there exists no
structural or other material defects or damages in or to the Property and
Borrower has not received any written notice from any insurance company or
bonding company of any material defect or inadequacies in the Property, or any
part thereof, which would materially and adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.
No portion of the Premises is located in an “area of special flood hazard,” as
that term is defined in the regulations of the Federal Insurance Administration,
Department of Housing and Urban Development, under the National Flood Insurance
Act of 1968, as amended (24 CFR § 1909.1) or Borrower has obtained the flood
insurance required by Section 3.01(a)(vi) hereof. The Premises either does not
lie in a 100 year flood plain that has been identified by the Secretary of
Housing and Urban Development or any other Governmental Authority or, if it
does, Borrower has obtained the flood insurance required by Section 3.01(a)(vi)
hereof.


      
        
          
          

        

        
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      (e) Completion;
Encroachment. All
Improvements necessary for the efficient use and operation of the Premises,
including, without limitation, all Improvements which were included for purposes
of determining the appraised value of the Property in the Appraisal, have been
completed and none of said Improvements lie outside the boundaries and building
restriction lines of the Premises. Except as set forth in the title insurance
policy insuring the lien of this Security Instrument, no improvements on
adjoining properties encroach upon the Premises.

       

      (f) Separate
Lot. The
Premises are taxed separately without regard to any other real estate and
constitute a legally subdivided lot under all applicable Legal Requirements (or,
if not subdivided, no subdivision or platting of the Premises is required under
applicable Legal Requirements), and for all purposes may be mortgaged,
encumbered, conveyed or otherwise dealt with as an independent parcel. Except as
previously disclosed in writing to Lender, the Property does not benefit from
any tax abatement or exemption.

       

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

       

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

       

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

       

      (j) Property
Proceedings. Other
than as previously disclosed in writing by Borrower to Lender, there are no
actions, suits or proceedings pending or, to Borrower’s knowledge, threatened in
any court or before any Governmental Authority or arbitration board or tribunal
(i) relating to (A) the zoning of the Premises or any part thereof, (B) any
certificates of occupancy, licenses, registrations, permits, consents or
approvals issued with respect to the Property or any part thereof, (C) the
condemnation of the Property or any part thereof, or (D) the condemnation or
relocation of any roadways abutting the Premises required for access or the
denial or limitation of access to the Premises or any part thereof from any
point of access to the Premises, (ii) asserting that (A) any such zoning,
certificates of occupancy, licenses, registrations, permits, consents and/or
approvals do not permit the operation of any material portion of the Realty as
presently being conducted, (B) any material improvements located on the Property
or any part thereof cannot be located thereon or operated with their intended
use or (C) the operation of the Property or any part thereof is in violation in
any material respect of any Environmental Statutes, Development Laws or other
Legal Requirements or Space Leases or Property Agreements or (iii) which might
(A) affect the validity or priority of any Loan Document or (B) have a Material
Adverse Effect.


      
        
          
          

        

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

       

      (l) Mechanics’
Liens. The
Property is free and clear of any mechanics’ liens or liens in the nature
thereof, and no rights are outstanding that under law could give rise to any
such liens, any of which liens are or may be prior to, or equal with, the lien
of this Security Instrument, except those which are insured against by the title
insurance policy insuring the lien of this Security Instrument. No stop notices
have been served with respect to any work, labor or materials furnished to or
for the benefit of the Property or any portion thereof, and no disputes
currently exist with respect to any of such matters.

       

      (m) Title
Insurance. Lender
has received a lenders’ commitment to issue a title insurance policy insuring
this Security Instrument as a first lien on the Realty subject only to Permitted
Encumbrances.

       

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

       

      (o) Space
Leases.

       

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

       

      (ii) Each
Space Lease constitutes the legal, valid and binding obligation of Borrower and,
to the knowledge of Borrower, is enforceable against the tenant thereof. Except
as set forth on the Rent Roll or in any estoppel certificate delivered to
Lender, no default exists, or with the passing of time or the giving of notice
would exist, (A) under any Major Space Lease or (B) under any other Space Leases
which would, in the aggregate, have a Material Adverse Effect.

       

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


      
        
          
          

        

        
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      (iv) Except as
set forth on the Rent Roll or previously disclosed in writing to Lender, all
material work to be performed by Borrower under the Space Leases has been
substantially performed, all contributions to be made by Borrower to the tenants
thereunder have been made except for any held-back amounts, and all other
conditions precedent to each such tenant’s obligations thereunder have been
satisfied.

       

      (v) Except as
previously disclosed to Lender in writing or in the Space Leases provided to
Lender, there are no options to terminate any Space Lease.

       

      (vi) Except as
previously disclosed in writing to Lender, each tenant under a Major Space Lease
has entered into occupancy of the demised premises to the extent required under
the terms of its Major Space Lease, and each such tenant is open and conducting
business with the public in the demised premises. Except as previously disclosed
in writing to Lender, to the best knowledge of Borrower, after due inquiry, each
tenant under a Lease other than a Major Space Lease has entered into occupancy
of its demised premises under its Lease to the extent required under the terms
of its Lease and each such tenant is open and conducting business with the
public in the demised premises.

       

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

       

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

       

      (ix) Except as
set forth on the Rent Roll, each tenant under each Space Lease is free from
bankruptcy, reorganization or arrangement proceedings or a general assignment
for the benefit of creditors.

       

      (x) No Space
Lease provides any party with the right to obtain a lien or encumbrance upon the
Property superior to the lien of this Security Instrument or to subject to the
Property to any mechanics lien. 

       

      (p) Property
Agreements.

       

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

       

      (ii) No
Property Agreement provides any party with the right to obtain a lien or
encumbrance upon the Property superior to the lien of this Security
Instrument.

       

      (iii) To the
best of Borrower’s knowledge, no default exists or with the passing of time or
the giving of notice or both would exist under any Property Agreement which
would, individually or in the aggregate, have a Material Adverse
Effect.


      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

      (q) Personal
Property.
Borrower has delivered to Lender a true, correct and complete schedule of all
personal property, if any, owned by Borrower and located upon the Realty or used
in connection with the use or operation of the Realty and Borrower represents
that it has good and marketable title to all such personal property, free and
clear of any liens or security interests, except for liens and security
interests created under the Loan Documents, liens and security interests
otherwise disclosed to Lender in writing and disclosed in the title insurance
policy insuring the lien of this Security Instrument, and liens and security
interests which describe the equipment and other personal property owned by
tenants.

       

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

       

      (s) Security
Deposits. All
security deposits with respect to the Property on the date hereof have been
transferred to the Security Deposit Account on the date hereof, and Borrower is
in compliance with all Legal Requirements relating to such security deposits as
to which failure to comply might, individually or in the aggregate, have a
Material Adverse Effect. 


      
        
          
          

        

        
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      (t) Appraisal.
Borrower has no knowledge that any of the facts or assumptions on which the
Appraisal was based are false or incomplete in any material respect and has no
information that would reasonably suggest that the fair market value determined
in the Appraisal does not reflect the actual fair market value of the
Property.

       

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

       

      Section
2.06. Removal of
Lien. (a)
Borrower shall, at its expense, maintain this Security Instrument as a first
lien on the Property and shall keep the Property free and clear of all liens and
encumbrances of any kind and nature other than the Permitted Encumbrances.
Borrower shall, within thirty (30) days following receipt of notice of the
filing thereof, promptly discharge of record, by bond or otherwise, any such
liens and, promptly upon request by Lender, shall deliver to Lender evidence
reasonably satisfactory to Lender of the discharge thereof. 

       

      (b) Without
limitation to the provisions of Section 2.06(a) hereof, Borrower shall (i) pay,
from time to time when the same shall become due, all claims and demands of
mechanics, materialmen, laborers, and others which, if unpaid, might result in,
or permit the creation of, a lien on the Property or any part thereof, (ii)
cause to be removed of record (by payment or posting of bond or settlement or
otherwise) any mechanics’, materialmens’, laborers’ or other lien on the
Property, or any part thereof, or on the revenues, rents, issues, income or
profit arising therefrom, and (iii) in general, do or cause to be done, without
expense to Lender, everything reasonably necessary to preserve in full the lien
of this Security Instrument. If Borrower fails to comply with the requirements
of this Section 2.06(b), then, upon ten (10) Business Days’ prior notice to
Borrower, Lender may, but shall not be obligated to, pay any such lien, and
Borrower shall, within ten (10) Business Days after Lender’s demand therefor,
reimburse Lender for all sums so expended, together with interest thereon at the
Default Rate from the date advanced, all of which shall be deemed part of the
Debt. Nothing contained herein shall be deemed a consent or request of Lender,
express or implied, by inference or otherwise, to the performance of any
alteration, repair or other work by any contractor, subcontractor or laborer or
the furnishing of any materials by any materialmen in connection
therewith.

       

      (c) Notwithstanding
the foregoing, Borrower may contest any lien (other than a lien relating to
non-payment of Impositions, the contest of which shall be governed by Section
4.04 hereof) of the type set forth in subparagraph (b)(ii) of this Section 2.06
provided that, following prior notice to Lender (i) Borrower is contesting the
validity of such lien with due diligence and in good faith and by appropriate
proceedings, without cost or expense to Lender or any of its agents, employees,
officers, or directors, (ii) Borrower shall preclude the collection of, or other
realization upon, any contested amount from the Property or any revenues from or
interest in the Property, (iii) neither the Property nor any part thereof nor
interest therein, shall be in any danger of being sold, forfeited or lost by
reason of such contest by Borrower, (iv) such contest by Borrower shall not
affect the ownership, use or occupancy of the Property, (v) such contest by
Borrower shall not subject Lender or Borrower to the risk of civil or criminal
liability (other than the civil liability of Borrower for the amount of the lien
in question), (vi) such lien is subordinate to the lien of this Security
Instrument, (vii) Borrower has not consented to such lien, (viii) Borrower has
given Lender prompt notice of the filing of such lien and, upon request by
Lender from time to time, notice of the status of such contest by Borrower
and/or confirmation of the continuing satisfaction of the conditions set forth
in this Section 2.06(c), (ix) Borrower shall promptly pay the obligation secured
by such lien upon a final determination of Borrower’s liability therefor, and
(x) Borrower shall deliver written notice of its intent to contest such lien at
least thirty (30) days before commencing such contest and also shall deliver to
Lender, if requested by Lender, cash, a bond or other security acceptable to
Lender equal to 125% of the contested amount pursuant to collateral arrangements
reasonably satisfactory to Lender. 


      
        
          
          

        

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

       

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

       

      Section
2.09. Financial
Reports.
(a)
Borrower
will keep and maintain or will cause to be kept and maintained on a Fiscal Year
basis, in accordance with GAAP (or such other accounting basis reasonably
acceptable to Lender) consistently applied, proper and accurate books, tax
returns, records and accounts reflecting (i) all of the financial affairs of
Borrower and (ii) all items of income and expense in connection with the
operation of the Property or in connection with any services, equipment or
furnishings provided in connection with the operation thereof, whether such
income or expense may be realized by Borrower or by any other Person whatsoever,
excepting lessees unrelated to and unaffiliated with Borrower who have leased
from Borrower portions of the Premises for the purpose of occupying the same.
Lender shall have the right from time to time at all times during normal
business hours upon reasonable advance notice to examine such books, tax
returns, records and accounts at the office of Borrower or other Person
maintaining such books, tax returns, records and accounts and to make such
copies or extracts thereof as Lender shall desire. During the continuance of an
Event of Default, Borrower shall pay any costs and expenses incurred by Lender
to examine Borrower’s and Guarantor’s accounting records with respect to the
Property, as Lender shall determine to be necessary or appropriate in the
protection of Lender’s interest.

       

      (b) Borrower
will furnish Lender (i) annually, within one hundred twenty (120) days following
the end of each Fiscal Year of Borrower and (ii) on a quarterly basis, within
thirty (30) days following the end of each fiscal quarter of Borrower, with a
complete copy of Borrower’s financial statement consistently applied covering
(A) all of the financial affairs of Borrower and (B) the operation of the
Property for such Fiscal Year or fiscal quarters, as applicable, and containing
a statement of revenues and expenses, a statement of assets and liabilities and
a statement of Borrower’s equity. Each annual financial statement shall be
prepared by an Independent certified public accountant that is reasonably
acceptable to Lender in accordance with GAAP (or such other accounting basis
reasonably acceptable to Lender). Upon request made in connection with a
Securitization of the Loan or after the occurrence of an Event of Default, such
annual financial statements shall be audited by an Independent certified public
accountant that is reasonably acceptable to Lender in accordance with GAAP.
Together with the financial statements required to be furnished pursuant to this
Section 2.09(b), Borrower shall furnish to Lender (A) an Officer’s Certificate
certifying as of the date thereof (1) that the financial statements accurately
represent the results of operations and financial condition of Borrower and the
Property all in accordance with GAAP (or such other accounting basis reasonably
acceptable to Lender) consistently applied, and (2) whether, to the best of such
officer’s knowledge, there exists a Default under the Note or any other Loan
Document executed and delivered by Borrower, and if such event or circumstance
exists, the nature thereof, the period of time it has existed and the action
then being taken to remedy such event or circumstance and (B) together with the
financial statements delivered pursuant to Section 2.09(b)(ii) above, a
statement showing (1) Pro-Forma Net Operating Income at the end of the most
recent fiscal quarter (subject to verification by Lender in its reasonable
discretion) and (2) the calculation of Debt Service Coverage.


      
        
          
          

        

        
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      (c) Borrower
will furnish Lender monthly, within twenty (20) days following the end of each
month, with (i) a true, complete and correct cash flow statement with respect to
the Property in the form attached hereto as Exhibit C and made a part hereof,
showing (A) all cash receipts of any kind whatsoever and all cash payments and
disbursements, (B) year-to-date summaries of such cash receipts, payments and
disbursements, and (C) during an O&M Operative Period, Pro Forma Net
Operating Income (subject to the verification by Lender) and a calculation of
Debt Service Coverage, (ii) a certification of Manager stating that such cash
flow statement is true, complete and correct and a list of all litigation and
proceedings affecting Borrower or the Property in which the amount involved is
$250,000 or more, if not covered by insurance (or $2,500,000 or more whether or
not covered by insurance), (iii) the sales per square foot for each lessee under
the Space Leases to the extent such information is required to be delivered by
such lessees and (iv) an occupancy report for the Property.

       

      (d) Borrower
will furnish Lender monthly, within twenty (20) days following the end of each
month, with a certification of Manager stating that all Operating Expenses with
respect to the Property which had accrued as of the last day of the month
preceding the delivery of the cash flow statement referred to in clause (c)
above have been fully paid or otherwise reserved for by Manager (any such
certification or any certification furnished by a Manager pursuant to clause (c)
above, a “Manager
Certification”).

       

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

       

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

       

      (g) Borrower
shall cause Manager to furnish to Lender, within twenty (20) days following the
end of each month, a schedule of tenant security deposits showing any activity
in the Security Deposit Account for such month, together with a certification of
Manager as to the balance in such Security Deposit Account and that such tenant
security deposits are being held in accordance with all Legal
Requirements.

       

      (h) Borrower
will furnish Lender annually, within ninety (90) days after the end of each
Fiscal Year, with a report setting forth (i) the Net Operating Income for such
Fiscal Year, (ii) the average occupancy rate of the Property during such Fiscal
Year, and (iii) the capital repairs, replacements and improvements performed at
the Property during such Fiscal Year and the aggregate Recurring Replacement
Expenditures made in connection therewith.


      
        
          
          

        

        
          -44-

          
            

          

        

        
          
          

        

      

       

      (i) Borrower
shall furnish to Lender annually, within thirty (30) days of filing its
respective tax return, a copy of such tax return and either a copy of the tax
return of Guarantor within such thirty (30) day period or within ninety (90)
days after the end of each Fiscal Year, a certificate from an Independent
certified public accountant indicating the net worth of the
Guarantor.

       

      (j) Borrower
shall submit to Lender for Lender’s written approval an Annual Budget not later
than sixty (60) days prior to the commencement of each Fiscal Year or, with
respect to the Fiscal Year in which the Closing Date occurs, within sixty (60)
days of the Closing Date, in form satisfactory to Lender setting forth in
reasonable detail budgeted monthly operating income and monthly operating
capital and other expenses for the Property. Each Annual Budget shall contain,
among other things, limitations on management fees, third party service fees,
and other expenses as Borrower may reasonably determine. Lender shall have the
right to approve such Annual Budget which approval shall not be unreasonably
withheld, and in the event that Lender objects to the proposed Annual Budget
submitted by Borrower, Lender shall advise Borrower of such objections within
ten (10) Business Days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall, within
four (4) Business Days after receipt of notice of any such objections, revise
such Annual Budget and resubmit the same to Lender. Lender shall advise Borrower
of any objections to such revised Annual Budget within seven (7) Business Days
after receipt thereof (and deliver to Borrower a reasonably detailed description
of such objections) and Borrower shall revise the same in accordance with the
process described herein until Lender approves an Annual Budget, provided,
however, that if Lender shall not advise Borrower of its objections to any
proposed Annual Budget within the applicable time period set forth in this
Section, then such proposed Annual Budget shall be deemed approved by Lender.
Until such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in Basic Carrying Costs and
utilities expenses. In the event that Borrower must incur an Extraordinary
Expense, then Borrower shall promptly deliver to Lender a reasonably detailed
explanation of such proposed Extraordinary Expense for Lender’s approval, which
approval may be granted or denied in Lender’s reasonable discretion; provided,
however, so long as no O&M Operative Period is then in existence, no
approval from Lender shall be required if (i) a single Extraordinary Expense is
equal to or less than five percent (5%) of the amount set forth in the Approved
Annual Budget for expenses related to such Extraordinary Expense, or (ii) if no
sum was budgeted for such expense in the Approved Annual Budget, the
Extraordinary Expense is less than or equal to five percent (5%) of the Approved
Annual Budget, provided that all Extraordinary Expenses in any Fiscal Year do
not exceed five percent (5%) of the Approved Annual Budget. The Approved Annual
Budget shall be prepared for the Property.

       

      (k) In the
event that Borrower fails to deliver any of the financial statements, reports or
other information required to be delivered to Lender pursuant to this Section
2.09 on or prior to their due dates, if any such failure shall continue for
fifteen (15) days following notice thereof from Lender, without waiving any
default arising out of such failure, Borrower shall pay to Lender on each
Payment Date for each month or portion thereof that any such financial
statement, report or other information remains undelivered, an administrative
fee in the amount of Two Thousand Five Hundred Dollars ($2,500) and (ii) if
Borrower has not delivered any such reports within five (5) Business Days of
Lender’s giving an additional notice to Borrower requesting the missing
financial statement, report or other information, an O&M Operative Period
shall be deemed to have commenced. Borrower agrees that such administrative fee
(i) is a fair and reasonable fee necessary to compensate Lender for its
additional administrative costs and increased costs relating to Borrower’s
failure to deliver the aforementioned statements, reports or other items as and
when required hereunder and (ii) is not a penalty.


      
        
          
          

        

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

       

      Section
2.11. Updates of
Representations.
Borrower shall deliver to Lender within ten (10) Business Days of the request of
Lender an Officer’s Certificate updating all of the representations and
warranties contained in this Security Instrument and the other Loan Documents
and certifying that all of the representations and warranties contained in this
Security Instrument and the other Loan Documents, as updated pursuant to such
Officer’s Certificate, are true, accurate and complete as of the date of such
Officer’s Certificate or shall set forth the exceptions to representations
and/or warranties in reasonable detail, as applicable, and, upon Lender’s
request for further information with respect to such exceptions, shall provide
Lender such additional information as Lender may reasonably request.
Notwithstanding the foregoing, provided that no Event of Default has occurred
and is continuing, Borrower shall not be required to deliver the foregoing
Officer’s Certificate more than two (2) times in any Loan Year. 

       

      ARTICLE III:
INSURANCE AND CASUALTY
RESTORATION

       

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

       

      (a) (i) Insurance
against loss or damage by fire, casualty and other hazards included in an
“all-risk” coverage endorsement or its equivalent, with such endorsements as
Lender may from time to time reasonably require and which are customarily
required by Institutional Lenders of similar properties similarly situated,
including, without limitation, if the Property constitutes a legal
non-conforming use, an ordinance of law coverage endorsement which contains
“Demolition Cost”, “Loss Due to Operation of Law” and “Increased Cost of
Construction” coverages, covering the Property in an amount not less than the
greater of (A) 100% of the insurable replacement value of the Property
(exclusive of the Premises and footings and foundations) and (B) such other
amount as is necessary to prevent any reduction in such policy by reason of and
to prevent Borrower, Lender or any other insured thereunder from being deemed to
be a co-insurer. Not less frequently than once every three (3) years, Borrower,
at its option, shall either (A) have the Appraisal updated or obtain a new
appraisal of the Property, (B) have a valuation of the Property made by or for
its insurance carrier conducted by an appraiser experienced in valuing
properties of similar type to that of the Property which are in the geographical
area in which the Property is located or (C) provide such other evidence as
will, in Lender’s sole judgment, enable Lender to determine whether there shall
have been an increase in the insurable value of the Property and Borrower shall
deliver such updated Appraisal, new appraisal, insurance valuation or other
evidence acceptable to Lender, as the case may be, and, if such updated
Appraisal, new appraisal, insurance valuation, or other evidence acceptable to
Lender reflects an increase in the insurable value of the Property, the amount
of insurance required hereunder shall be increased accordingly and Borrower
shall deliver evidence satisfactory to Lender that such policy has been so
increased.


      
        
          
          

        

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

       

      (iii) Business
interruption, rent loss or other similar insurance (A) with loss payable to
Lender, (B) covering all risks required to be covered by the insurance provided
for in Section 3.01(a)(i) hereof and (C) in an amount not less than 90% of the
projected fixed or base rent plus percentage rent for the succeeding eighteen
(18) month period based on an occupancy rate of 100%. Such insurance coverage
shall provide a six (6) month extended period of indemnity. The amount of such
insurance shall be determined upon the execution of this Security Instrument,
and not more frequently than once each calendar year thereafter based on
Borrower’s reasonable estimate of projected fixed or base rent plus percentage
rent, from the Property for the next succeeding eighteen (18) months. In the
event the Property shall be damaged or destroyed, Borrower shall and hereby does
assign to Lender all payment of claims under the policies of such insurance, and
all amounts payable thereunder, and all net amounts, shall be collected by
Lender under such policies and shall be applied in accordance with this Security
Instrument; provided, however, that nothing herein contained shall be deemed to
relieve Borrower of its obligations to timely pay all amounts due under the Loan
Documents.

       

      (iv) Intentionally
Deleted.

       

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

       

      (vi) Flood
insurance in an amount equal to the full insurable value of the Property or the
maximum amount available, whichever is less, if the Improvements are located in
an area designated by the Secretary of Housing and Urban Development as being
“an area of special flood hazard” under the National Flood Insurance Program
(i.e., having
a one percent or greater chance of flooding), and if flood insurance is
available under the National Flood Insurance Act.

       

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


      
        
          
          

        

        
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      (viii) Intentionally
Deleted.

       

      (ix) 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 (i), (ii) and
(iii) above.

       

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

       

      (b) Borrower
shall cause any Manager of the Property to maintain fidelity insurance in an
amount equal to $5,000,000 or such lesser amount as Lender shall
approve.

       

      Section
3.02. Policy
Terms. (a)
All
insurance required by this Article III shall be in the form (other than with
respect to Sections 3.01(a)(vi) and (vii) above when insurance in those two
sub-sections is placed with a governmental agency or instrumentality on such
agency’s forms) and amount and with deductibles as, from time to time, shall be
reasonably acceptable to Lender, under valid and enforceable policies issued by
financially responsible insurers authorized to do business in the State where
the Property is located, with a general policyholder’s service rating of not
less than A- and a financial rating of not less than X as rated in the most
currently available Best’s Insurance Reports (or the equivalent, if such rating
system shall hereafter be altered or replaced) and shall have a claims paying
ability rating and/or financial strength rating, as applicable, of not less than
“AA” (or its equivalent), or such lower claims paying ability rating and/or
financial strength rating, as applicable, as Lender shall, in its sole and
absolute discretion, consent to, from a Rating Agency (one of which after a
Securitization in which Standard & Poor’s rates any securities issued in
connection with such Securitization, shall be Standard & Poor’s). Originals
or certified copies of all insurance policies shall be delivered to and held by
Lender. All such policies (except policies for worker’s compensation) shall name
Lender, its successors and/or assigns as an additional named insured, shall
provide for loss payable to Lender, its successors and/or assigns and shall
contain (or have attached): (i) standard “non-contributory mortgagee”
endorsement or its equivalent relating, inter alia, to
recovery by Lender notwithstanding the negligent or willful acts or omissions of
Borrower; (ii) a waiver of subrogation endorsement as to Lender; (iii) an
endorsement indicating that neither Lender nor Borrower shall be or be deemed to
be a co-insurer with respect to any casualty risk insured by such policies and
shall provide for a deductible per loss of an amount not more than the lesser of
(x) that which is customarily maintained by owners of similar properties
similarly situated and (y) five percent (5%) of the Adjusted Net Cash Flow, and
(iv) a provision that such policies shall not be canceled, terminated, denied
renewal or amended, including, without limitation, any amendment reducing the
scope or limits of coverage, without at least thirty (30) days’ prior written
notice to Lender in each instance. Not less than thirty (30) days prior to the
expiration dates of the insurance policies obtained pursuant to this Security
Instrument, originals or certified copies of renewals of such policies (or
certificates evidencing such renewals) bearing notations evidencing the payment
of premiums or accompanied by other reasonable evidence of such payment (which
premiums shall not be paid by Borrower through or by any financing arrangement
which would entitle an insurer to terminate a policy) shall be delivered by
Borrower to Lender. Borrower shall not carry separate insurance, concurrent in
kind or form or contributing in the event of loss, with any insurance required
under this Article III.


      
        
          
          

        

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

       

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

       

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

       

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


      
        
          
          

        

        
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      (b) In the
event of the foreclosure of this Security Instrument or any other transfer of
title or assignment of all or any part of the Property in extinguishment, in
whole or in part, of the Debt, all right, title and interest of Borrower in and
to all policies of insurance required by this Security Instrument shall inure to
the benefit of the successor in interest to Borrower or the purchaser of the
Property to the extent that such policies are assignable or transferable. If,
prior to the receipt by Lender of any proceeds, the Property or any portion
thereof shall have been sold on foreclosure of this Security Instrument or by
deed in lieu thereof or otherwise, or any claim under such insurance policy
arising during the term of this Security Instrument is not paid until after the
extinguishment of the Debt, and Lender shall not have received the entire amount
of the Debt outstanding at the time of such extinguishment, whether or not a
deficiency judgment on this Security Instrument shall have been sought or
recovered or denied, then, the proceeds of any such insurance to the extent of
the amount of the Debt not so received, shall be paid to and be the property of
Lender, together with interest thereon at the Default Rate, and the reasonable
attorney’s fees, costs and disbursements incurred by Lender in connection with
the collection of the proceeds which shall be paid to Lender and Borrower hereby
assigns, transfers and sets over to Lender all of Borrower’s right, title and
interest in and to such proceeds. Notwithstanding any provisions of this
Security Instrument to the contrary, Lender shall not be deemed to be a trustee
or other fiduciary with respect to its receipt of any such proceeds, which may
be commingled with any other monies of Lender; provided, however, that Lender
shall use such proceeds for the purposes and in the manner permitted by this
Security Instrument. Any proceeds deposited with Lender shall be held by Lender
in an interest-bearing account, but Lender makes no representation or warranty
as to the rate or amount of interest, if any, which may accrue on such deposit
and shall have no liability in connection therewith. Interest accrued, if any,
on the proceeds shall be deemed to constitute a part of the proceeds for
purposes of this Security Instrument. The provisions of this Section 3.03(b)
shall survive the termination of this Security Instrument by foreclosure, deed
in lieu thereof or otherwise as a consequence of the exercise of the rights and
remedies of Lender hereunder after a Default.

       

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


      
        
          
          

        

        
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      (ii) Notwithstanding
the foregoing provisions of this Section 3.04, upon the occurrence of any damage
to or destruction of the Property, provided that such damage or destruction is
not a Substantial Casualty, if in Lender’s reasonable judgment the cost of
repair of or restoration to the Property required as a result of any damage or
destruction is less than $1,000,000 in the aggregate and the Work can be
completed in less than one hundred eighty (180) days (but in no event beyond the
date which is six (6) months prior to the Maturity Date), then Lender, shall
permit Borrower to apply for and receive the Insurance Proceeds directly from
the insurer (and Lender shall advise the insurer to pay over such Insurance
Proceeds directly to Borrower), to the extent required to pay for any such Work,
with any excess thereof to be retained by Borrower.

       

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

       

      (iv) If (A) an
Event of Default shall have occurred and is continuing, (B) Lender is not
reasonably satisfied that the Debt Service Coverage, after substantial
completion of the Work, will be at least equal to the Required Debt Service
Coverage, (C) more than thirty percent (30%) of the reasonably estimated fair
market value of the Property is damaged or destroyed, (D) Lender is not
reasonably satisfied that the Work can be completed six (6) months prior to
Maturity or (E) Lender is not reasonably satisfied that Leases covering at least
75% of the rentable square footage for the Property (immediately prior to such
damage or destruction) will not be terminated due to the casualty during and
following the restoration, or (F) Lender is not reasonably satisfied that the
Work can be completed within twelve (12) months of the damage to or destruction
of the Property (each, a “Substantial
Casualty”),
Lender shall have the option, in its sole discretion to apply any Insurance
Proceeds it may receive pursuant to this Security Instrument (less any
reasonable cost to Lender of recovering and paying out such proceeds incurred
pursuant to the terms hereof and not otherwise reimbursed to Lender, including,
without limitation, reasonable attorneys’ fees and expenses) to the payment of
the Debt, without any prepayment fee or charge of any kind, or to allow such
proceeds to be used for the Work pursuant to the terms and subject to the
conditions of Section 3.04(b) hereof and the other applicable sections of this
Article III.

       

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

       

      (b) If any
Condemnation Proceeds in accordance with Section 6.01(a), or any Insurance
Proceeds in accordance with Section 3.04(a), are to be applied to the repair,
restoration or rebuilding of the Property, then such proceeds shall be deposited
into a segregated interest-bearing bank account at the Bank, which shall be an
Eligible Account, held by Lender and shall be paid out from time to time to
Borrower as the Work progresses (less any reasonable cost to Lender of
recovering and paying out such proceeds, including, without limitation,
reasonable attorneys’ fees and costs allocable to inspecting the Work and the
plans and specifications therefor), subject to Section 5.13 hereof and to all of
the following conditions:


      
        
          
          

        

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

       

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

       

      (iii) Each
request for payment shall be made on not less than ten (10) days’ prior notice
to Lender and shall be accompanied by a certificate of an Architect or Engineer,
or, if the Work is not required to be supervised by an Architect or Engineer, by
an Officer’s Certificate stating (A) that payment is for Work completed or
materials delivered in compliance with the plans and specifications, if required
under clause (ii) above, (B) that the sum requested is required to reimburse
Borrower for payments by Borrower to date, or is due to the contractors,
subcontractors, materialmen, laborers, engineers, architects or other Persons
rendering services or materials for the Work (giving a brief description of such
services and materials), and that when added to all sums previously paid out by
Lender does not exceed the value of the Work done to the date of such
certificate, (C) if the sum requested is to cover payment relating to repair and
restoration of personal property required or relating to the Property, that
title to the personal property items covered by the request for payment is
vested in Borrower (unless Borrower is lessee of such personal property), and
(D) that the Insurance Proceeds and other amounts deposited by Borrower held by
Lender after such payment is equal to or more than the estimated remaining cost
to complete such Work; provided, however, that if such certificate is given by
an Architect or Engineer, such Architect or Engineer shall certify as to clause
(A) above, and such Officer’s Certificate shall certify as to the remaining
clauses above, and provided, further, that Lender shall not be obligated to
disburse such funds if Lender determines, in Lender’s reasonable discretion,
that Borrower shall not be in compliance with this Section 3.04(b).
Additionally, each request for payment shall contain a statement signed by
Borrower stating that the requested payment is for Work satisfactorily done to
date or for materials for the Work.


      
        
          
          

        

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

       

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

       

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

       

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


      
        
          
          

        

        
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      (viii) Upon
failure on the part of Borrower promptly to commence the Work as provided for
herein or to proceed diligently and continuously to completion of the Work,
subject to Force Majeure, not to exceed sixty (60) days, which failure shall
continue after notice for thirty (30) days, Lender may apply any Insurance
Proceeds or Condemnation Proceeds it then or thereafter holds to the payment of
the Debt in accordance with the provisions of the Note; provided, however, that
Lender shall be entitled to apply at any time all or any portion of the
Insurance Proceeds or Condemnation Proceeds it then holds to the extent
necessary to cure any Event of Default.

       

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

       

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

       

      Section
3.05. Compliance with Insurance
Requirements.
Borrower promptly shall comply with, and shall cause the Property to comply
with, all Insurance Requirements, even if such compliance requires structural
changes or improvements or would result in interference with the use or
enjoyment of the Property or any portion thereof provided Borrower shall have a
right to contest in good faith and with diligence such Insurance Requirements
provided (a) no Event of Default shall be continuing during such contest and
such contest shall not subject the Property or any portion thereof to any lien
or affect the priority of the lien of this Security Instrument, (b) failure to
comply with such Insurance Requirements will not subject Lender or any of its
agents, employees, officers or directors to any civil or criminal liability, (c)
such contest will not cause any reduction in insurance coverage, (d) such
contest shall not affect the ownership, use or occupancy of the Property, (e)
the Property or any part thereof or any interest therein shall not be in any
danger of being sold, forfeited or lost by reason of such contest by Borrower,
(f) Borrower has given Lender prompt notice of such contest and, upon request by
Lender from time to time, notice of the status of such contest by Borrower
and/or information of the continuing satisfaction of the conditions set forth in
clauses (a) through (e) of this Section 3.05, (g) upon a final determination of
such contest, Borrower shall promptly comply with the requirements thereof, and
(h) prior to and during such contest, Borrower shall furnish to Lender security
satisfactory to Lender, in its reasonable discretion, against loss or injury by
reason of such contest or the non-compliance with such Insurance Requirement
(and if such security is cash, Lender shall deposit the same in an
interest-bearing account and interest accrued thereon, if any, shall be deemed
to constitute a part of such security for purposes of this Security Instrument,
but Lender (i) makes no representation or warranty as to the rate or amount of
interest, if any, which may accrue thereon and shall have no liability in
connection therewith and (ii) shall not be deemed to be a trustee or fiduciary
with respect to its receipt of any such security and any such security may be
commingled with other monies of Lender). Upon completion of any contest, Lender
shall return the security , if any, deposited with Lender pursuant to clause (h)
of this Section 3.05. If Borrower shall use the Property or any portion thereof
in any manner which could permit the insurer to cancel any insurance required to
be provided hereunder, Borrower immediately shall obtain a substitute policy
which shall satisfy the requirements of this Security Instrument and which shall
be effective on or prior to the date on which any such other insurance policy
shall be canceled. Borrower shall not by any action or omission invalidate any
insurance policy required to be carried hereunder unless such policy is replaced
as aforesaid, or materially increase the premiums on any such policy above the
normal premium charged for such policy. Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Insurance Proceeds lawfully or
equitably payable to Lender in connection with the transaction contemplated
hereby.


      
        
          
          

        

        
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      Section
3.06. Event of Default During
Restoration.
Notwithstanding anything to the contrary contained in this Security Instrument
including, without limitation, the provisions of this Article III, if, at the
time of any casualty affecting the Property or any part thereof, or at any time
during any Work, or at any time that Lender is holding or is entitled to receive
any Insurance Proceeds pursuant to this Security Instrument, a Default exists
and is continuing (whether or not it constitutes an Event of Default), Lender
shall then have no obligation to make such proceeds available for Work and
Lender shall have the right and option, to be exercised in its sole and absolute
discretion and election, with respect to the Insurance Proceeds, either to
retain and apply such proceeds in reimbursement for the actual costs, fees and
expenses incurred by Lender in accordance with the terms hereof in connection
with the adjustment of the loss and any balance toward payment of the Debt in
such priority and proportions as Lender, in its sole discretion, shall deem
proper, or towards the Work, upon such terms and conditions as Lender shall
determine, or to cure such Default, or to any one or more of the foregoing as
Lender, in its sole and absolute discretion, may determine. If Lender shall
receive and retain such Insurance Proceeds, the lien of this Security Instrument
shall be reduced only by the amount thereof received, after reimbursement to
Lender of expenses of collection, and actually applied by Lender in reduction of
the principal sum payable under the Note in accordance with the
Note.

       

      Section
3.07. Application of Proceeds to
Debt Reduction.
(a) No
damage to the Property, or any part thereof, by fire or other casualty
whatsoever, whether such damage be partial or total, shall relieve Borrower from
its liability to pay in full the Debt and to perform its obligations under this
Security Instrument and the other Loan Documents.

       

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

       

      ARTICLE IV:
IMPOSITIONS

       

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

       

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


      
        
          
          

        

        
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      (c) Borrower
shall pay all taxes, charges, filing, registration and recording fees, excises
and levies imposed upon Lender by reason of or in connection with its ownership
of any Loan Document or any other instrument related thereto, or resulting from
the execution, delivery and recording of, or the lien created by, or the
obligation evidenced by, any of them, other than income, franchise and other
similar taxes imposed on Lender and shall pay all corporate stamp taxes, if any,
and other taxes, required to be paid on the Loan Documents. If Borrower shall
fail to make any such payment within ten (10) days after written notice thereof
from Lender, Lender shall have the right, but shall not be obligated, to pay the
amount due, and Borrower shall reimburse Lender therefor, on demand, with
interest thereon at the Default Rate from the date of the advance thereof to the
date of repayment, and such amount shall constitute a portion of the Debt
secured by this Security Instrument.

       

      Section
4.02. Deduction from
Value. In the
event of the passage after the date of this Security Instrument of any Legal
Requirement deducting from the value of the Property for the purpose of
taxation, any lien thereon or changing in any way the Legal Requirements now in
force for the taxation of this Security Instrument and/or the Debt for federal,
state or local purposes, or the manner of the operation of any such taxes so as
to adversely affect the interest of Lender, or impose any tax or other charge on
any Loan Document, then Borrower will pay such tax, with interest and penalties
thereon, if any, within the statutory period; provided, however, such tax
payments shall not include such taxes incurred more than ninety (90) days prior
to the date Borrower receives Lender’s notice of payment. In the event the
payment of such tax or interest and penalties by Borrower would be unlawful, or
taxable to Lender or unenforceable or provide the basis for a defense of usury,
then in any such event, Lender shall have the option, by written notice of not
less than sixty (60) days, to declare the Debt immediately due and payable, with
no prepayment fee or charge of any kind.

       

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

       

      Section
4.04. Right to
Contest.
Borrower shall have the right, after prior notice to Lender, at its sole
expense, to contest by appropriate legal proceedings diligently conducted in
good faith, without cost or expense to Lender or any of its agents, employees,
officers or directors, the validity, amount or application of any Imposition or
any charge described in Section 4.01(b), provided that (a) no Default or Event
of Default shall exist during such proceedings and such contest shall not
(unless Borrower shall comply with clause (d) of this Section 4.04) subject the
Property or any portion thereof to any lien or affect the priority of the lien
of this Security Instrument, (b) failure to pay such Imposition or charge will
not subject Lender or any of its agents, employees, officers or directors to any
civil or criminal liability, (c) the contest suspends enforcement of the
Imposition or charge (unless Borrower first pays the Imposition or charge), (d)
prior to and during such contest, Borrower shall furnish to Lender security
satisfactory to Lender, in its reasonable discretion, against loss or injury by
reason of such contest or the non-payment of such Imposition or charge (and if
such security is cash, Lender may deposit the same in an interest-bearing
account and interest accrued thereon, if any, shall be deemed to constitute a
part of such security for purposes of this Security Instrument, but Lender (i)
makes no representation or warranty as to the rate or amount of interest, if
any, which may accrue thereon and shall have no liability in connection
therewith and (ii) shall not be deemed to be a trustee or fiduciary with respect
to its receipt of any such security and any such security may be commingled with
other monies of Lender), (e) such contest shall not affect the ownership, use or
occupancy of the Property, (f) the Property or any part thereof or any interest
therein shall not be in any danger of being sold, forfeited or lost by reason of
such contest by Borrower, (g) Borrower has given Lender notice of the
commencement of such contest and upon request by Lender, from time to time,
notice of the status of such contest by Borrower and/or confirmation of the
continuing satisfaction of clauses (a) through (f) of this Section 4.04, and (h)
upon a final determination of such contest, Borrower shall promptly comply with
the requirements thereof. Upon completion of any contest, Borrower shall
immediately pay the amount due, if any, and deliver to Lender proof of the
completion of the contest and payment of the amount due, if any, following which
Lender shall return the security, if any, deposited with Lender pursuant to
clause (d) of this Section 4.04. Borrower shall not pay any Imposition in
installments unless permitted by applicable Legal Requirements, and shall, upon
the request of Lender, deliver copies of all notices and bills relating to any
Imposition or other charge covered by this Article IV to
Lender.


      
        
          
          

        

        
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      Section
4.05. No Credits on Account of the
Debt.
Borrower will not claim or demand or be entitled to any credit or credits on
account of the Debt for any part of the Impositions assessed against the
Property or any part thereof and no deduction shall otherwise be made or claimed
from the taxable value of the Property, or any part thereof, by reason of this
Security Instrument or the Debt. In the event such claim, credit or deduction
shall be required by Legal Requirements, Lender shall have the option, by
written notice of not less than forty-five (45) days, to declare the Debt
immediately due and payable, and Borrower hereby agrees to pay such amounts not
later than forty-five (45) days after such notice.

       

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

      


       

      ARTICLE V:
CENTRAL CASH
MANAGEMENT

       

      Section
5.01. Cash Flow.
Borrower hereby acknowledges and agrees that (i) the Rents (which for the
purposes of this Section 5.01 shall not include security deposits from tenants
under Leases held by Borrower and not applied towards Rent) derived from the
Property and (ii) Loss Proceeds (other than Loss Proceeds that Lender has
elected to apply to reduce the Debt in accordance with the terms of Article III
hereof) shall be utilized (a) to fund the Basic Carrying Costs Sub-Account, (b)
to pay all amounts to become due and payable under the Note by funding the Debt
Service Payment Sub-Account, (c) to fund the Recurring Replacement Reserve
Sub-Account, (d) to fund the Reletting Reserve Sub-Account, (e) to fund the
Operation and Maintenance Expense Sub-Account, and (f) to fund the Curtailment
Reserve Sub-Account, all to the extent provided for herein. Borrower shall
collect all security deposits from tenants under valid Leases, which shall be
held by Borrower, in accordance with applicable law and in a segregated demand
deposit bank account at such commercial or savings bank or banks as may be
reasonably satisfactory to Lender (the “Security Deposit
Account”).
Borrower shall notify Lender of any security deposits held as letters of credit
and, upon Lender’s request, such letters of credit shall be promptly delivered
to Lender. Borrower shall have no right to withdraw funds from the Security
Deposit Account; provided that,
prior to the occurrence of an Event of Default, Borrower may withdraw funds from
the Security Deposit Account to refund or apply security deposits as required by
the Leases or by applicable Legal Requirements. During the continuance of an
Event of Default, all withdrawals from the Security Deposit Account must be
approved by Lender. Borrower shall cause all Rent which is due and payable to
Borrower pursuant to the terms of the Leases (other than security deposits under
valid Leases which are held in the Security Deposit Account) to be paid through
automated clearing house funds (“ACH”), a
check drawn on an account in a bank located in the continental United States
which is a member of the New York Clearing House Association or by Federal wire
directly to the Rent Account. Borrower shall give each tenant under a Lease an
irrevocable direction in the form of Exhibit E attached hereto and made a part
hereof to deliver all rent payments made by tenants and other payments
constituting Rent directly to the Rent Account and shall deliver copies of such
letters to Lender, together with an Officer’s Certificate certifying that such
letters were delivered to each tenant under the Leases within five (5) days of
the Closing Date. Notwithstanding the foregoing, if any Rent is received by
Borrower or Manager, then (a) such amounts shall be held in trust for the
benefit, and as the property, of Lender, (b) such amounts shall not be
commingled with any other funds or property of Borrower or Manager and (c)
Borrower or Manager shall deposit such amounts in the Rent Account within one
(1) Business Day of receipt. Borrower shall, or shall cause Manager to, give to
the bank in which the Rent Account is located an irrevocable written
instruction, in form and substance acceptable to, and acknowledged by, Lender,
that all funds deposited in the Rent Account shall be automatically transferred
through ACH or by Federal wire to the Central Account prior to 2:00 p.m. (New
York City time) on each Business Day. Upon execution of any Space Lease after
the Closing Date, Borrower shall deliver to Lender a copy of the irrevocable
direction letter referred to above, the receipt of which has been acknowledged
by the tenant under such Space Lease. Lender may elect to change the financial
institution in which the Central Account or the Rent Account shall be
maintained; however, Lender
shall give Borrower and the bank in which the Rent Account is located not fewer
than ten (10) Business Days’ prior notice of such change. Neither Borrower nor
Manager shall change the bank in which the Rent Account is located or the Rent
Account without the prior written consent of Lender. All fees and charges of the
bank in which the Central Account is located shall be paid by
Borrower.


      
        
          
          

        

        
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      Section
5.02. Establishment of
Accounts. Lender
has established the Escrow Accounts and the Central Account in the name of
Lender as secured party and Borrower has established the Central Account in the
joint names of Lender, as secured party, and Borrower. The Central Account, the
Rent Account and the Escrow Accounts shall be under the sole dominion and
control of Lender and funds held therein shall not constitute trust funds.
Borrower hereby irrevocably directs and authorizes Lender to withdraw funds from
the Central Account, the Rent Account and the Escrow Accounts, all in accordance
with the terms and conditions of this Security Instrument. Borrower shall have
no right of withdrawal in respect of the Central Account, the Rent Account or
the Escrow Accounts. Each transfer of funds to be made hereunder shall be made
only to the extent that funds are on deposit in the Central Account, the Rent
Account or the affected Sub-Account or Escrow Account, and Lender shall have no
responsibility to make additional funds available in the event that funds on
deposit are insufficient. The Central Account shall contain the Basic Carrying
Costs Sub-Account, the Debt Service Payment Sub-Account, the Recurring
Replacement Reserve Sub-Account, the Reletting Reserve Sub-Account, the
Operation and Maintenance Expense Sub-Account and the Curtailment Reserve
Sub-Account, each of which accounts shall be Eligible Accounts or book entry
sub-accounts of an Eligible Account (each a “Sub-Account” and
collectively, the “Sub-Accounts”) to
which certain funds shall be allocated and from which disbursements shall be
made pursuant to the terms of this Security Instrument. In addition, on the date
hereof, the Central Account shall also contain (w) a Sub-Account entitled the
“Engineering Escrow Sub Account”, which shall be funded by Borrower at Closing
with the Initial Engineering Deposit set forth on Exhibit B attached hereto
(representing the sum applicable to the Required Engineering Work described in
Section 5.12 below and on Exhibit D attached hereto, (x) a Sub-Account entitled
the Holdback Reserve Sub-Account which shall be funded by Borrower at closing
with the Initial Holdback Reserve Deposit, (y) a Sub-Account entitled the Debt
Service Reserve Sub-Account which shall be funded by Borrower at closing with
the Initial Debt Service Reserve Deposit and (z) a Sub-Account entitled the
Yield Maintenance Reserve Sub-Account which shall be funded by Borrower at
closing with the Initial Yield Maintenance Reserve Deposit. Sums held in the
Escrow Accounts may be commingled with other monies held by Lender.

       

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

       

      
        
          
          

        

        
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      Section
5.04. Servicing
Fees. At the
option of Lender, the Loan may be serviced by a servicer (the “Servicer”)
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Security Instrument to the Servicer. Provided that
no Default has occurred and is continuing, Borrower shall have no obligation to
reimburse Lender for servicing fees incurred in connection with the ordinary,
routine servicing of the Loan; provided, however, that Borrower shall reimburse
Lender for (a) any and all costs and expenses incurred after the occurrence of a
Default and (b) as otherwise provided for in this Security Instrument.
Additionally, Borrower shall pay all reasonable servicing fees of Servicer, if
any, not to exceed $500.00 per month, charged in connection with any
disbursement of funds from the Escrow Accounts pursuant to the Servicer’s then
standard conditions and rates.

       

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

       

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

       

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

       

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

       

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

       

      (v) fifth,
but only during the occurrence and continuance of an Event of Default, to the
Operation and Maintenance Expense Sub-Account in an amount equal to the Cash
Expenses, other than management fees payable to Affiliates of Borrower, for such
Current Month pursuant to the related Approved Annual Budget;

       

      (vi) sixth,
but only during the occurrence and continuance of an Event of Default, to the
Operation and Maintenance Expense Sub-Account in an amount equal to the amount,
if any, of the Net Capital Expenditures for such Current Month pursuant to the
related Approved Annual Budget; 


      
        
          
          

        

        
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      (vii) seventh,
but only during the occurrence and continuance of an Event of Default, to the
Operation and Maintenance Expense Sub-Account in an amount equal to the amount,
if any, of the Extraordinary Expenses approved by Lender for such Current
Month;

       

      (viii) eighth,
but only during an O&M Operative Period, the balance, if any, to the
Curtailment Reserve Sub-Account.

       

      Provided
that (I) no Event of Default has occurred and is continuing and (II) Lender has
received the Manager Certification referred to in Section 2.09(d) hereof for the
most recent period for which the same is due, Lender agrees that in each Current
Month any amounts deposited into or remaining in the Central Account after the
Sub-Accounts have been funded in accordance with clauses (i) through (viii)
above with respect to the Current Month and any periods prior thereto, shall be
disbursed by Lender to Borrower on the Payment Date and, to the extent that
funds are available for such purpose, on the fifteenth and twenty-fifth day of
each Current Month or, if such days are not Business Days, on the next
succeeding Business Day in accordance with Borrower’s irrevocable written
instruction delivered to Lender on the Closing Date. During the existence of an
Event of Default, no funds held in the Central Account shall be distributed to
Borrower and Lender shall have the right to apply all or any portion of the
funds held in the Central Account or any Sub-Account or any Escrow Account to
the Debt in Lender’s sole discretion.

       

      (b) On each
Payment Date, (i) sums held in the Basic Carrying Costs Sub-Account shall be
transferred to the Basic Carrying Costs Escrow Account, (ii) sums held in the
Debt Service Payment Sub-Account, together with any amounts deposited into the
Central Account that are either (x) Loss Proceeds that Lender has elected to
apply to reduce the Debt in accordance with the terms of Article III hereof or
(y) excess Loss Proceeds remaining after the completion of any restoration
required hereunder, shall be transferred to Lender to be applied towards the
Required Debt Service Payment, (iii) sums held in the Recurring Replacement
Reserve Sub-Account shall be transferred to the Recurring Replacement Reserve
Escrow Account, (iv) sums held in the Reletting Reserve Sub-Account shall be
transferred to the Reletting Reserve Escrow Account, (v) sums held in the
Operation and Maintenance Expense Sub-Account shall be transferred to the
Operation and Maintenance Expense Escrow Account and (vi) sums held in the
Curtailment Reserve Sub-Account shall be transferred to the Curtailment Reserve
Escrow Account.

       

      Section
5.06. Payment of Basic Carrying
Costs.
Borrower hereby agrees to pay all Basic Carrying Costs (without regard to the
amount of money in the Basic Carrying Costs Sub-Account or the Basic Carrying
Costs Escrow Account). At least ten (10) Business Days prior to the due date of
any Basic Carrying Costs, and not more frequently than once each month, Borrower
may notify Lender in writing and request that Lender pay such Basic Carrying
Costs on behalf of Borrower on or prior to the due date thereof, and, provided
that no Event of Default has occurred and that there are sufficient funds
available in the Basic Carrying Costs Escrow Account, Lender shall make such
payments out of the Basic Carrying Costs Escrow Account before same shall be
delinquent. Together with each such request, Borrower shall furnish Lender with
bills and all other documents necessary, as reasonably determined by Lender, for
the payment of the Basic Carrying Costs which are the subject of such request.
Borrower’s obligation to pay (or cause Lender to pay) Basic Carrying Costs
pursuant to this Security Instrument shall include, to the extent permitted by
applicable law, Impositions resulting from future changes in law which impose
upon Lender an obligation to pay any property taxes or other Impositions or
which otherwise adversely affect Lender’s interests as provided for in this
Security Instrument.

       

      
        
          
          

        

        
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      Provided
that no Event of Default shall have occurred, all funds deposited into the Basic
Carrying Costs Escrow Account shall be held by Lender pursuant to the provisions
of this Security Instrument and shall be applied in payment of Basic Carrying
Costs in accordance with the terms hereof. Should an Event of Default occur, the
sums on deposit in the Basic Carrying Costs Sub-Account and the Basic Carrying
Costs Escrow Account may be applied by Lender in payment of any Basic Carrying
Costs or may be applied to the payment of the Debt or any other charges
affecting all or any portion of 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.

       

      Section
5.07. Reletting Reserve Escrow
Account. (a)
Borrower hereby agrees to pay all Reletting Expenditures (without regard to the
amount of money then available in the Reletting Reserve Sub-Account or the
Reletting Reserve Escrow Account). Upon the execution of any Space Lease with
respect to which Borrower is obligated to undertake or pay for any Reletting
Expenditures, Borrower shall submit to Lender (i) an itemized line item budget
(a “Budget”)
reasonably acceptable to Lender outlining all of the Reletting Expenditures,
(ii) a copy of the signed Lease for which said Reletting Expenditures relate, in
each case which has an expiration date at least three (3) years after the
commencement thereof and which is otherwise in compliance with the provisions of
this Security Instrument, (iii) a copy of the plans and specifications, if any,
for the proposed Reletting Expenditures and (iv) an Officer’s Certificate with
respect to the items referred to in clauses (i) through (iii) and setting forth
an anticipated completion date for the Reletting Expenditures. Thereafter,
provided that no Event of Default has occurred and is continuing and that Lender
has received a written request from Borrower for payment or reimbursement of any
costs incurred in connection with any Reletting Expenditures, together with (i)
unconditional lien waivers (subject only to payment), (ii) a statement from an
Architect or Engineer, indicating that such portion of the Reletting
Expenditures for which payment or reimbursement is sought has been substantially
completed in compliance with all Legal Requirements, (iii) unless Borrower
requests disbursement by means of check payable jointly to Borrower and the
applicable vendor, copies of bills for such Reletting Expenditures marked “paid
in full” (or such other documentation reasonably satisfactory to Lender to
establish the payment of the Reletting Expenditures) for the portion due and for
which payment or reimbursement is sought, (iv) upon final completion of such
Reletting Expenditures, tenant estoppel certificates from the tenant leasing
space in the Premises for whom the Reletting Expenditures are being made which
indicate, among other things, that the tenant under such Space Lease has been in
occupancy and open for business for at least one full calendar month and paid
all rents due under the Space Lease without abatement, suspension, deferment,
diminution, reduction or other allowances for at least one full calendar month,
and (v) such other documentation as may be reasonably requested by Lender to
establish that the Reletting Expenditures or portion thereof which are the
subject of such request have been completed, all of which are reasonably
acceptable in form and substance to Lender, Lender shall disburse to Borrower,
to the extent of funds remaining in the Reletting Reserve Escrow Account, any
actual expenses incurred in connection with such Reletting Expenditures which
were set forth in the approved Budget provided that Borrower may make a request
for disbursement of sums from the Reletting Reserve Escrow Account no more than
once during any month and any request (other than the final request) shall be in
a minimum amount of $5,000. With respect to any Reletting Expenditures which
relate to brokerage commissions, upon the receipt of (i) copies of bills for
such Reletting Expenditures marked “paid in full”, (ii) tenant estoppel
certificates from the tenant leasing space in the Premises for which Lease the
brokerage commissions are due which indicate, among other things, that the
tenant under such Space Lease has been in occupancy and open for business for at
least one full calendar month and paid all rents due under the Space Lease
without abatement, suspension, deferment, diminution, reduction or other
allowances for at least one full calendar month and (iii) a copy of the signed
Lease for which said Reletting Expenditures relate, in each case which has an
expiration date at least three (3) years, all of which are reasonably acceptable
to Lender, Lender shall disburse to Borrower any actual expenses incurred in
connection with such Reletting Expenditures out of the Reletting Reserve Escrow
Account. Lender shall not be required to make any disbursements out of the
Reletting Reserve Escrow Account if an Event of Default shall have occurred and
is continuing, if more than one such request is made in any month or if
sufficient funds are not available in the Reletting Reserve Escrow
Account.

       

      
        
          
          

        

        
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      (b) In
addition, Borrower shall pay to Lender for deposit with Lender all funds
received by Borrower in excess of $50,000 in connection with any cancellation,
termination or surrender of any Lease, including, but not limited to, any
surrender or cancellation fees, buyout fees, or reimbursements for tenant
improvements and leasing commissions (“Termination Payments”); provided, as long
as no Event of Default exists, when the applicable space is re-leased pursuant
to a Space Lease entered into in accordance with the terms of this Security
Instrument, any such Termination Payments on deposit with Lender and remaining
after payment of all tenant improvements and leasing commissions in connection
with such new Space Lease pursuant to 5.07(a) above shall be paid to Borrower
upon the occupancy and the payment of rents due under the new Space Lease for at
least one full calendar month

       

      (c) Provided
that no Event of Default shall have occurred, all funds deposited into the
Reletting Reserve Escrow Account relating to Reletting Expenditures shall be
held by Lender pursuant to the provisions of this Security Instrument and shall
be applied in payment of Reletting Expenditures. Should an Event of Default
occur, the sums on deposit in the Reletting Reserve Sub-Account and the
Reletting Reserve Escrow Account may be applied by Lender in payment of any
Reletting Expenditures or may be applied to the payment of the Debt or any other
charges affecting all or any portion of the 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.

       

      (d) In the
event that Borrower holds any letters of credit as security for obligations
under Leases, within thirty (30) days (or if any letters of credit may expire
within such thirty (30) day period, prior to the expiration of such letter of
credit) of the occurrence of a monetary event of default or a material
non-monetary event of default under the related Lease, Borrower shall present
for draw and use all commercially reasonable efforts to draw the full amount
which it is entitled to draw under such letter of credit; provided, however,
Borrower shall not be obliged to draw on such letter of credit if (i) Borrower
has submitted to Lender a plan of action to resolve any event of default which
gave rise to Borrower’s right to draw on the applicable letter of credit and
Lender shall, in its reasonable discretion, have consented to such plan or
Borrower is precluded from making a draw on the applicable letter of credit by
applicable law, and (ii) the term of such letter of credit will not expire prior
to the implementation of such submitted plan. Borrower shall deliver to Lender
all security deposits which are applied against sums due to Borrower under
Leases (including, without limitation, all sums drawn on letters of credits held
as security for obligations of tenants under Leases) and Rent paid by or on
behalf of any lessee under a Space Lease in whole or partial consideration for
the termination, cancellation or surrender of any Space Lease including, without
limitation, surrender or cancellation fees, buy-out fees or reimbursements for
tenant improvements or leasing commissions, within five (5) Business Days of
receipt thereof and all such sums shall be held in the Reletting Reserve Escrow
Account and shall be disbursed therefrom as set forth above.

       

      Section
5.08. Recurring Replacement
Reserve Escrow Account.
Borrower hereby agrees to pay all Recurring Replacement Expenditures with
respect to the Property (without regard to the amount of money then available in
the Recurring Replacement Reserve Sub-Account or the Recurring Replacement
Reserve Escrow Account). Provided that Lender has received written notice from
Borrower at least five (5) Business Days prior to the due date of any payment
relating to Recurring Replacement Expenditures and not more frequently than once
each month, and further provided that no Event of Default has occurred and is
continuing, that there are sufficient funds available in the Recurring
Replacement Reserve Escrow Account and that Borrower shall have theretofore
furnished Lender with lien waivers, copies of bills, invoices and other
reasonable documentation as may be required by Lender to establish that the
Recurring Replacement Expenditures which are the subject of such request
represent amounts due for completed or partially completed capital work and
improvements performed at the Property, Lender shall make such payments out of
the Recurring Replacement Reserve Escrow Account. 


      
        
          
          

        

        
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      Provided
that no Event of Default shall have occurred, all funds deposited into the
Recurring Replacement Reserve Escrow Account shall be held by Lender pursuant to
the provisions of this Security Instrument and shall be applied in payment of
Recurring Replacement Expenditures. Should an Event of Default occur, the sums
on deposit in the Recurring Replacement Reserve Sub-Account and the Recurring
Replacement Reserve Escrow Account may be applied by Lender in payment of any
Recurring Replacement Expenditures or may be applied to the payment of the Debt
or any other charges affecting all or any portion of the 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.

       

      Section
5.09. Operation and Maintenance
Expense Escrow Account.
Borrower hereby agrees to pay all Operating Expenses with respect to the
Property (without regard to the amount of money then available in the Operation
and Maintenance Expense Sub-Account or the Operation and Maintenance Expense
Escrow Account). All funds allocated to the Operation and Maintenance Expense
Escrow Account shall be held by Lender pursuant to the provisions of this
Security Instrument. Any sums held in the Operation and Maintenance Expense
Escrow Account shall be disbursed to Borrower within five (5) Business Days of
receipt by Lender from Borrower of (a) a written request for such disbursement
which shall indicate the Operating Expenses (exclusive of Basic Carrying Costs
and any management fees payable to Borrower or to Affiliates of Borrower) for
which the requested disbursement is to pay and (b) an Officer’s Certificate
stating that no Operating Expenses with respect to the Property are more than
sixty (60) days past due; provided,
however, in the
event that Borrower legitimately disputes any invoice for an Operating Expense,
and (i) no Event of Default has occurred and is continuing hereunder, (ii)
Borrower shall have set aside adequate reserves for the payment of such disputed
sums together with all interest and late fees thereon, (iii) Borrower has
complied with all the requirements of this Security Instrument relating thereto,
and (iv) the contesting of such sums shall not constitute a default under any
other instrument, agreement, or document to which Borrower is a party, then
Borrower may, after certifying to Lender as to items (i) through (iv) hereof,
contest such invoice. Together with each such request, Borrower shall furnish
Lender with bills and all other documents necessary for the payment of the
Operating Expenses which are the subject of such request. Borrower may request a
disbursement from the Operation and Maintenance Expense Escrow Account no more
than one (1) time per calendar month. Should an Event of Default occur and be
continuing, the sums on deposit in the Operation and Maintenance Expense
Sub-Account or the Operation and Maintenance Expense Escrow Account may be
applied by Lender in payment of any Operating Expenses for the Property 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.


      
        
          
          

        

        
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      Section
5.10. Intentionally
Deleted

       

      Section
5.11. Curtailment Reserve Escrow
Account. Funds
deposited into the Curtailment Reserve Escrow Account during an O&M
Operative Period shall be held by Lender in the Curtailment Reserve Escrow
Account as additional security for the Loan until the Loan has been paid in
full. Notwithstanding anything herein to the contrary, provided that no Event of
Default and no O&M Operative Period has occurred and is continuing, Lender
shall, upon written request from Borrower, disburse all sums contained in the
Curtailment Reserve Escrow Account to Borrower. Should an Event of Default
occur, the sums on deposit in the Curtailment Reserve Sub-Account and the
Curtailment Reserve Escrow Account may be applied by Lender to the payment of
the Debt or 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. Lender shall calculate the
Debt Service Coverage as of the end of each fiscal quarter. Such calculation
shall be completed within ten (10) Business Days of Lender’s receipt of the
quarterly financial statements required under Section 2.09(b) with respect to
such fiscal quarter.

       

      Section
5.12. Performance of Engineering
Work. (a)
Borrower
shall promptly commence and diligently thereafter pursue to completion (without
regard to the amount of money then available in the Engineering Escrow Account)
the Required Engineering Work prior to the twelve 12 month anniversary of the
Closing Date. After Borrower completes an item of Required Engineering Work,
Borrower may submit to Lender an invoice therefor with lien waivers and a
statement from the Engineer, reasonably acceptable to Lender, indicating that
the portion of the Required Engineering Work in question has been completed in
compliance with all Legal Requirements, and Lender shall, within twenty (20)
days thereafter, although in no event more frequently than once each month,
reimburse such amount to Borrower from the Engineering Escrow Account;
provided,
however, that
Borrower shall not be reimbursed more than the amount set forth on Exhibit D
hereto as the amount allocated to the portion of the Required Engineering Work
for which reimbursement is sought. 

       

      (b) From and
after the date all of the Required Engineering Work is completed, Borrower may
submit a written request, which request shall be delivered together with final
lien waivers and a statement from the Engineer, as the case may be, reasonably
acceptable to Lender, indicating that all of the Required Engineering Work has
been completed in compliance with all Legal Requirements, and Lender shall,
within twenty (20) days thereafter, disburse any balance of the Engineering
Escrow Account to Borrower. Should an Event of Default occur, the sums on
deposit in the Engineering Escrow Account may be applied by Lender in payment of
any Required Engineering Work or may be applied to the payment of the Debt or
any other charges affecting all or any portion of the 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.

       

      
        
          
          

        

        
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      Section
5.13. Loss
Proceeds. In the
event of a casualty to the Property, unless Lender elects or is required
pursuant to Article III hereof to make all of the Insurance Proceeds available
to Borrower for restoration, Lender and Borrower shall cause all such Insurance
Proceeds to be paid by the insurer directly to the Central Account, whereupon
Lender shall, after deducting Lender’s reasonable costs of recovering and paying
out such Insurance Proceeds, including without limitation, reasonable attorneys’
fees, apply the same to reduce the Debt in accordance with the terms of the
Note; provided,
however, that if
Lender elects, or is deemed to have elected, or is required to make the
Insurance Proceeds available for restoration, all Insurance Proceeds in respect
of rent loss, business interruption or similar coverage shall be maintained in
the Central Account, to be applied by Lender in the manner as Rent received with
respect to the operation of the Property; provided,
further,
however, that in
the event that the Insurance Proceeds with respect to rent loss, business
interruption or similar insurance policy are paid in a lump sum in advance,
Lender shall hold such Insurance Proceeds in a segregated interest-bearing
escrow account, which shall be an Eligible Account, shall estimate, in Lender’s
reasonable discretion, the number of months required for Borrower to restore the
damage caused by the casualty, shall divide the aggregate rent loss, business
interruption or similar Insurance Proceeds by such number of months, and shall
disburse from such bank account into the Central Account each month during the
performance of such restoration such monthly installment of said Insurance
Proceeds. In the event that Insurance Proceeds are to be applied toward
restoration, Lender shall hold such funds in a segregated bank account at the
Bank, which shall be an Eligible Account, and shall disburse same in accordance
with the provisions of Section 3.04 hereof. Unless Lender elects, or is required
pursuant to Section 6.01 hereof to make all of the Condemnation Proceeds
available to Borrower for restoration, Lender and Borrower shall cause all such
Condemnation Proceeds to be paid to the Central Account, whereupon Lender shall,
after deducting Lender’s reasonable costs of recovering and paying out such
Condemnation Proceeds, including without limitation, reasonable attorneys’ fees,
apply same to reduce the Debt in accordance with the terms of the Note;
provided,
however, that
any Condemnation Proceeds received in connection with a temporary Taking shall
be maintained in the Central Account, to be applied by Lender in the same manner
as Rent received with respect to the operation of the Property; provided,
further,
however, that in
the event that the Condemnation Proceeds of any temporary Taking are paid in a
lump sum in advance, Lender shall hold such Condemnation Proceeds in a
segregated interest-bearing bank account, which shall be an Eligible Account,
shall estimate, in Lender’s reasonable discretion, the number of months that the
Property shall be affected by such temporary Taking, shall divide the aggregate
Condemnation Proceeds in connection with such temporary Taking by such number of
months, and shall disburse from such bank account into the Central Account each
month during the pendency of such temporary Taking such monthly installment of
said Condemnation Proceeds. In the event that Condemnation Proceeds are to be
applied toward restoration, Lender shall hold such funds in a segregated bank
account at the Bank, which shall be an Eligible Account, and shall disburse same
in accordance with the provisions of Section 3.04 hereof. If any Loss Proceeds
are received by Borrower, such Loss Proceeds shall be received in trust for
Lender, shall be segregated from other funds of Borrower, and shall be forthwith
paid into the Central Account, or paid to Lender to hold in a segregated bank
account at the Bank, in each case to be applied or disbursed in accordance with
the foregoing. Any Loss Proceeds made available to Borrower for restoration in
accordance herewith, to the extent not used by Borrower in connection with, or
to the extent they exceed the cost of, such restoration, shall be paid to
Borrower promptly following the completion of the Work.

       

      
        
          
          

        

        
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      Section
5.14. Intentionally
Deleted.

       

      Section
5.15. Holdback Escrow
Account.
a) On any
of the sixth (6), twelfth (12th), eighteenth (18th) and twenty-fourth (24th)
month anniversaries of the date hereof, provided that no Event of Default has
occurred and is continuing, Borrower shall have the right to request and shall
be entitled to the release of all or any portion of the Holdback Reserve Escrow
Account in the amount of the Holdback Release Amount provided the Property has
sufficient Pro-Forma Net Operating Income to achieve a Debt Service Coverage of
1.20 and a loan-to-value ratio of 80%. In other words, based upon Pro-Forma Net
Operating Income, Lender shall calculate what loan amount would be supported in
order to achieve a Debt Service Coverage of 1.20 (using a mortgage loan constant
associated with 6.09% which is 7.2641881%) with a loan to value ratio of no
greater than eighty percent (80%) and from that loan amount, Lender shall
subtract $24,250,000.00 (plus any amounts previously released from the Holdback
Escrow Account). The resulting amount would then be deducted from the balance
held in the Holdback Reserve Escrow Account. It is intended that the balance in
the Holdback Reserve Escrow Account may be partially released in stages provided
that in no event shall Borrower be entitled to more than four (4) requests to
have the funds released. The calculation formula for the release of funds and an
example is set forth on Exhibit G annexed hereto. Borrower shall provide to
Lender any and all financial information as Lender reasonably requests as
necessary to evaluate Borrower's request to release funds from the Holdback
Reserve Escrow Account. Lender shall not be required to make any disbursements
out of the Holdback Reserve Escrow Account if an Event of Default shall have
occurred and is continuing, if more than one such request is made every six (6)
months or if sufficient funds are not available in the Holdback Reserve Escrow
Account. In the event that the Property has insufficient Pro-Forma Net Operating
Income to achieve a Debt Service Coverage of 1.20 and a loan-to-value ratio of
80% to support the entire Loan Amount, in all cases on or before twenty-four
(24) months from the date hereof, Borrower shall no longer be entitled to
request a return of such funds and Lender shall apply the balance of funds then
remaining in the Holdback Reserve Escrow Account to the Debt with the payment of
any prepayment fee or penalty as provided in the Note (including any amounts
held in the Yield Maintenance Reserve Escrow Account) and manner as determined
by Lender in its sole and absolute discretion; 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.

       

      (b) Upon the
release of all or any portion of the Holdback Reserve Escrow Account, Lender, in
its reasonable discretion, shall contemporaneously release to Borrower the
corresponding amount of the Debt Service Reserve Escrow Account and the Yield
Maintenance Reserve Escrow Account based on the amount which has been released
(e.g., if
$2,000,000 of the Holdback Reserve Escrow Account is released, then that amount
of the Debt Service Reserve Escrow Account shall be released which is not
necessary to supplement any debt service payments towards a $26,250,000 loan
amount until the Payment Date in 2008 as well as any excess amounts in the Yield
Maintenance Reserve Escrow Account which would not be necessary if the then
balance of the Holdback Reserve Escrow Account were to be applied to the
Debt).


      
        
          
          

        

        
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      Provided
that no Event of Default shall have occurred, all funds deposited into the Basic
Holdback Reserve Escrow Account shall be held by Lender pursuant to the
provisions of this Security Instrument. Should an Event of Default occur, the
sums on deposit in the Holdback Reserve Sub-Account and the Holdback Reserve
Escrow Account may be applied by Lender in payment of 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.

       

      Section
5.16. Debt Service Reserve
Account. The
Initial Debt Service Reserve Deposit shall act as a debt service reserve on that
portion of the Loan Amount which constitutes the Holdback Reserve Escrow Account
under Section 5.15 hereof. In the event of a shortfall of revenues (the
“Shortfall”) generated at the Property to pay monthly debt service, upon
Borrower’s request together with any and all financial information evidencing
such Shortfall, Lender shall disburse to itself on each Payment Date the amount
of the Shortfall until the earlier to occur of (x) the Payment Date in April
2008 and (y) the release of the Holdback Reserve Escrow Account in accordance
with Section 5.15. Upon the release of all or a portion of the Holdback Reserve
Escrow Account, all or a portion of the Debt Service Reserve Escrow Account
shall be released to Borrower in accordance with Section 5.15(b). If all or any
portion of the Holdback Reserve Escrow Account is applied to the Debt in
accordance with Section 5.15, to the extent the amounts in the Yield Maintenance
Reserve Escrow Account are sufficient to pay any prepayment penalty, the Debt
Service Reserve Escrow Account shall be returned to Borrower; provided that, if
the Yield Maintenance Reserve Escrow Account is insufficient, the amounts
remaining in the Debt Service Reserve Sub-Account may be applied towards any
prepayment penalty. Lender’s failure to disburse funds from the Debt Service
Reserve Account shall not relieve Borrower of its obligation to pay all amounts
due Lender in accordance with this Security Instrument on any Payment Date.
Borrower acknowledges that Lender has no obligation to disburse more than the
remaining balance of the Debt Service Reserve Account if such amount is less
than the full payment requested.

       

      Provided
that no Event of Default shall have occurred, all funds deposited into the Debt
Service Reserve Escrow Account shall be held by Lender pursuant to the
provisions of this Security Instrument and shall be applied to the payment of
debt service in accordance with the terms hereof. Should an Event of Default
occur, the sums on deposit in the Debt Service Reserve Sub-Account and the Debt
Service Reserve Escrow Account may be applied by Lender in payment of debt
service 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.

       

      Section
5.17. Yield Maintenance Reserve
Escrow Account. The
Initial Yield Maintenance Reserve Deposit shall act as a reserve for any
prepayment penalty incurred in connection with Section 5.15 hereof. Provided no
Event of Default has occurred and is
continuing, Borrower shall have the right to use all or any portion of the Yield
Maintenance Reserve Escrow Account towards any prepayment penalty incurred in
the event Lender applies the Holdback Reserve Escrow Account to the prepayment
of the Debt in accordance with Section 5.15 of this Security
Instrument.

       

      
        
          
          

        

        
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      Provided
that no Event of Default shall have occurred, all funds deposited into the Yield
Maintenance Reserve Escrow Account shall be held by Lender pursuant to the
provisions of this Security Instrument and shall be applied in payment of any
prepayment fees in accordance with the terms hereof. Should an Event of Default
occur, the sums on deposit in the Yield Maintenance Reserve Sub-Account and the
Yield Maintenance Reserve Escrow Account may be applied by Lender in payment of
any prepayment penalty 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. 

       

      ARTICLE VI:
CONDEMNATION

       

      Section
6.01. Condemnation.
i) Borrower
shall notify Lender promptly of the commencement or threat of any Taking of the
Property or any portion thereof. Lender is hereby irrevocably appointed as
Borrower’s attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain the proceeds of any such Taking and to make any
compromise or settlement in connection with such proceedings (subject to
Borrower’s reasonable approval, except after the occurrence of an Event of
Default, in which event Borrower’s approval shall not be required), subject to
the provisions of this Security Instrument; provided, however, that Borrower may
participate in any such proceedings and shall be authorized and entitled to
compromise or settle any such proceeding with respect to Condemnation Proceeds
in an amount less than five percent (5%) of the Loan Amount. Borrower shall
execute and deliver to Lender any and all instruments reasonably required in
connection with any such proceeding promptly after request therefor by Lender.
Except as set forth above, Borrower shall not adjust, compromise, settle or
enter into any agreement with respect to such proceedings without the prior
consent of Lender. All Condemnation Proceeds are hereby assigned to and shall be
paid to Lender. With respect to Condemnation Proceeds in an amount in excess of
five percent (5%) of the Allocated Loan Amount, Borrower hereby authorizes
Lender to compromise, settle, collect and receive such Condemnation Proceeds,
and to give proper receipts and acquittance therefor. Subject to the provisions
of this Article VI, Lender may apply such Condemnation Proceeds (less any cost
to Lender of recovering and paying out such proceeds, including, without
limitation, reasonable attorneys’ fees and disbursements and costs allocable to
inspecting any repair, restoration or rebuilding work and the plans and
specifications therefor) toward the payment of the Debt or to allow such
proceeds to be used for the Work.

       

      (b) “Substantial
Taking” shall
mean (i) a Taking of such portion of the Property that would, in Lender’s
reasonable discretion, leave remaining a balance of the Property which would not
under then current economic conditions, applicable Development Laws and other
applicable Legal Requirements, permit the restoration of the Property so as to
constitute a complete, rentable facility of the same type as existed prior to
the Taking, having adequate ingress and egress to the Property, the Leases of
which covering 75% of the square footage of the Property immediately prior to
such Taking will not be terminated due to the Taking during and following the
restoration of such Property and being capable of producing a projected Net
Operating Income (as reasonably determined by Lender) yielding a projected Debt
Service Coverage therefrom for the next two (2) years of not less than the
Required Debt Service Coverage or (ii) a Taking which occurs less than two (2)
years prior to the Maturity Date or (iii) a Taking which Lender is not
reasonably satisfied could be repaired within twelve (12) months and at least
six (6) months prior to the Maturity Date or (iv) a Taking of fifteen percent
(15%) or more of the Property.


      
        
          
          

        

        
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      (c) In the
case of a Substantial Taking, Condemnation Proceeds shall be payable to Lender
in reduction of the Debt but without any prepayment fee or charge of any kind
and, if Borrower elects to apply any Condemnation Proceeds it may receive
pursuant to this Security Instrument to the payment of the Debt, Borrower may
prepay the balance of the Debt without any prepayment fee or charge of any
kind.

       

      (d) In the
event of a Taking which is less than a Substantial Taking, Borrower at its sole
cost and expense (whether or not the award shall have been received or shall be
sufficient for restoration) shall proceed diligently to restore, or cause the
restoration of, the remaining Improvements not so taken, to maintain a complete,
rentable, self-contained fully operational facility of the same sort as existed
prior to the Taking in as good a condition as is reasonably possible. In the
event of such a Taking, Lender shall receive the Condemnation Proceeds and shall
pay over the same:

       

      (i) (i) first,
provided no Default shall have occurred and be continuing, to Borrower to the
extent of any portion of the award as may be necessary to pay the reasonable
cost of restoration of the Improvements remaining, and

       

      (ii) (ii) second,
to Lender, in reduction of the Debt without any prepayment premium or charge of
any kind.

       

      If one or
more Takings in the aggregate create a Substantial Taking, then, in such event,
the sections of this Article VI above applicable to Substantial Takings shall
apply.

       

      (e) In the
event Lender is obligated to or elects to make Condemnation Proceeds available
for the restoration or rebuilding of the Property, such proceeds shall be
disbursed in the manner and subject to the conditions set forth in Section
3.04(b) hereof. If, in accordance with this Article VI, any Condemnation
Proceeds are used to reduce the Debt, they shall be applied in accordance with
the provisions of the Note and, with no prepayment fee or charge of any kind.
Borrower shall promptly execute and deliver all instruments requested by Lender
for the purpose of confirming the assignment of the Condemnation Proceeds to
Lender. Application of all or any part of the Condemnation Proceeds to the Debt
shall be made in accordance with the provisions of Sections 3.06 and 3.07
hereof. No application of the Condemnation Proceeds to the reduction of the Debt
shall have the effect of releasing the lien of this Security Instrument until
the remainder of the Debt has been paid in full. In the case of any Taking,
Lender, to the extent that Lender has not been reimbursed by Borrower, shall be
entitled, as a first priority out of any Condemnation Proceeds, to reimbursement
for all costs, fees and expenses reasonably incurred in the determination and
collection of any Condemnation Proceeds. All Condemnation Proceeds deposited
with Lender pursuant to this Section, until expended or applied as provided
herein, shall be held in accordance with Section 3.04(b) hereof and shall
constitute additional security for the payment of the Debt and the payment and
performance of Borrower’s obligations, but Lender shall not be deemed a trustee
or other fiduciary with respect to its receipt of such Condemnation Proceeds or
any part thereof. All awards so deposited with Lender shall be held by Lender in
an Eligible Account, but Lender makes no representation or warranty as to the
rate or amount of interest, if any, which may accrue on any such deposit and
shall have no liability in connection therewith. For purposes hereof, any
reference to the award shall be deemed to include interest, if any, which has
accrued thereon.

       

      
        
          
            
            

          

          
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      ARTICLE VII:
LEASES AND
RENTS

       

      Section
7.01. Assignment. (a)
Borrower
does hereby bargain, sell, assign and set over unto Lender, all of Borrower’s
interest in the Leases and Rents. The assignment of Leases and Rents in this
Section 7.01 is an absolute, unconditional and present assignment from Borrower
to Lender and not an assignment for security and the existence or exercise of
Borrower’s license (revocable by Lender only during the continuance of an Event
of Default) to collect Rent shall not operate to subordinate this assignment to
any subsequent assignment. The exercise by Lender of any of its rights or
remedies pursuant to this Section 7.01 shall not be deemed to make Lender a
mortgagee-in-possession. In addition to the provisions of this Article VII,
Borrower shall comply with all terms, provisions and conditions of the
Assignment.

       

      (b) So long
as there shall exist and be continuing no Event of Default, Borrower shall have
a revocable license to take all actions with respect to all Leases and Rents,
present and future, including the right to collect and use the Rents, subject to
the terms of this Security Instrument and the Assignment.

       

      (c) In a
separate instrument Borrower shall, as requested from time to time by Lender,
assign to Lender or its nominee by specific or general assignment, any and all
Leases, such assignments to be in form and content reasonably acceptable to
Lender, but subject to the provisions of Section 7.01(b) hereof. Borrower agrees
to deliver to Lender, within thirty (30) days after Lender’s request, a true and
complete copy of every Lease and, within ten (10) Business Days after Lender’s
request, a complete list of the Leases, certified by Borrower to be true,
accurate and complete and stating the demised premises, the names of the
lessees, the Rent payable under the Leases, the date to which such Rents have
been paid, the material terms of the Leases, including, without limitation, the
dates of occupancy, the dates of expiration, any Rent concessions, work
obligations or other inducements granted to the lessees thereunder, and any
renewal options.

       

      (d) The
rights of Lender contained in this Article VII, the Assignment or any other
assignment of any Lease shall not result in any obligation or liability of
Lender to Borrower or any lessee under a Lease or any party claiming through any
such lessee or constitute an assumption by Lender of any such liability or
obligation.

       

      (e) At any
time during the continuance of an Event of Default, the license granted
hereinabove may be revoked by Lender, and Lender or a receiver appointed in
accordance with this Security Instrument may enter upon the Property, and
collect, retain and apply the Rents toward payment of the Debt in such priority
and proportions as Lender in its sole discretion shall deem proper.

       

      (f) In
addition to the rights which Lender may have herein, upon the occurrence and
during the continuance of any Event of Default, Lender, at its option, may
require Borrower to pay monthly in advance to Lender, or any receiver appointed
to collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of the Property as may be used and occupied by Borrower
and may require Borrower to vacate and surrender possession of the Property to
Lender or to such receiver and, in default thereof, Borrower may be evicted by
summary proceedings or otherwise.


      
        
          
          

        

        
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      Section
7.02. Management of
Property. 

       

      (a) Borrower
shall manage the Property or cause the Property to be managed in a manner which
is consistent with the Approved Manager Standard. The Manager (other than
Borrower) shall at all times meet the Minimum Manager Credentials. All Space
Leases shall provide for rental rates comparable to then existing local market
rates and terms and conditions which constitute good and prudent business
practice and are consistent with prevailing market terms and conditions, and
shall be arm’s length transactions. All Space Leases shall be on a form
previously approved by Lender with such commercially reasonable changes as are
consistent with the standards of other similarly situated owners when compared
with terms and conditions of leases in similarly situated shopping centers in
similar context at the time in question, taking into account, inter alia, the
type, creditworthiness and bargaining power of the prospective tenant and the
location and size of the space covered by the proposed Lease, and shall provide
that they are subordinate to this Security Instrument and that the lessees
thereunder attorn to Lender. Borrower shall deliver copies of all Leases,
amendments, modifications and renewals thereof to Lender. All proposed Space
Leases for the Property shall be subject to the prior written approval of
Lender, not to be unreasonably withheld or delayed, provided, however that
Borrower may enter into new Space Leases with unrelated third parties without
obtaining the prior consent of Lender provided that: (i) the leases conform with
the requirements of this Section 7.02; (ii) the space to be leased pursuant to
such proposed Lease, together with any other space which is leased to the
proposed tenant or an Affiliate thereof, does not exceed 6,000 square feet; and
(iii) the term of the proposed lease does not exceed six (6) years and,
inclusive of all extensions and renewals, does not exceed ten (10) years.
Lender’s consent to any Lease shall be deemed given, if the first correspondence
from Borrower to Lender requesting such approval is in an envelope marked
“PRIORITY” and contains a bold-faced, conspicuous legend at the top of the first
page thereof stating that “IF YOU FAIL TO RESPOND TO OR TO EXPRESSLY DENY THIS
REQUEST FOR APPROVAL IN WRITING WITHIN TEN (10) BUSINESS DAYS, YOUR APPROVAL MAY
BE DEEMED GIVEN”, and is accompanied by the information and documents required
above and any other information reasonably requested by Lender in writing prior
to the expiration of such ten (10) Business Day period in order to adequately
review the same has been delivered and, if Lender fails to respond or to
expressly deny such request for approval in writing within the ten (10) Business
Day period a second notice is delivered to Lender from Borrower in an envelope
marked “PRIORITY” requesting approval containing a bold-faced, conspicuous
legend at the top of the first page thereof stating that “IF YOU FAIL TO RESPOND
TO OR EXPRESSLY DENY THIS REQUEST FOR APPROVAL IN WRITING WITHIN FIVE (5)
BUSINESS DAYS, YOUR APPROVAL SHALL BE DEEMED GIVEN” and Lender fails to respond
or to expressly deny each request for approval within the five (5) Business Day
period.

       

      (b) Borrower
(i) shall observe and perform all of its material obligations under the Leases
pursuant to applicable Legal Requirements and shall not do or permit to be done
anything to impair the value of the Leases as security for the Debt; (ii) shall
promptly send copies to Lender of all notices of default which Borrower shall
receive under the Leases; (iii) shall, consistent with the Approved Manager
Standard, enforce all of the terms, covenants and conditions contained in the
Leases to be observed or performed; (iv) shall not collect any of the Rents
under the Leases more than one (1) month in advance (except that Borrower may
collect in advance (A) such security deposits as are permitted pursuant to
applicable Legal Requirements and are commercially reasonable in the prevailing
market and (B) all rent deemed “additional rent” under the Leases); (v) shall
not execute any other assignment of lessor’s interest in the Leases or the Rents
except as otherwise expressly permitted pursuant to this Security Instrument;
(vi) shall not cancel or terminate any of the Space Leases or accept a surrender
thereof in any manner inconsistent with the Approved Manager Standard; (vii)
shall not convey, transfer or suffer or permit a conveyance or transfer of all
or any part of the Premises or the Improvements or of any interest therein so as
to effect a merger of the estates and rights of, or a termination or diminution
of the obligations of, lessees thereunder; (viii) shall not alter, modify or
change the terms of any guaranty of any Major Space Lease or cancel or terminate
any such guaranty in any manner inconsistent with the Approved Manager Standard;
(ix) shall, in accordance with the Approved Manager Standard, make all
reasonable efforts to seek lessees for space as it becomes vacant and enter into
Leases in accordance with the terms hereof; (x) shall not materially modify,
alter or amend any Major Space Lease or Property Agreement without Lender’s
consent, which consent will not be unreasonably withheld or delayed; (xi) shall
notify Lender promptly if any Pad Owner shall cease business operations or of
the occurrence of any event of which it becomes aware affecting a Pad Owner or
its property which might have any material effect on the Property; and (xii)
shall, without limitation to any other provision hereof, execute and deliver at
the reasonable request of Lender all such further assurances, confirmations and
assignments in connection with the Property as are required herein and as Lender
shall from time to time reasonably require.

       

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

       

      (d) Lender
shall, upon request of Borrower, enter into a subordination, nondisturbance and
attornment agreement (“SNDA”) with
respect to each proposed tenant entering into a Lease in compliance with the
requirements of this Security Instrument provided that such Lease is (i) with a
tenant occupying at least 6,000 square feet of the Premises or is with an
existing tenant pursuant to a Lease dated prior to the Closing Date which
provides that the tenant thereunder is entitled to an SNDA or with any tenant
which is renting space on a national basis which leases at least 2,000 square
feet of the Premises, (ii) with a tenant reasonably approved by Lender in
writing prior to Borrower’s execution of any such Lease and (iii) on the
standard form of Lease previously approved in writing by Lender with such
commercially reasonable changes as are consistent with the Approved Manager
Standard. Any SNDA executed by Lender shall be in Lender’s then standard form
with such changes as Lender shall agree to and provide that in the event Lender
or any purchaser at foreclosure shall succeed to Borrower’s interest in the
Property, the Leases of such tenants will remain in full force and effect and be
binding upon Lender or such purchaser and such tenant as though each were
original parties thereto.


      
        
          
          

        

        
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      (e) Borrower
covenants and agrees with Lender that (i) the Property will be managed at all
times by Borrower in accordance with Borrower’s organizational documents or by a
Manager pursuant to a management agreement approved by Lender (the “Management
Agreement”), (ii)
after Borrower has knowledge of a fifty percent (50%) or more change in control
of the ownership of Manager, Borrower will promptly give Lender notice thereof
(a “Manager Control
Notice”) and
(iii) the Management Agreement (or in the case Borrower is acting as Manager,
Borrower’s right to manage the Property) may be terminated by Lender at any time
for cause (including, but not limited to, Manager’s gross negligence,
misappropriation of funds, willful misconduct or fraud) or at any time following
(A) the occurrence of an Event of Default, or (B) the receipt of a Manager
Control Notice, or (C) the date upon which the Debt Service Coverage is 1.10:1.0
or less. In the event of any such termination, a substitute managing agent shall
be appointed by Borrower, subject to Lender’s prior written approval, which may
be given or withheld in Lender’s sole discretion and which may be conditioned
on, inter alia, a letter from each Rating Agency confirming that any rating
issued by the Rating Agency in connection with a Securitization will not, as a
result of the proposed change of Manager, be downgraded from the then current
ratings thereof, qualified or withdrawn. Borrower may from time to time appoint
a successor manager to manage the Property with Lender’s prior written consent
which consent shall not be unreasonably withheld or delayed, provided that any
such successor manager shall be a reputable management company which meets the
Minimum Manager Credentials and each Rating Agency shall have confirmed in
writing that any rating issued by the Rating Agency in connection with a
Securitization will not, as a result of the proposed change of Manager, be
downgraded from the then current ratings thereof, qualified or withdrawn.
Borrower further covenants and agrees that Borrower shall require Manager (or
any successor managers) to maintain at all times during the term of the Loan
worker’s compensation insurance as required by Governmental
Authorities.

       

      ARTICLE VIII:
MAINTENANCE AND
REPAIR

       

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

       

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

       

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


      
        
          
          

        

        
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      (c) Borrower
shall, except in connection with tenant improvement work under Space Leases
entered into in accordance with the terms of this Security Instrument, not
demolish, remove, construct, or, except as otherwise expressly provided herein,
restore, or alter the Property or any portion thereof which could diminish the
value of the Property nor consent to or permit any such demolition, removal,
construction, restoration, addition or alteration which would diminish the value
of the Property without Lender’s prior written consent in each instance, which
consent shall not be unreasonably withheld or delayed.

       

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

       

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

       

      ARTICLE IX:
TRANSFER OR ENCUMBRANCE OF
THE PROPERTY

       

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


      
        
          
          

        

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

       

      (b) Notwithstanding
any provision of this Security Instrument to the contrary, no person or entity
may, after the date hereof, become an owner of a direct or indirect interest in
any entity comprising Borrower, which interest exceeds forty-nine percent (49%),
without Lender’s written consent in each instance and receipt by Lender of (x)
written confirmation that any rating issued by such Rating Agency in connection
with the
Securitization will not, as a result of the proposed Transfer, be downgraded
from the then current ratings thereof, qualified or withdrawn, and (y) a
substantive non-consolidation opinion in form and substance acceptable to
Lender.

       

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

       

      Section
9.04. Permitted
Transfer.
Notwithstanding the foregoing provisions of this Article IX, the sale,
conveyance or transfer of the Property, except as otherwise set forth in Section
9.04(B) (hereinafter, “Sale”) shall
be permitted hereunder provided that each of the following terms and conditions
are satisfied:

       

      (a) no Event
of Default is then continuing hereunder or under any of the other Loan Documents
and no O&M Operative Period shall have commenced and be
continuing;

       

      (b) Lender
shall have consented to the Sale, provided, however, such consent shall not be
unreasonably withheld and, if the proposed Sale is to occur at any time after a
Securitization, each Rating Agency shall have delivered written confirmation
that any rating issued by such Rating Agency in connection with the
Securitization will not, as a result of the proposed Sale, be downgraded from
the then current ratings thereof, qualified or withdrawn; provided, however,
that no request for consent to the Sale will be entertained by Lender if the
proposed Sale is to occur within sixty (60) days of any contemplated sale of the
Loan by Lender, whether in connection with a Securitization or
otherwise;

       

      
        
          
          

        

        
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      (c) Borrower
gives Lender written notice of the terms of the proposed Sale not less than
forty-five (45) days before the date on which such Sale is scheduled to close
and, concurrently therewith, gives Lender (i) all such information concerning
the proposed transferee of the Property (hereinafter, “Buyer”) as
Lender would require in evaluating an initial extension of credit to a borrower
and Lender determines, in its reasonable discretion that the Buyer is acceptable
to Lender in all respects and (ii) a non-refundable application fee equal to
$7,500; 

       

      (d) Borrower
pays Lender, concurrently with the closing of such Sale, a non-refundable
assumption fee in an amount equal to one quarter of one percent (.25%) of the
then outstanding Loan Amount together with all reasonable out-of-pocket costs
and expenses, including, without limitation, reasonable attorneys’ fees,
incurred by Lender in connection with the Sale;

       

      (e) Buyer
assumes all of the obligations under the Loan Documents and, prior to or
concurrently with the closing of such Sale, 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 as Lender may require;

       

      (f) Borrower
and Buyer execute, without any cost or expense to Lender, new financing
statements or financing statement amendments and any additional documents
reasonably requested by Lender;

       

      (g) Borrower
delivers to Lender, without any cost or expense to Lender, such 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 reasonably satisfactory to Lender,
including, without limitation, an endorsement or endorsements to Lender’s title
insurance policy insuring the lien of this Security Instrument, 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 (e) of this Section, with no additional exceptions added to such
policy, and insuring that fee simple title to the Property is vested in
Buyer;

       

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

       

      (i) subject
to the provisions of Section 18.32 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, 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; provided that, upon the closing of such Sale, if Borrower and Buyer
have satisfied each of the terms of this Section 9.04, as reasonably determined
by Lender, Lender shall release Borrower from all obligations arising after the
closing of such Sale. Additionally, if a replacement guarantor acceptable to
Lender in its reasonable discretion executes a guaranty identical in substance
to the guaranty executed by Guarantor in connection with the Loan (the
“Guaranty”),
Lender shall release the existing Guarantor from any liabilities under the
Guaranty arising after the closing of such Sale;


      
        
          
          

        

        
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      (j) such Sale
is not construed so as to relieve any Guarantor of its obligations under any
guaranty or indemnity agreement executed in connection with the Loan and each
such Guarantor 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 agreement, provided that if Buyer or a party
associated with Buyer approved by Lender in its sole discretion assumes the
obligations of the current Guarantor under its guaranty and Buyer or such party
associated with Buyer, as applicable, executes, without any cost or expense to
Lender, a new guaranty in similar form and substance to the existing guaranty
and otherwise satisfactory to Lender, then Lender shall release the current
Guarantor from all obligations arising under its guaranty after the closing of
such Sale; and

       

      (k) Buyer is
a Single Purpose Entity and Lender receives a non-consolidation opinion relating
to Buyer from Buyer’s counsel, which opinion is in form and substance acceptable
to Lender.

       

      ARTICLE X:
CERTIFICATES

       

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

       

      (b) Within
fifteen (15) days after written request by Borrower, Lender shall furnish to
Borrower a written statement confirming the amount of the Debt, the maturity
date of the Note and the date to which interest has been paid.

       

      (c) Borrower
shall use all commercially reasonable efforts to obtain estoppel certificates
from tenants in form and substance reasonably acceptable to Lender or in form
and substance as provided in the applicable Leases, but, provided no Event of
Default has occurred and is continuing, in no event shall Borrower be required
to deliver estoppel certificates more than twice during any Loan
Year.

       

      ARTICLE XI:
NOTICES

       

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


      
        
          
          

        

        
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                If
      to Lender:

              	
                To
      Lender, at the address first written above,

              
	 	 
	
                with
      a copy to:

              	
                Winston
      & Strawn LLP

              
	 	
                200
      Park Avenue

              
	 	
                New
      York, New York 10166

              
	 	
                Attention:
      Corey A. Tessler, Esq.

              
	 	 
	
                If
      to Borrower:

              	
                To
      Borrower, at the address first written above,

              
	 	 
	
                with
      a copy to:

              	
                Herrick
      Feinstein LLP

              
	 	
                2
      Park Avenue 

              
	 	
                New
      York, New York 10016 

              
	 	
                Attention:
      Sheldon Chanales, Esq.

              


      

       

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

       


      
        
          
          

        

        
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      ARTICLE XII:
INDEMNIFICATION

       

      Section
12.01. Indemnification Covering
Property. In
addition, and without limitation, to any other provision of this Security
Instrument or any other Loan Document, Borrower shall protect, indemnify and
save harmless Lender and its successors and assigns, and each of their agents,
employees, officers, directors, stockholders, partners and members
(collectively, “Indemnified
Parties”) for,
from and against any claims, demands, penalties, fines, actual liabilities,
settlements, actual damages, actual costs and expenses of whatever kind or
nature, known or unknown, contingent or otherwise, whether incurred or imposed
within or outside the judicial process, including, without limitation,
reasonable attorneys’ fees and disbursements imposed upon or incurred by or
asserted against any of the Indemnified Parties by reason of (a) ownership of
this Security Instrument, the Assignment, the Property or any part thereof or
any interest therein or receipt of any Rents; (b) any accident, injury to or
death of any person or loss of or damage to property occurring in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs, parking
areas, streets or ways; (c) any use, nonuse or condition in, on or about, or
possession, alteration, repair, operation, maintenance or management of, the
Property or any part thereof or on the adjoining sidewalks, curbs, parking
areas, streets or ways; (d) any failure on the part of Borrower to perform or
comply with any of the terms of this Security Instrument or the Assignment; (e)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Property or any part thereof; (f) any claim by
brokers, finders or similar Persons claiming to be entitled to a commission in
connection with any Lease or other transaction involving the Property or any
part thereof; (g) any Imposition including, without limitation, any Imposition
attributable to the execution, delivery, filing, or recording of any Loan
Document, Lease or memorandum thereof; (h) any lien, security interest, or claim
arising on or against the Property or any part thereof under any Legal
Requirement or any liability asserted against any of the Indemnified Parties
with respect thereto; (i) any claim arising out of or in any way relating to any
tax or other imposition on the making and/or recording of this Security
Instrument, the Note or any of the other Loan Documents unless otherwise set
forth herein; (j) a Default under Sections 2.02(f) or 2.02(g) hereof, (k) the
failure of any Person to file timely with the Internal Revenue Service an
accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate,
Broker and Barter Exchange Transactions, which may be required in connection
with the Loan, or to supply a copy thereof in a timely fashion to the recipient
of the proceeds of the Loan; or (l) the claims of any lessee or any Person
acting through or under any lessee or otherwise arising under or as a
consequence of any Lease prior to the time Lender may have taken possession of
the Property. Notwithstanding the foregoing provisions of this Section 12.01 to
the contrary, Borrower shall have no obligation to indemnify the Indemnified
Parties pursuant to this Section 12.01 for liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses relative to the
foregoing which result from Lender’s, and its successors’ or assigns’, willful
misconduct or gross negligence. Any amounts payable to Lender by reason of the
application of this Section 12.01 shall constitute a part of the Debt secured by
this Security Instrument and the other Loan Documents and shall become
immediately due and payable and shall bear interest at the Default Rate from the
date the liability, obligation, claim, cost or expense is sustained by Lender,
as applicable, until paid. The provisions of this Section 12.01 shall survive
the termination of this Security Instrument whether by repayment of the Debt,
foreclosure or delivery of a deed in lieu thereof, assignment or otherwise. In
case any action, suit or proceeding is brought against any of the Indemnified
Parties by reason of any occurrence of the type set forth in (a) through (l)
above, Borrower shall, at Borrower’s expense, resist and defend such action,
suit or proceeding or will cause the same to be resisted and defended by counsel
at Borrower’s expense for the insurer of the liability or by counsel designated
by Borrower (unless reasonably disapproved by Lender promptly after Lender has
been notified of such counsel); provided,
however, that
nothing herein shall compromise the right of Lender (or any other Indemnified
Party) to appoint its own counsel at Borrower’s expense for its defense with
respect to any action which, in the reasonable opinion of Lender or such other
Indemnified Party, as applicable, presents a conflict or potential conflict
between Lender or such other Indemnified Party that would make such separate
representation advisable. Any Indemnified Party will give Borrower prompt notice
after such Indemnified Party obtains actual knowledge of any potential claim by
such Indemnified Party for indemnification hereunder. The Indemnified Parties
shall not settle or compromise any action, proceeding or claim as to which it is
indemnified hereunder without notice to, and provided that no Event of Default
has occurred and is continuing, consultation with, Borrower.

       

      
        
          
          

        

        
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      ARTICLE XIII:
DEFAULTS

       

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

       

      (a) if the
final payment or prepayment premium, if any, due under the Note shall not be
paid on Maturity;

       

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

       

      (c) if
payment of any sum (other than the sums described in (a) above or (b) above)
required to be paid pursuant to the Note, this Security Instrument or any other
Loan Document shall not be paid within seven (7) Business Days after Lender
delivers written notice to Borrower that same is due and payable thereunder or
hereunder;

       

      (d) if
Borrower, Guarantor or, if Borrower or Guarantor is a partnership, any general
partner of Borrower or Guarantor, or, if Borrower or Guarantor is a limited
liability company, any member of Borrower or Guarantor, shall institute or cause
to be instituted any proceeding for the termination or dissolution of Borrower,
Guarantor or any such general partner or member;

       

      (e) if the
insurance policies required hereunder are not kept in full force and effect, or
if the insurance policies are not assigned and delivered to Lender as herein
provided;

       

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

       

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

       

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

       

      (i) if a
receiver, liquidator or trustee of Borrower, Guarantor or any general partner of
Borrower or Guarantor shall be appointed or if Borrower, Guarantor or their
respective general partners shall be adjudicated a bankrupt or insolvent, or if
any petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to by, or acquiesced in by, Borrower, Guarantor or their
respective general partners or if any proceeding for the dissolution or
liquidation of Borrower, Guarantor or their respective general partners shall be
instituted; however, if such appointment, adjudication, petition or proceeding
was involuntary and not consented to by Borrower, Guarantor or their respective
general partners, as applicable, upon the same not being discharged, stayed or
dismissed within sixty (60) days or if Borrower, Guarantor or their respective
general partners shall generally not be paying its debts as they become
due;


      
        
          
          

        

        
          -79-

          
            

          

        

        
          
          

        

      

       

      (j) if
Borrower shall be in default beyond any notice or grace period, if any, under
any other mortgage or deed of trust or deed to secure debt or security agreement
covering any part of the Property without regard to its priority relative to
this Security Instrument; provided, however, this provision shall not be deemed
a waiver of the provisions of Article IX prohibiting further encumbrances
affecting the Property or any other provision of this Security
Instrument;

       

      (k) if the
Property becomes subject (i) to any lien or security interest which is superior
to the lien of this Security Instrument, other than a lien for real estate taxes
and assessments not due and payable, or (ii) to any mechanic’s, materialman’s or
other lien which is or is asserted to be superior to the lien of this Security
Instrument, and such lien shall remain undischarged (by payment, bonding, or
otherwise) for ten (10) days unless contested in accordance with the terms
hereof; 

       

      (l) if
Borrower discontinues the operation of the Property or any part thereof for
reasons other than repair or restoration arising from a casualty or condemnation
for ten (10) days or more; 

       

      (m) except as
permitted in this Security Instrument, any material alteration, demolition or
removal by, on behalf or with the consent of Borrower of any of the Improvements
without the prior consent of Lender;

       

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

       

      (o) Intentionally
Deleted;

       

      (p) if
Borrower breaches any provision of Article IX or Section 2.02(g) of this
Security Instrument; or

       

      (q) if a
default shall occur under any of the other terms, covenants or conditions of the
Note, this Security Instrument or any other Loan Document, other than as set
forth in (a) through (p) above, for ten (10) days after notice from Lender in
the case of any default which can be cured by the payment of a sum of money, or
for thirty (30) days after notice from Lender in the case of any other default
or an additional ninety (90) days if Borrower is diligently and continuously
effectuating a cure of a curable non-monetary default, other than as set forth
in (a) through (p) above.

       

      
        
          
            
            

          

          
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      Section
13.02. Remedies. (a) Upon
the occurrence and during the continuance of any Event of Default, Lender may,
in addition to any other rights or remedies available to it hereunder or under
any other Loan Document, at law or in equity, take such action, without notice
or demand, as it reasonably deems advisable to protect and enforce its rights
against Borrower and in and to the Property including, but not limited to, the
following actions, each of which may be pursued singly, concurrently or
otherwise, at such time and in such order as Lender may determine, in its sole
discretion, without impairing or otherwise affecting any other rights and
remedies of Lender hereunder, at law or in equity: declare all or any portion of
the unpaid Debt to be immediately due and payable; provided, however, that upon
the occurrence of any of the events specified in Section 13.01(i), the entire
Debt will be immediately due and payable without notice or demand or any other
declaration of the amounts due and payable; but subject to the rights of the
tenants under the Leases, enter into or upon the Property or any part thereof,
either personally or by its agents, nominees or attorneys, and dispossess
Borrower and its agents and servants therefrom, and thereupon Lender may (A)
use, operate, manage, control, insure, maintain, repair, restore and otherwise
deal with all and every part of the Property and conduct the business thereat,
(B) make alterations, additions, renewals, replacements and improvements to or
on the Property or any part thereof, (C) exercise all rights and powers of
Borrower with respect to the Property or any part thereof, whether in the name
of Borrower or otherwise, including, without limitation, the right to make,
cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all earnings, revenues, rents, issues, profits and other
income of the Property and every part thereof, and (D) apply the receipts from
the Property or any part thereof to the payment of the Debt, after deducting
therefrom all expenses (including, without limitation, reasonable attorneys’
fees and disbursements) reasonably incurred in connection with the aforesaid
operations and all amounts necessary to pay the Impositions, insurance and other
charges in connection with the Property or any part thereof, as well as just and
reasonable compensation for the services of Lender’s third-party agents; or
(iii) have an appraisal or other valuation of the Property or any part thereof
performed by an Appraiser (and Borrower covenants and agrees it shall cooperate
in causing any such valuation or appraisal to be performed) and any cost or
expense incurred by Lender in connection therewith shall constitute a portion of
the Debt and be secured by this Security Instrument and shall be immediately due
and payable to Lender with interest, at the Default Rate, until the date of
receipt by Lender; or (iv), sell the Property or institute, or instruct Trustee
to institute, proceedings for the complete foreclosure of this Security
Instrument, or take such other action as may be allowed pursuant to Legal
Requirements, at law or in equity, for the enforcement of this Security
Instrument in which case the Property or any part thereof may be sold for cash
or credit in one or more parcels; or (v) with or without entry, and to the
extent permitted and pursuant to the procedures provided by applicable Legal
Requirements, institute proceedings for the partial foreclosure of this Security
Instrument, or take such other action as may be allowed pursuant to Legal
Requirements, at law or in equity, for the enforcement of this Security
Instrument for the portion of the Debt then due and payable, subject to the lien
of this Security Instrument continuing unimpaired and without loss of priority
so as to secure the balance of the Debt not then due; or (vi) sell the Property
or any part thereof and any or all estate, claim, demand, right, title and
interest of Borrower therein and rights of redemption thereof, pursuant to power
of sale or otherwise, at one or more sales, in whole or in parcels, in any order
or manner, at such time and place, upon such terms and after such notice thereof
as may be required or permitted by law, at the discretion of Lender, and in the
event of a sale, by foreclosure or otherwise, of less than all of the Property,
this Security Instrument shall continue as a lien on the remaining portion of
the Property; or (vii) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained in the
Loan Documents, or any of them; or (viii) recover judgment on the Note or any
guaranty either before, during or after
(or in lieu of) any proceedings for the enforcement of this Security Instrument;
(ix) require, at Lender's option, Borrower to pay monthly in advance to Lender,
or any receiver appointed to collect the Rents, the fair and reasonable rental
value for the use and occupation of any portion of the Property occupied by
Borrower and may require Borrower to vacate and surrender possession to Lender
of the Property or to such receiver and Borrower may be evicted by summary
proceedings or otherwise; or (i) without notice to Borrower (A) apply all or any
portion of the cash collateral in any Sub-Account and Escrow Account, including
any interest and/or earnings therein, to carry out the obligations of Borrower
under this Security Instrument and the other Loan Documents, to protect and
preserve the Property and for any other purpose permitted under this Security
Instrument and the other Loan Documents and/or (B) have all or any portion of
such cash collateral immediately paid to Lender to be applied against the Debt
in the order and priority set forth in the Note; or (xi) pursue any or all such
other rights or remedies as Lender may have under applicable law or in equity;
provided, however, that the provisions of this Section 13.02(a) shall not be
construed to extend or modify any of the notice requirements or grace periods
provided for hereunder or under any of the other Loan Documents. Borrower hereby
waives, to the fullest extent permitted by Legal Requirements, any defense
Borrower might otherwise raise or have by the failure to make any tenants
parties defendant to a foreclosure proceeding and to foreclose their rights in
any proceeding instituted by Lender. 

       

      
        
          
          

        

        
          -81-

          
            

          

        

        
          
          

        

      

       

      (b) Any time
after an Event of Default Lender shall have the power, to the extent permitted
by applicable law, to sell the Property or any part thereof at public auction,
in such manner, at such time and place, upon such terms and conditions, and upon
such public notice as Lender may deem best for the interest of Lender, or as may
be required or permitted by applicable law, consisting of advertisement (if
required by law) in a newspaper of general circulation in the jurisdiction and
for such period as applicable law may require and at such other times and under
the power of sale herein granted or by such other methods, if any, as may be
required or permitted by law to convey the Property or portions thereof in one
or more sales in fee simple by Lender’s deed to and at the cost of the
purchaser, who shall not be liable to see to the application of the purchase
money. The proceeds or avails of any sale made under or by virtue of this
Section 13.02, together with any other sums which then may be held by Lender
under this Security Instrument, whether under the provisions of this Section
13.02 or otherwise, shall, to the extent permitted by applicable law, be applied
as follows:

       

      First: To
the payment of the third-party costs and expenses reasonably incurred in
connection with any such sale and to advances, fees and expenses, including,
without limitation, title service guaranty fees, reasonable fees and expenses of
Lender’s legal counsel as applicable, and of any judicial proceedings wherein
the same may be made, and of all expenses, liabilities and advances reasonably
made or incurred by Lender under this Security Instrument, together with
interest as provided herein on all such advances made by Lender, and all
Impositions, except any Impositions or other charges subject to which the
Property shall have been sold;

       

      Second:
To the payment of the whole amount then due, owing and unpaid under the Note for
principal and interest thereon, with interest on such unpaid principal at the
Default Rate from the date of the occurrence of the earliest Event of Default
that formed a basis for such sale until the same is paid;

       

      Third: To
the payment of any other portion of the Debt required to be paid by Borrower
pursuant to any provision of this Security Instrument, the Note, or any of the
other Loan Documents; and

       

      Fourth:
The surplus, if any, to Borrower or such other Persons as may be legally
entitled thereto, unless otherwise required by Legal Requirements.

       

      Lender
and any receiver or custodian of the Property or any part thereof shall be
liable to account for only those rents, issues, proceeds and profits actually
received by it.

       

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


      
        
          
          

        

        
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      (d) Upon the
completion of any sale or sales made by Lender under or by virtue of this
Section 13.02, Lender or any officer of any court empowered to do so, shall
execute and deliver to the accepted purchaser or purchasers a good and
sufficient instrument, or good and sufficient instruments, granting, conveying,
assigning and transferring all estate, right, title and interest in and to the
property and rights sold. Lender is hereby irrevocably appointed the true and
lawful attorney-in-fact of Borrower (coupled with an interest), in its name and
stead, to make all necessary conveyances, assignments, transfers and deliveries
of the property and rights so sold pursuant to this Section 13.02 and for that
purpose Lender may execute all necessary instruments of conveyance, assignment,
transfer and delivery, and may substitute one or more Persons with like power,
Borrower hereby ratifying and confirming all that its said attorney-in-fact or
such substitute or substitutes shall lawfully do by virtue hereof. Nevertheless,
Borrower, if so requested by Lender, shall ratify and confirm any such sale or
sales by executing and delivering to Lender, or to such purchaser or purchasers
all such instruments as may be advisable, in the sole judgment of Lender, for
such purpose, and as may be designated in such request. Any such sale or sales
made under or by virtue of this Section 13.02, whether made under the power of
sale herein granted or under or by virtue of judicial proceedings or a judgment
or decree of foreclosure and sale, shall operate to divest all the estate,
right, title, interest, claim and demand whatsoever, whether at law or in
equity, of Borrower in and to the property and rights so sold, and shall, to the
fullest extent permitted under Legal Requirements, be a perpetual bar, both at
law and in equity against Borrower and against any and all Persons claiming or
who may claim the same, or any part thereof, from, through or under
Borrower.

       

      (e) In the
event of any sale made under or by virtue of this Section 13.02 (whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or a judgment or decree of foreclosure and sale), the entire Debt
immediately thereupon shall, anything in the Loan Documents to the contrary
notwithstanding, become due and payable.

       

      (f) Upon any
sale made under or by virtue of this Section 13.02 (whether made under the power
of sale herein granted or under or by virtue of judicial proceedings or a
judgment or decree of foreclosure and sale), Lender may bid for and acquire the
Property or any part thereof and in lieu of paying cash therefor may make
settlement for the purchase price by crediting upon the Debt the net sales price
after deducting therefrom the expenses of the sale and the costs of the
action.

       

      (g) No
recovery of any judgment by Lender and no levy of an execution under any
judgment upon the Property or any part thereof or upon any other property of
Borrower shall release the lien of this Security Instrument upon the Property or
any part thereof, or any liens, rights, powers or remedies of Lender hereunder,
but such liens, rights, powers and remedies of Lender shall continue unimpaired
until all amounts due under the Note, this Security Instrument and the other
Loan Documents are paid in full.

       

      (h) Upon the
exercise by Lender of any power, right, privilege, or remedy pursuant to this
Security Instrument which requires any consent, approval, registration,
qualification, or authorization of any Governmental Authority, Borrower agrees
to execute and deliver, or will cause the execution and delivery of, all
applications, certificates, instruments, assignments and other documents and
papers that Lender or any purchaser of the Property may be required to obtain
for such governmental consent, approval, registration, qualification, or
authorization and Lender is hereby irrevocably appointed the true and lawful
attorney-in-fact of Borrower (coupled with an interest), in its name and stead,
to execute all such applications, certificates, instruments, assignments and
other documents and papers.


      
        
          
          

        

        
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      Section
13.03. Payment of Debt After
Default. If,
following the occurrence of any Event of Default, Borrower shall tender payment
of an amount sufficient to satisfy the Debt in whole or in part at any time
prior to a foreclosure sale of the Property, and if at the time of such tender
prepayment of the principal balance of the Note is not permitted by the Note or
this Security Instrument, Borrower shall, in addition to the entire Debt, also
pay to Lender all amounts due Lender under Section 1.5(b) of the Note. If at the
time of such tender, prepayment of the principal balance of the Note is
permitted, such tender by Borrower shall be deemed to be a voluntary prepayment
of the principal balance of the Note and Borrower shall, in addition to the
entire Debt, also pay to Lender the applicable prepayment consideration
specified in the Note and this Security Instrument.

       

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

       

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

       

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


      
        
          
          

        

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

       

      Section
13.08. Right to Cure
Defaults. (a)
Upon the
occurrence of any Event of Default, Lender or its agents may, but without any
obligation to do so and without notice to or demand on Borrower and without
releasing Borrower from any obligation hereunder, make or do the same in such
manner and to such extent as Lender may deem necessary to protect the security
hereof. Lender and its agents are authorized to enter upon the Property or any
part thereof for such purposes, or appear in, defend, or bring any action or
proceedings to protect Lender’s interest in the Property or any part thereof or
to foreclose this Security Instrument or collect the Debt, and the cost and
expense thereof (including reasonable attorneys’ fees to the extent permitted by
law), with interest as provided in this Section 13.08, shall constitute a
portion of the Debt and shall be immediately due and payable to Lender upon
demand. All such costs and expenses incurred by Lender or its agents in
remedying such Event of Default or in appearing in, defending, or bringing any
such action or proceeding shall bear interest at the Default Rate, for the
period from the date so demanded to the date of payment to Lender. All such
costs and expenses incurred by Lender or its agents together with interest
thereon calculated at the above rate shall be deemed to constitute a portion of
the Debt and be secured by this Security Instrument.

       

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

       

      Section
13.09. Late Payment
Charge. If any
portion of the Debt is not paid in full on or before the day on which it is due
and payable hereunder Borrower shall pay to Lender an amount equal to five
percent (5%) of such unpaid portion of the Debt (“Late
Charge”) to
defray the expense incurred by Lender in handling and processing such delinquent
payment, and such amount shall constitute a part of the Debt; provided, that no
late charge shall be due and payable if Borrower fails to repay the Loan
evidenced hereby upon the Maturity Date (whether by acceleration or
otherwise). 


      
        
          
          

        

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

       

      Section
13.11. Marshalling and Other
Matters.
Borrower hereby waives, to the fullest extent permitted by law, the benefit of
all appraisement, valuation, stay, extension, reinstatement, redemption (both
equitable and statutory) and homestead laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Property or any
part thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of Borrower, whether equitable
or statutory and on behalf of each and every Person acquiring any interest in or
title to the Property or any part thereof subsequent to the date of this
Security Instrument and on behalf of all Persons to the fullest extent permitted
by applicable law.

       

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

       

      Section
13.13. General Provisions Regarding
Remedies.

       

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

       

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


      
        
          
          

        

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

       

      ARTICLE XIV:
COMPLIANCE WITH
REQUIREMENTS

       

      Section
14.01. Compliance with Legal
Requirements. (a)
Borrower
shall promptly comply with all present and future Legal Requirements, foreseen
and unforeseen, ordinary and extraordinary, whether requiring structural or
nonstructural repairs or alterations including, without limitation, all zoning,
subdivision, building, safety and environmental protection, land use and
development Legal Requirements, all Legal Requirements which may be applicable
to the curbs adjoining the Property or to the use or manner of use thereof, and
all rent control, rent stabilization and all other similar Legal Requirements
relating to rents charged and/or collected in connection with the Leases.
Borrower represents and warrants that the Property to the best of Borrower’s
knowledge is in compliance in all material respects with all Legal Requirements
as of the date hereof, no notes or notices of violations of any Legal
Requirements have been entered or received by Borrower and there is no basis for
the entering of such notes or notices.

       

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

       

      (c) Borrower
shall at all times comply with all applicable Legal Requirements with respect to
the construction, use and maintenance of any vaults adjacent to the Property. If
by reason of the failure to pay taxes, assessments, charges, permit fees,
franchise taxes or levies of any kind or nature, the continued use of the vaults
adjacent to Property or any part thereof is discontinued, Borrower nevertheless
shall, with respect to any vaults which may be necessary for the continued use
of the Property, take such steps (including the making of any payment) to ensure
the continued use of vaults or replacements.


      
        
          
          

        

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

       

      ARTICLE XV:
PREPAYMENT

       

      Section
15.01. Prepayment.
 Except as
set forth in Section 1.5 of the Note, no prepayment of the Debt may be made in
whole or in part.

       

      ARTICLE XVI:
ENVIRONMENTAL
COMPLIANCE

       

      Section
16.01. Covenants, Representations
and Warranties.
(a)
Borrower
has not, at any time, and, to Borrower’s best knowledge after due inquiry and
investigation, except as set forth in the Environmental Report, no other Person
has at any time, handled, buried, stored, retained, refined, transported,
processed, manufactured, generated, produced, spilled, allowed to seep, leak,
escape or leach, or pumped, poured, emitted, emptied, discharged, injected,
dumped, transferred or otherwise disposed of or dealt with Hazardous Materials
on, to or from the Premises or any other real property owned and/or occupied by
Borrower (other than in compliance with all Legal Requirements), and Borrower
does not intend to and shall not use the Property or any part thereof or any
such other real property for the purpose of handling, burying, storing,
retaining, refining, transporting, processing, manufacturing, generating,
producing, spilling, seeping, leaking, escaping, leaching, pumping, pouring,
emitting, emptying, discharging, injecting, dumping, transferring or otherwise
disposing of or dealing with Hazardous Materials, except for use and storage for
use of heating oil, cleaning fluids, pesticides and other substances customarily
used in the operation of properties that are being used for the same purposes as
the Property is presently being used, provided such use and/or storage for use
is in compliance with the requirements hereof and the other Loan Documents and
does not give rise to liability under applicable Legal Requirements or
Environmental Statutes or be the basis for a lien against the Property or any
part thereof. In addition, without limitation to the foregoing provisions,
Borrower represents and warrants that, to the best of its knowledge, after due
inquiry and investigation, except as previously disclosed in writing to Lender
or in the Environmental Report or Engineering Report, there is no asbestos in,
on, over, or under all or any portion of the fire-proofing or any other portion
of the Property.

       

      (b) Borrower,
after due inquiry and investigation, knows of no seepage, leak, escape, leach,
discharge, injection, release, emission, spill, pumping, pouring, emptying or
dumping of Hazardous Materials into waters on, under or adjacent to the Property
or any part thereof or any other real property owned and/or occupied by
Borrower, or onto lands from which such Hazardous Materials might seep, flow or
drain into such waters, except as disclosed in the Environmental
Report.


      
        
          
          

        

        
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      (c) Borrower
shall not permit any Hazardous Materials to be handled, buried, stored,
retained, refined, transported, processed, manufactured, generated, produced,
spilled, allowed to seep, leak, escape or leach, or to be pumped, poured,
emitted, emptied, discharged, injected, dumped, transferred or otherwise
disposed of or dealt with on, under, to or from the Property or any portion
thereof at any time, except for use and storage for use of heating oil, ordinary
cleaning fluids, pesticides and other substances customarily used in the
operation of properties that are being used for the same purposes as the
Property is presently being used, provided such use and/or storage for use is in
compliance with the requirements hereof and the other Loan Documents and does
not give rise to liability under applicable Legal Requirements or be the basis
for a lien against the Property or any part thereof.

       

      (d) Borrower
represents and warrants that no actions, suits, or proceedings have been
commenced, or are pending, or to the best knowledge of Borrower, are threatened
with respect to any Legal Requirement governing the use, manufacture, storage,
treatment, transportation, or processing of Hazardous Materials with respect to
the Property or any part thereof. Borrower has received no notice of, and,
except as disclosed in the Environmental Report, after due inquiry, has no
knowledge of any fact, condition, occurrence or circumstance which with notice
or passage of time or both would give rise to a claim under or pursuant to any
Environmental Statute pertaining to Hazardous Materials on, in, under or
originating from the Property or any part thereof or any other real property
owned or occupied by Borrower or arising out of the conduct of Borrower,
including, without limitation, pursuant to any Environmental
Statute.

       

      (e) Borrower
has not waived any Person’s liability with regard to Hazardous Materials in, on,
under or around the Property, nor has Borrower retained or assumed,
contractually or by operation of law, any other Person’s liability relative to
Hazardous Materials or any claim, action or proceeding relating
thereto.

       

      (f) In the
event that there shall be filed a lien against the Property or any part thereof
pursuant to any Environmental Statute pertaining to Hazardous Materials,
Borrower shall, within sixty (60) days or, in the event that the applicable
Governmental Authority has commenced steps to cause the Premises or any part
thereof to be sold pursuant to the lien, within fifteen (15) days, from the date
that Borrower receives notice of such lien, either (i) pay the claim and remove
the lien from the Property, or (ii) furnish (A) a bond satisfactory to Lender in
the amount of the claim out of which the lien arises, (B) a cash deposit in the
amount of the claim out of which the lien arises, or (C) other security
reasonably satisfactory to Lender in an amount sufficient to discharge the claim
out of which the lien arises.

       

      (g) Borrower
represents and warrants that (i) except as disclosed in the Environmental
Report, Borrower has no knowledge of any violation of any Environmental Statute
or any Environmental Problem in connection with the Property, nor has Borrower
been requested or required by any Governmental Authority to perform any remedial
activity or other responsive action in connection with any Environmental Problem
and (ii) neither the Property nor any other property owned by Borrower is
included or, to Borrower’s best knowledge, after due inquiry and investigation,
proposed for inclusion on the National Priorities List issued pursuant to CERCLA
by the United States Environmental Protection Agency (the “EPA”) or on
the inventory of other potential “Problem” sites issued by the EPA and has not
otherwise been identified by the EPA as a potential CERCLA site or included or,
to Borrower’s knowledge, after due inquiry and investigation, proposed for
inclusion on any list or inventory issued pursuant to any other Environmental
Statute, if any, or issued by any other Governmental Authority. Borrower
covenants that Borrower will comply with all Environmental Statutes affecting or
imposed upon Borrower or the Property.


      
        
          
          

        

        
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      (h) Borrower
covenants that it shall promptly notify Lender of the presence and/or release of
any Hazardous Materials and of any request for information or any inspection of
the Property or any part thereof by any Governmental Authority with respect to
any Hazardous Materials and provide Lender with copies of such request and any
response to any such request or inspection. Borrower covenants that it shall, in
compliance with applicable Legal Requirements, conduct and complete all
investigations, studies, sampling and testing (and promptly shall provide Lender
with copies of any such studies and the results of any such test) and all
remedial, removal and other actions necessary to clean up and remove all
Hazardous Materials in, on, over, under, from or affecting the Property or any
part thereof in accordance with all such Legal Requirements applicable to the
Property or any part thereof to the satisfaction of Lender.

       

      (i) Following
the occurrence of an Event of Default that is continuing hereunder, and without
regard to whether Lender shall have taken possession of the Property or a
receiver has been requested or appointed or any other right or remedy of Lender
has or may be exercised hereunder or under any other Loan Document, Lender shall
have the right (but no obligation) to conduct such investigations, studies,
sampling and/or testing of the Property or any part thereof as Lender may, in
its discretion, determine to conduct, relative to Hazardous Materials. All costs
and expenses incurred in connection therewith including, without limitation,
consultants’ fees and disbursements and laboratory fees, shall constitute a part
of the Debt and shall, upon demand by Lender, be immediately due and payable and
shall bear interest at the Default Rate from the date so demanded by Lender
until reimbursed. Borrower shall, at its sole cost and expense, fully and
expeditiously cooperate in all such investigations, studies, samplings and/or
testings including, without limitation, providing all relevant information and
making knowledgeable people available for interviews.

       

      (j) Borrower
represents and warrants that, except as disclosed in the Environmental Report,
all paint and painted surfaces existing within the interior or on the exterior
of the Improvements are not flaking, peeling, cracking, blistering, or chipping,
and do not contain lead or are maintained in a condition that prevents exposure
of young children to lead-based paint, as of the date hereof, and that the
current inspections, operation, and maintenance program at the Property with
respect to lead-based paint is consistent with FNMA guidelines and sufficient to
ensure that all painted surfaces within the Property shall be maintained in a
condition that prevents exposure of tenants to lead-based paint. To Borrower’s
knowledge, there have been no claims for adverse health effects from exposure on
the Property to lead-based paint or requests for the investigation, assessment
or removal of lead-based paint at the Property.

       

      (k) Borrower
represents and warrants that except in accordance with all applicable
Environmental Statutes and as disclosed in the Environmental Report, (i) no
underground treatment or storage tanks or pumps or water, gas, or oil wells are
or have been located about the Property, (ii) no PCBs or transformers,
capacitors, ballasts or other equipment that contain dielectric fluid containing
PCBs are located about the Property, (iii) no insulating material containing
urea formaldehyde is located about the Property and (iv) no asbestos-containing
material is located about the Property.

       

      
        
          
          

        

        
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      (l) Environmental
Indemnification.
Borrower shall defend, indemnify and hold harmless the Indemnified Parties for,
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, known or
unknown, contingent or otherwise, whether incurred or imposed within or outside
the judicial process, including, without limitation, reasonable attorneys’ and
consultants’ fees and disbursements and investigations and laboratory fees
arising out of, or in any way related to any Environmental Problem, including
without limitation:

       

      (a) the
presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threat of release of any Hazardous Materials in, on, over, under,
from or affecting the Property or any part thereof whether or not disclosed by
the Environmental Report;

       

      (b) any
personal injury (including wrongful death, disease or other health condition
related to or caused by, in whole or in part, any Hazardous Materials) or
property damage (real or personal) arising out of or related to any Hazardous
Materials in, on, over, under, from or affecting the Property or any part
thereof whether or not disclosed by the Environmental Report;

       

      (c) any
action, suit or proceeding brought or threatened, settlement reached, or order
of any Governmental Authority relating to such Hazardous Material whether or not
disclosed by the Environmental Report; and/or

       

      (d) any
violation of the provisions, covenants, representations or warranties of Section
16.01 hereof or of any Legal Requirement which is based on or in any way related
to any Hazardous Materials in, on, over, under, from or affecting the Property
or any part thereof including, without limitation, the cost of any work
performed and materials furnished in order to comply therewith whether or not
disclosed by the Environmental Report.

       

      Notwithstanding
the foregoing provisions of this Section 16.02 to the contrary, Borrower shall
have no obligation to indemnify Lender for liabilities, claims, damages,
penalties, causes of action, costs and expenses relative to the foregoing which
result directly from Lender’s willful misconduct or gross negligence. Any
amounts payable to Lender by reason of the application of this Section 16.02
shall be secured by this Security Instrument and shall, upon demand by Lender,
become immediately due and payable and shall bear interest at the Default Rate
from the date so demanded by Lender until paid.

       

      This
indemnification shall survive the termination of this Security Instrument
whether by repayment of the Debt, foreclosure or deed in lieu thereof,
assignment, or otherwise. The indemnity provided for in this Section 16.02 shall
not be included in any exculpation of Borrower or its principals from personal
liability provided for in this Security Instrument or in any of the other Loan
Documents. Nothing in this Section 16.02 shall be deemed to deprive Lender of
any rights or remedies otherwise available to Lender, including, without
limitation, those rights and remedies provided elsewhere in this Security
Instrument or the other Loan Documents. The foregoing indemnity shall
specifically not include any such costs relating to Hazardous Materials which
are initially placed on, in or under any of the Properties after foreclosure or
other taking of title of such Properties by Lender or its successors or
assigns.

       

      
        
          
          

        

        
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      ARTICLE XVII:
ASSIGNMENTS

       

      Section
17.01. Participations and
Assignments. Lender
shall have the right to assign this Security Instrument and/or any of the Loan
Documents, and to transfer, assign or sell participations and subparticipations
(including blind or undisclosed participations and subparticipations) in the
Loan Documents and the obligations hereunder to any Person; provided, however,
that no such participation shall increase, decrease or otherwise affect either
Borrower’s or Lender’s obligations under this Security Instrument or the other
Loan Documents or increase the Debt.

       

      ARTICLE XVIII:
MISCELLANEOUS

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

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

       

      Section
18.09. Headings; Construction of
Documents; etc. The
table of contents, headings and captions of various paragraphs of this Security
Instrument are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
Borrower acknowledges that it was represented by competent counsel in connection
with the negotiation and drafting of this Security Instrument and the other Loan
Documents and that neither this Security Instrument nor the other Loan Documents
shall be subject to the principle of construing the meaning against the Person
who drafted same.

       

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

       

      Section
18.11. Waiver of
Notice.
Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Security Instrument
specifically and expressly provides for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not, pursuant
to applicable Legal Requirements, permitted to waive the giving of
notice.

       

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

       

      Section
18.13. Applicable
Law.
THIS
SECURITY INSTRUMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA.

       

      
        
          
          

        

        
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      Section
18.14. Security
Agreement. (a)
(i) This
Security Instrument is both a real property mortgage, deed to secure debt or
deed of trust, as applicable, and a “security agreement” within the meaning of
the UCC. The Property includes both real and personal property and all other
rights and interests, whether tangible or intangible in nature, of Borrower in
the Property, and Borrower hereby grants to Lender a security interest in all
portions of the Property constituting personal property or fixtures under the
UCC. This Security Instrument is filed as a fixture filing and covers goods
which are or are to become fixtures on the Property. Borrower by executing and
delivering this Security Instrument has granted to Lender, as security for the
Debt, a security interest in the Property to the full extent that the Property
may be subject to the UCC (said portion of the Property so subject to the UCC
being called in this Section 18.14 the “Collateral”). If an
Event of Default shall occur, Lender, in addition to any other rights and
remedies which it may have, shall have and may exercise immediately and without
demand, any and all rights and remedies granted to a secured party upon default
under the UCC, including, without limiting the generality of the foregoing, the
right to take possession of the Collateral or any part thereof, and to take such
other measures as Lender may deem necessary for the care, protection and
preservation of the Collateral. Upon request or demand of Lender following an
Event of Default, Borrower shall, at its expense, assemble the Collateral and
make it available to Lender at a convenient place acceptable to Lender. Borrower
shall pay to Lender on demand any and all expenses, including reasonable legal
expenses and attorneys’ fees, incurred or paid by Lender in protecting its
interest in the Collateral and in enforcing its rights hereunder with respect to
the Collateral. Any disposition pursuant to the UCC of so much of the Collateral
as may constitute personal property shall be considered commercially reasonable
if made pursuant to a public sale which is advertised at least twice in a
newspaper in which sheriff’s sales are advertised in the county where the
Premises is located. Any notice of sale, disposition or other intended action by
Lender with respect to the Collateral given to Borrower in accordance with the
provisions hereof at least ten (10) days prior to such action, shall constitute
reasonable notice to Borrower. The proceeds of any disposition of the
Collateral, or any part thereof, may be applied by Lender to the payment of the
Debt in such priority and proportions as Lender in its discretion shall deem
proper. It is not necessary that the Collateral be present at any disposition
thereof. Lender shall have no obligation to clean-up or otherwise prepare the
Collateral for disposition.

       

      (ii) The
mention in a financing statement filed in the records normally pertaining to
personal property of any portion of the Property shall not derogate from or
impair in any manner the intention of this Security Instrument. Lender hereby
declares that all items of Collateral are part of the real property encumbered
hereby to the fullest extent permitted by law, regardless of whether any such
item is physically attached to the Improvements or whether serial numbers are
used for the better identification of certain items. Specifically, the mention
in any such financing statement of any items included in the Property shall not
be construed to alter, impair or impugn any rights of Lender as determined by
this Security Instrument or the priority of Lender’s lien upon and security
interest in the Property in the event that notice of Lender’s priority of
interest as to any portion of the Property is required to be filed in accordance
with the UCC to be effective against or take priority over the interest of any
particular class of persons, including the federal government or any subdivision
or instrumentality thereof. No portion of the Collateral constitutes or is the
proceeds of “Farm Products”, as defined in the UCC.


      
        
          
          

        

        
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      (iii) If
Borrower is at any time a beneficiary under a letter of credit now or hereafter
issued in favor of Borrower, Borrower shall promptly notify Lender thereof and,
at the request and option of Lender, Borrower shall, pursuant to an agreement in
form and substance satisfactory to Lender, either (A) arrange for the issuer and
any confirmer of such letter of credit to consent to an assignment to Lender of
the proceeds of any drawing under the letter of credit or (B) arrange for Lender
to become the transferee beneficiary of the letter of credit, with Lender
agreeing, in each case, that the proceeds of any drawing under the letter to
credit are to be applied as provided in this Security Instrument.

       

      (iv) Borrower
and Lender acknowledge that for the purposes of Article 9 of the UCC, the law of
the State of New York shall be the law of the jurisdiction of the bank in which
the Central Account is located.

       

      (v) Lender
may comply with any applicable Legal Requirements in connection with the
disposition of the Collateral, and Lender’s compliance therewith will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.

       

      (vi) Lender
may sell the Collateral without giving any warranties as to the Collateral.
Lender may specifically disclaim any warranties of title, possession, quiet
enjoyment or the like. This procedure will not be considered to adversely affect
the commercial reasonableness of any sale of the Collateral.

       

      (vii) If Lender
sells any of the Collateral upon credit, Borrower will be credited only with
payments actually made by the purchaser, received by Lender and applied to the
indebtedness of Borrower. In the event the purchaser of the Collateral fails to
fully pay for the Collateral, Lender may resell the Collateral and Borrower will
be credited with the proceeds of such sale.

       

      (b) Borrower
hereby irrevocably appoints Lender as its attorney-in-fact, coupled with an
interest, to file with the appropriate public office on its behalf any financing
or other statements signed only by Lender, as secured party, or, to the extent
permitted under the UCC, unsigned, in connection with the Collateral covered by
this Security Instrument.

       

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

       

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


      
        
          
          

        

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

       

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

       

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

       

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

       

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

       

      Section
18.22. Advances. This
Security Instrument shall cover any and all advances made pursuant to the Loan
Documents, rearrangements and renewals of the Debt and all extensions in the
time of payment thereof, even though such advances, extensions or renewals be
evidenced by new promissory notes or other instruments hereafter executed and
irrespective of whether filed or recorded. Likewise, the execution of this
Security Instrument shall not impair or affect any other security which may be
given to secure the payment of the Debt, and all such additional security shall
be considered as cumulative. The taking of additional security, execution of
partial releases of the security, or any extension of time of payment of the
Debt shall not diminish the force, effect or lien of this Security Instrument
and shall not affect or impair the liability of Borrower and shall not affect or
impair the liability of any maker, surety, or endorser for the payment of the
Debt.


      
        
          
          

        

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

       

      Section
18.24. Intervening
Lien. To the
fullest extent permitted by law, any agreement hereafter made pursuant to this
Security Instrument shall be superior to the rights of the holder of any
intervening lien or security interest.

       

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

       

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

       

      Section
18.27. Borrower’s Obligations
Absolute.
Borrower acknowledges that Lender and/or certain Affiliates of Lender are
engaged in the business of financing, owning, operating, leasing, managing, and
brokering real estate and in other business ventures which may be viewed as
adverse to or competitive with the business, prospect, profits, operations or
condition (financial or otherwise) of Borrower. Except as set forth to the
contrary in the Loan Documents, all sums payable by Borrower hereunder shall be
paid without notice or demand, counterclaim, set-off, deduction or defense and
without abatement, suspension, deferment, diminution or reduction, and the
obligations and liabilities of Borrower hereunder shall in no way be released,
discharged, or otherwise affected (except as expressly provided herein) by
reason of: (a) any damage to or destruction of or any Taking of the Property or
any portion thereof; (b) any restriction or prevention of or interference with
any use of the Property or any portion thereof; (c) any title defect or
encumbrance or any eviction from the Premises or any portion thereof by title
paramount or otherwise; (d) any bankruptcy proceeding relating to Borrower, any
General Partner, or any guarantor or indemnitor, or any action taken with
respect to this Security Instrument or any other Loan Document by any trustee or
receiver of Borrower or any such General Partner, guarantor or indemnitor, or by
any court, in any such proceeding; (e) any claim which Borrower has or might
have against Lender; (f) any default or failure on the part of Lender to perform
or comply with any of the terms hereof or of any other agreement with Borrower;
or (g) any other occurrence whatsoever, whether similar or dissimilar to the
foregoing, whether or not Borrower shall have notice or knowledge of any of the
foregoing. 

       

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


      
        
          
          

        

        
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      Section
18.29. Securitization
Opinions. In the
event the Loan is included as an asset of a Securitization by Lender or any of
its Affiliates, Borrower shall, within fifteen (15) Business Days after Lender’s
written request therefor, at Lender’s sole cost and expense, deliver opinions in
form and substance and delivered by counsel reasonably acceptable to Lender and
each Rating Agency, as may be reasonably required by Lender and/or each Rating
Agency in connection with such securitization. Borrower’s failure to deliver the
opinions required hereby within such ten (10) Business Day period shall
constitute an “Event of Default” hereunder.

       

      Section
18.30. Intentionally
Deleted. 

       

      Section
18.31. Securitization
Financials.
Borrower covenants and agrees that, upon Lender’s written request therefor in
connection with a Securitization, Borrower shall, at Lender’s sole cost and
expense, promptly deliver audited financial statements and related documentation
prepared by an Independent certified public accountant that satisfy securities
laws and requirements for use in a public registration statement (which may
include up to three (3) years of historical audited financial
statements).

       

      Section
18.32. Exculpation.
Notwithstanding anything herein or in any other Loan Document to the contrary,
except as otherwise set forth in this Section 18.32 to the contrary, Lender
shall not enforce the liability and obligation of Borrower or (a) if Borrower is
a partnership, its constituent partners or any of their respective partners, (b)
if Borrower is a trust, its beneficiaries or any of their respective Partners
(as hereinafter defined), (c) if Borrower is a corporation, any of its
shareholders, directors, principals, officers or employees, or (d) if Borrower
is a limited liability company, any of its members, managers, officers or
directors (the Persons described in the foregoing clauses (a) - (d), as the case
may be, are hereinafter referred to as the “Partners”) to
perform and observe the obligations contained in this Security Instrument or any
of the other Loan Documents by any action or proceeding wherein a money judgment
shall be sought against Borrower or the Partners, except that Lender may bring a
foreclosure action, action for specific performance, or other appropriate action
or proceeding (including, without limitation, an action to obtain a deficiency
judgment) solely for the purpose of enabling Lender to realize upon (i)
Borrower’s interest in the Property, (ii) the Rent to the extent received by
Borrower (or received by its Partners) after the occurrence of an Event of
Default and not either delivered to Lender (or Lender’s agent) or applied to
ordinary and necessary expenses of owning and operating the Property (the
“Recourse
Distributions”) and
(iii) any other collateral given to Lender under the Loan Documents (the
collateral described in the foregoing clauses (i) - (iii) is hereinafter
referred to as the “Default
Collateral”);
provided,
however, that
any judgment in any such action or proceeding shall be enforceable against
Borrower or the Partners, as the case may be, only to the extent of any such
Default Collateral. The provisions of this Section shall not, however, (a)
impair the validity of the Debt evidenced by the Note or in any way affect or
impair the lien of this Security Instrument or any of the other Loan Documents
or the right of Lender to foreclose this Security Instrument following the
occurrence of an Event of Default; (b) impair the right of Lender to name
Borrower as a party defendant in any action or suit for judicial foreclosure and
sale under this Security Instrument; (c) affect the validity or enforceability
of the Note, this Security Instrument, or any of the other Loan Documents, or
impair the right of Lender to seek a personal judgment against the Guarantor;
(d) impair the right of Lender
to obtain the appointment of a receiver; (e) impair the enforcement of the
Assignment; (f) impair the 

       

      
        
          
          

        

        
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      right of
Lender to bring suit for a monetary judgment against Borrower with respect to
any losses resulting from fraud, material misrepresentation, or failure to
disclose a material fact, any untrue statement of a material fact or omission to
state a material fact in the written materials and/or information provided to
Lender or any of its affiliates by or on behalf of Borrower, Guarantor or any of
their Affiliates in connection with this Security Instrument, the Note or the
other Loan Documents, and the foregoing provisions shall not modify, diminish or
discharge the liability of Borrower, Guarantor or any of their Affiliates with
respect to same; (g) impair the right of Lender to bring suit for a monetary
judgment against Borrower to obtain the Recourse Distributions received by
Borrower including, without limitation, the right to bring suit for a monetary
judgment to proceed against Guarantor to the extent of Guarantor’s liability
under any guaranty delivered by Guarantor and the foregoing provisions shall not
modify, diminish or discharge the liability of Borrower or Guarantor with
respect to same; (h) impair the right of Lender to bring suit for a monetary
judgment against Borrower with respect to any losses resulting from Borrower’s
misappropriation of tenant security deposits or Rent (other than rent deemed
“additional rent” under the Leases) collected more than one (1) month in
advance, and the foregoing provisions shall not modify, diminish or discharge
the liability of Borrower with respect to same; (i) impair the right of Lender
to obtain Loss Proceeds due to Lender pursuant to this Security Instrument to
the extent actually paid by the insurer; (j) impair the right of Lender to
enforce the provisions of Sections 2.02(g), 16.01 or 16.02, inclusive of this
Security Instrument, even after repayment in full by Borrower of the Debt or to
bring suit for a monetary judgment against Borrower with respect to any losses
resulting from any obligation set forth in said Sections; (k) prevent or in any
way hinder Lender from exercising, or constitute a defense, or counterclaim, or
other basis for relief in respect of the exercise of, any other remedy against
any or all of the collateral securing the Note as provided in the Loan
Documents; (l) impair the right of Lender to bring suit for a monetary judgment
against Borrower with respect to any losses resulting from any misappropriation
or conversion of Loss Proceeds, and the foregoing provisions shall not modify,
diminish or discharge the liability of Borrower with respect to same; (m) impair
the right of Lender to sue for, seek or demand a deficiency judgment against
Borrower solely for the purpose of foreclosing the Property or any part thereof,
or realizing upon the Default Collateral; provided,
however, that
any such deficiency judgment referred to in this clause (m) shall be enforceable
against Borrower and Guarantor only to the extent of any of the Default
Collateral; (n) impair the ability of Lender to bring suit for a monetary
judgment against Borrower with respect to any losses resulting from arson or
physical waste to or of the Property or damage to the Property in each case
resulting from the intentional acts or intentional omissions of Borrower,
Guarantor or any of their Affiliates; (o) impair the right of Lender to bring a
suit for a monetary judgment against Borrower in the event of the exercise of
any right or remedy under any federal, state or local forfeiture laws resulting
in the loss of the lien of this Security Instrument, or the priority thereof,
against the Property; (p) be deemed a waiver of any right which Lender may have
under Sections 506(a), 506(b), 1111(b) or any other provision of the Bankruptcy
Code to file a claim for the full amount of the Debt or to require that all
collateral shall continue to secure all of the Debt; (q) impair the right of
Lender to bring suit for monetary judgment against Borrower with respect to any
losses resulting from any claims, actions or proceedings initiated by Borrower
(or any Affiliate of Borrower) alleging that the relationship of Borrower and
Lender is that of joint venturers, partners, tenants in common, joint tenants or
any relationship other than that of debtor and creditor; (r) impair the right of
Lender to bring suit for a
monetary judgment with respect to any losses resulting from a Transfer in
violation of the provisions of Article IX hereof; or (s) impair the right of
Lender to bring suit against Borrower for Borrower’s failure to pay any valid
taxes, assessments, mechanic’s liens, materialmen’s liens or other liens which
could create liens on any portion of the Property superior to the lien or
security title of this Security Instrument or the other Loan Documents, except,
(1) with respect to any such taxes or assessments, to the extent that funds have
been deposited with Lender pursuant to the terms of this Security Instrument
specifically for the applicable taxes or assessments and not applied by Lender
to pay such taxes and assessments, and (2) to the extent that there is
insufficient available cash flow at any time to enable Borrower to pay all
operating expenses (including taxes and assessments) then due and payable,
necessary property improvement expenditures and amounts due and payable under
the Loan Documents (as demonstrated to the reasonable satisfaction of Lender)
and Borrower applies all available cash flow to the payment of any one or more
of the foregoing items. The provisions of this Section 18.32 shall be
inapplicable to Borrower if (a) any proceeding, action, petition or filing under
the Bankruptcy Code, or any similar state or federal law now or hereafter in
effect relating to bankruptcy, reorganization or insolvency, or the arrangement
or adjustment of debts, shall be filed by, consented to or acquiesced in by or
with respect to Borrower, or if Borrower shall institute any proceeding for its
dissolution or liquidation, or shall make an assignment for the benefit of
creditors or (b) Borrower or any Affiliate contests or interferes with Lender’s
enforcement of its rights and remedies hereunder or under the Loan Documents by
asserting any defense (x) as to the validity of the obligations under the Loan
Documents or in any way relating to the structure of the Borrower or the
enforceability of Lender’s rights and remedies under the Loan Documents, or (y)
for the purpose of delaying, hindering or impairing Lender’s rights and remedies
under the Loan Documents (collectively, a “Contest”)
(provided that if any such Person obtains a non-appealable order successfully
asserting a Contest, Borrower shall have no liability under this clause (b)), in
which event Lender shall have recourse against all of the assets of Borrower
including, without limitation, any right, title and interest of Borrower in and
to the Property.

       

      Section
18.33. Intentionally
Deleted

       

      Section
18.34. Intentionally
Deleted

       

      Section
18.35. Intentionally
Deleted

       

      
        
          
          

        

        
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      Section
18.36. Cooperation. (a)
Borrower covenants and agrees that in the event the Loan is to be included as an
asset of a Securitization, Borrower shall (a) gather any information reasonably
required by the Rating Agencies in connection with such a Securitization, (b) at
Lender’s request, meet with representatives of the Rating Agency to discuss the
business and operations of the Property, and (c) cooperate with the reasonable
requests of each Rating Agency and Lender in connection with all of the
foregoing as well as in connection with all other matters and the preparation of
any offering documents with respect thereof, including, without limitation,
entering into any amendments or modifications to this Security Instrument or to
any other Loan Document which may be requested by Lender to conform to Rating
Agency or market standards for a Securitization provided that no such
modification shall modify (a) the interest rate payable under the Note, (b) the
stated maturity of the Note, (c) the amortization of principal under the Note,
(d) Section 18.32 hereof, (e) any other material economic term of the Loan or
(f) any provision,
the effect of which would materially increase Borrower’s obligations or
materially decrease Borrower’s rights under the Loan Documents. Borrower
acknowledges that the information provided by Borrower to Lender may be
incorporated into the offering documents for a Securitization. Lender and each
Rating Agency shall be entitled to rely on the information supplied by, or on
behalf of, Borrower and Borrower indemnifies and holds harmless the Indemnified
Parties, their Affiliates and each Person who controls such Persons within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as same may be amended from time to time, for, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature, known or unknown,
contingent or otherwise, whether incurred or imposed within or outside the
judicial process, including, without limitation, reasonable attorneys’ fees and
disbursements (including, without limitation, reasonable attorney’s fees and
expenses, whether incurred within or outside the judicial process) that arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such information or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated in such information or necessary in order to make the statements in such
information, or in light of the circumstances under which they were made, not
misleading.

       

      (b) Further,
Borrower shall cooperate at no cost to Borrower or Guarantor, with Lender and
its affiliates in connection with any such sale of the Loan by mortgage backed
pass through certificates, participations, securities or pari passu notes
evidencing whole or component interests therein through one of more public or
private offerings, including, but not limited to:

       

      (i) separating
the Loan into two or more separate notes (or components that correspond to one
or more tranches of the certificates/securities created in a Securitization) or
participation interests. Such notes or components or participation interests may
be assigned different interest rates, so long as the weighted average of such
interest rates equals the interest rate on the Note. Additionally, Lender may
split the Loan into a senior/subordinated participation structure;

       

      (ii) obtaining
ratings from two or more Rating Agencies;

       

      (iii) making or
causing to be made reasonable changes or modifications to the loan
documentation, organizational documentation, opinion letters and other
documentation; 

       

      (iv) reviewing
prepared offering materials relating to the Property, Borrower, Guarantor and
the Loan;

       

      (v) delivering
updated information on the Borrower, Guarantor and the Property;

       

      (vi) participating
in investor or Rating Agency meetings if requested by Lender;
and


      
        
          
          

        

        
          -100-

          
            

          

        

        
          
          

        

      

       

      (vii) permitting
adjustment of Lender’s security interest to permit a senior/subordinate or other
structure to enhance a Securitization, participation interest or a distribution
of the Loan; and

       

      (viii) restructuring
of the Loan and/or a reduction of the Loan Amount with the imposition of a
mezzanine loan in the corresponding amount to be reduced, which mezzanine loan
shall be secured by a pledge of ownership interests in the Borrower or the
members of Borrower. Such notes or components may be assigned different interest
rates, so long as the weighted average of such interest rates equals the
interest rate on the Note. 

       

      Section
18.37. Regulation
A/B.
b) 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.

       

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


      
        
          
          

        

        
          -101-

          
            

          

        

        
          
          

        

      

       

      Section
18.38. Certain Matters Relating to
Property Located in the State of Florida. With
respect to the Property which is located in the State of Florida,
notwithstanding anything contained herein to the contrary. 

       

      (a) All
references herein to "attorneys' fees" shall be deemed to include reasonable
attorneys' fees incurred at both the trial and appellate levels. 

       

      (b) 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, within twenty (20) years from the date hereof, 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. The total amount
of the indebtedness including future advances, secured hereby may increase or
decrease from time to time in accordance with the terms of the Loan Documents,
but shall not exceed the sum $54,500,000.00 at any
one time, plus accrued interest thereon and any disbursements made by Lender in
accordance with the Loan Documents.

       

      (c) Borrower
hereby indemnifies and holds harmless the law firm of Winston & Strawn LLP
and all of their attorneys, from any and all loss, cost, expense, damage or
claim, whether or not valid, including, without limitation, reasonable
attorneys' fees and disbursements, arising under or in any way connected with
Section 697.10 of Florida Statutes or any similar law. Borrower hereby verifies
and confirms, to the best of its knowledge, all factual information in this
Mortgage, including the accuracy and correctness of the legal description set
forth herein. In the event any factual errors are found in this Mortgage or in
the legal description, Borrower and the Lender shall, at Borrower's sole cost
and expense, promptly correct or cause to be corrected subsequent to the date
hereof any and all such errors. Borrower shall promptly pay or cause to be paid
all damages, claims or any other costs whatsoever arising under or in way
connected with any claim, whether or not valid, arising under or in any way
connected with Section 697.10 of the Florida Statutes, or any similar law due to
or caused by any inaccuracy or incorrectness of factual information or
inaccuracy or incorrectness of the legal description set forth herein.
Notwithstanding the foregoing, all rights of Borrower and Lender are preserved
against Borrower's and Lender's title insurers, the surveyor, the engineer, if
any, and the appraiser, if any, and, after payment is made by Borrower, Borrower
shall be subrogated to such rights.

       

      (d) Upon
payment of all the Debt, Borrower (or its designee, including a subsequent
lender to Borrower) shall have the right to purchase the Loan Documents, said
purchase to be by assignment of the Loan Documents, without recourse,
representation or warranty (except as to ownership of the Loan Documents, their
not being encumbered or previously transferred and Lender's authority to assign
same).


      
        
          
          

        

        
          -102-

          
            

          

        

        
          
          

        

      

       

      (e) In no
event shall the Existing Note, the indebtedness evidenced by the Existing Note
or the lien of the Existing Mortgage be novated, cancelled or released by any of
the Loan Documents.

       

      


       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]


      
        
          
          

        

        
          -103-

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, Borrower has executed this Security Instrument on the day and
year first hereinabove set forth.

       

      
        	
                WITNESSES:

              	
                BORROWER:

              
	
                 

                /s/ Joy
      DeVita                           
      

                Signature

                 

                Joy
      DeVita                                 

                Print
      Name

                 

                /s/ Dina
      Berg                             

                Signature

                 

                Dina
      Berg                                    

                Print
      Name

              	
                LVP
      ST. AUGUSTINE OUTLETS LLC,

                a
      Delaware limited liability company 

                 

                By:
       Lightstone
      Value Plus REIT LP,

                        
      a Delaware limited partnership,

                        
      Its: Sole Member 

                 

                    By:
       Lightstone
      Value Plus Real Estate Investment Trust, Inc,

                    a
      Maryland corporation

                    Its:
      General Partner

                 

                 

                By
       /s/
      David Lichtenstein

                Name: David
      Lichtenstein

                Title: President
      

              


      

       

      
        
          
          

        

        
          -104-

          
            

          

        

        
          
          

        

      


      STATE OF
New
Jersey

      


      COUNTY OF
County

      


       

      The
foregoing instrument was acknowledged before me this ___ day of March, 2006 by
David Lichtenstein, the President and duly authorized agent of Lightstone Value
Plus Real Estate Investment Trust, Inc, a Maryland corporation, the General
Partner of Lightstone Value Plus REIT LP, a Delaware limited partnership, the
Sole Member of LVP ST. AUGUSTINE OUTLETS LLC, a Delaware limited liability
company. He is personally known to me or has produced _________________________
as identification.

       

       

      (Seal)


                                  

                                      /s/ Anna E.
Waddy

                                      Notary Public

      


                                        Print Name:
Anna
Waddy

      


      My
Commission Expires: 12/22/2010


      
        
          
          

        

        
          -105-

          
            

          

        

        
          
          

        

      


      EXHIBIT
A

      


      Legal
Description

      


      ALL that
certain lot, piece or parcel of land, with the buildings and improvements
thereon erected, situate, lying and being in the City of Saint Augustine, County
of Saint Johns, State of Florida.

      


      A part of
Section 5 and 6, Township 7 South, Range 29 East, St. Johns County, Florida,
more particularly described as follows: For a point of reference, commence at
the Northeast corner of said Section 6; thence South 02°02'27" East along the
East line of said Section 6, a distance of 921.41 feet to the Point of
Beginning; thence departing said Section line, South 33°23'45" East, a distance
of 1104.56 feet; thence South 56°36'15" West, a distance of 1350.00 feet to a
point on the Northeasterly limited access right of way line of Interstate 95,
State Road No. 9, (a varying right of way as now established) and a point on a
curve, concave Southwesterly having a radius of 5879.58 feet; thence
Northwesterly along said right of way line and along the arc of said curve, an
arc distance of 90.29 feet, said arc being subtended by a chord bearing of North
28°47'23" West and a chord distance of 90.29 feet to a point on said curve and a
point on the Northwesterly right of way line of Outlet Centre Drive (a 90 foot
private right of way); thence departing said Northeasterly limited access right
of way line, North 56°36'15" East along said Northwesterly right of way line, a
distance of 307.90 feet; thence departing said Northwesterly right of way line,
North 33°23'45" West, a distance of 83.75 feet; thence North 22°44'16" West, a
distance of 218.65 feet; thence North 33°23'45" West, a distance of 1093.87
feet; thence North 56°36'15" East, a distance of 994.41 feet; thence South
33°23'45" East, a distance of 377.94 feet to the point of
beginning.

      


      TOGETHER WITH
Easements benefiting the insured land as set forth in the following
documents:

      


      
        	
                1)

              	
                Development
      Agreement between St. Augustine Associates, Inc., a Florida corporation,
      as Trustee under Land Trust Agreement for St. Augustine Centre Land Trust
      dated June 15, 1998 and FOM St. Augustine Limited Partnership, recorded
      July 13, 1998 in Official Records Book 1333, page 416, Public Records of
      St. Johns County, Florida.

              


        	 	 


        	2) 	Declaration of Reciprocal Easements, Rights and
      Maintenance Covenants for the St. Augustine Centre DRI/PUD, by St.
      Augustine Associates, Inc., a Florida corporation, as Trustee under Land
      Trust Agreement for St. Augustine Centre Land Trust dated June 15, 1998
      recorded July 13, 1998 in Official Records Book 1333, page 347, Public
      Records of St. Johns County, Florida, and First Amendment to Declaration
      of Reciprocal Easements, Rights  and
      Maintenance Covenants for the St. Augustine Centre DRI/PUD by St.
      Augustine Associates, Inc., a Florida corporation, as Trustee under Land
      Trust Agreement for St. Augustine Centre Land Trust dated June 15, 1998,
      recorded July 13, 1998 in Official Records Book 1333, page 384, Public
      Records of St. Johns County, Florida. (NOTE: The Easements established
      pursuant to this Declaration include, but are not limited to, an access
      easement into, out of, on, over and across the areas described in the
      Declaration as Belz Outlet Boulevard and Outlet Centre Drive, as same is
      created pursuant to Paragraph 7 of the
Declaration.)


      

      

        
          
            
            

          

          
            -106-

            
              

            

          

          
            
            

          

        

      

      


      
        	
                3)

              	
                St.
      Augustine Centre Road and Utilities Improvements Construction Agreement
      between St. Augustine Associates, Inc., a Florida corporation, as Trustee
      under Land Trust Agreement for St. Augustine Centre Land Trust, dated June
      15, 1998 and FOM St. Augustine Limited Partnership recorded July 13, 1998
      in Official Records Book 1333, page 434, Public Records of St. Johns
      County, Florida.

              


      

      


      
        	
                4)

              	
                Declaration
      of Drainage Easement by St. Augustine Associates, Inc., a Florida
      corporation, as Trustee under Land Trust Agreement for St. Augustine
      Centre Land Trust dated June 15, 1998, recorded July 13, 1998 in Official
      Records Book 1333, page 388, Public Records of St. Johns County,
      Florida.

              


      

      


      
        	
                5)

              	
                Declaration
      of Restrictive Covenants and Easement Agreement made by FOM St. Augustine
      Limited Partnership dated September 23,
1999.

              


      

      


      
        	
                6)

              	
                Grant
      of Easements and Covenants Running with the Land between FOM St. Augustine
      Limited Partnership and St. Augustine Outlet World, Ltd., dated September
      23, 1999.

              


      

       

      NOTE: Being a
part of Sections 5 and 6, Township 7 South, Range 29 East, Tax Map of the County
of Saint Johns.


      
        
          
          

        

        
          -107-

          
            

          

        

        
          
          

        

      


      EXHIBIT
B

       

      SUMMARY OF
RESERVES

      


      
        	
                Reserve
      Items

              	
                Initial
      Deposit Amount

              	
                Monthly
      Installment Amount

              
	
                Basic
      Carrying Costs

                ·     Taxes

                ·     Insurance
      Premiums

              	
                 

                ·     Taxes          
      $349,332.13

                ·     Insurance

                        
      Premiums    $  38,168.90

              	
                 

                ·     Taxes              
      $49,904.59

                ·     Insurance

                        
      Premiums        $ 3,180.74

              
	
                Initial
      Engineering/Environmental Deposits

                ·     Immediate
      Repairs

                ·     Environmental
      Remediation

              	
                 

                ·     Immediate
      Repairs

                N/A

                ·     
      Environmental Remediation

                N/A)

              	
                 

                ·     Immediate
      Repairs

                N/A

                ·     Environmental
      Remediation

                N/A)

              
	
                Recurring
      Monthly Replacement Reserve Deposit

              	
                N/A

              	
                $3,115.73

              
	
                Reletting
      Reserve

              	
                N/A

              	
                $25,964.38

              
	
                Outstanding
      TILC Escrow Account

              	
                $750,000.00

              	
                N/A

              
	
                Initial
      Holdback Reserve Deposit

              	
                $3,000,000.00

              	
                N/A

              
	
                Initial
      Debt Service Reserve Deposit

              	
                $400,000.00

              	
                N/A

              
	
                Initial
      Yield Maintenance Reserve Deposit

              	
                $300,000.00

              	
                N/A

              


      

       

      
        
          
          

        

        
          -108-

          
            

          

        

        
          
          

        

      


      EXHIBIT
C

       

      CASH FLOW
STATEMENT

       

      


       

      Property:____________________________

      Location:____________________________

      Cash Flow
Statement for Month of:____________ Year: 

       

      
        	 	
                Current

                Month

              	
                Year
      to

                Date

              
	
                 

                REVENUE

                Net
      Rental Revenue

                Other
      Revenue

                Effective
      Gross Income

              	
                 

                 

                 

                 

                ________

              	
                 

                 

                 

                 

                ________

              
	
                OPERATING
      EXPENSES

                Common
      Area Maintenance

                Payroll

                Administration

                Leasing
      

                Service

                Clean
      & Decorate

                Utilities

                Repairs
      & Maintenance

                Taxes
      

                Insurance

                Management
      Fees

                Other

                Total
      Operating Expenses

                Net
      Operating Income

              	
                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                ________

                ________

              	
                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                ________

                ________

              
	
                 

                RECURRING
      EXPENSES

                To
      Include Expenses for: Carpet Replacement, Appliance Replacement,
      HVAC/Water Heater Replacement; Miniblinds/Drapes/Ceiling
    Fans:

              	
                 

                 

                 

                ________

              	
                 

                 

                 

                ________

              
	
                 

                NON-RECURRING
      EXPENSES

                To
      Include Capital Expenses for: Playground, Major Signage,
      Lawns/Trees/Shrubs, Paving/Parking, Roof Replacement,
      Carpentry/Siding/Balconies, Exterior Paint, Major Concrete/Sidewalks,
      Foundations, Major Exterior, Boiler Replacement, Major HVAC Replacement,
      Plumbing Replace, Electrical Replace, Other Major, Fire & Storm, Ins.
      Loss Recovery:

                 

              	
                 

              	
                 

              
	
                Net
      Cash Flow

              	
                ________

              	
                ________

              


      

      Certified
By:_____________________________

      Name:_____________________________

      Title:_____________________________

      Management
Company:_____________________________

       

      
        
          
            
            

          

          
            -109-

            
              

            

          

          
            
            

          

        

      

      


      EXHIBIT
D

       

      Intentionally
Deleted

      


      


       

       


      
        
          
          

        

        
          -110-

          
            

          

        

        
          
          

        

      


      EXHIBIT
E

       

      Form of
Direction Letter

       

      [Letterhead
of Landlord]

       

      [Name and
Address of tenant]

       

      Re:
[Address of Premises]

       

      Dear
tenant:

       

      You are
hereby directed to make all future payments of rent and other sums due to
Landlord under the Lease payable as follows:

       

      Payable
To: [Borrower]
and Wachovia Bank, National Association

       

      
        
          	If by federal wire
      transfer: 	 
	 	 
	Bank:	Wachovia
      Bank, NA
	ABA #:   	053-000-219
	Acct Name:	
                  [Borrower]

                
	Acct #:	 
	Ref Loan #: 	
                  ___________________

                
	 	 
	If by US
      Mail: 	 
	 	 
	_________________ 	 
	 	 
	
                  PO
      Box _____

                	 
	
                  Charlotte,
      NC 28260-1443

                	 
	 	 
	If by Overnight
      Courier: 	 
	 	 
	Wachovia Bank, NA 	 
	1525 West WT Harris Blvd 	 
	Bldg 2C2 (Ref # ______) 	 
	Charlotte, NC 28262 	 
	Ref Loan
    #:_____________________ 	 


        

      

       

      Please
take particular care in making the check payable only to the above-mentioned
names because only checks made payable to the referenced names will be credited
against sums due by you to landlord. Until otherwise advised in writing by
Landlord and the
above-mentioned bank (or its successor), you should continue to make your
payments for rent and other sums as directed by the terms of this
letter.

       

      Thank you
in advance for your cooperation with this change in payment
procedures.

       

      By:                                                                                            


       

                                                                                


      
        
          
          

        

        
          -111-

          
            

          

        

        
          
          

        

      


      EXHIBIT G

      


      Holdback Reserve Release
Calculation

      


      


      FORMULA

      


      
        	 	
                (i)

              	
                Lender
      determines Pro-Forma Net Operating
Income;

              


      

      


      
        	 	
                (ii)

              	
                Pro-Forma
      Net Operating Income is initially divided by 1.20 (the debt service
      coverage ratio);

              


      

      


      
        	 	
                (iii)

              	
                The
      result is divided by using a mortgage loan constant associated with 6.09%
      which is 7.2641881%. This calculation results in the loan amount which can
      be supported by the Pro-Forma Net Operating Income at the required Debt
      Service Coverage;

              


      

      


      
        	 	
                (iv)

              	
                $24,250,000.00
      is subtracted from the result of (iii); and


              


      

      


      
        	 	
                (v)

              	
                The
      result of (iv) determines the amount to be
  released.

              


      

      


      EXAMPLE

      Assumptions:

      
        	
                Initial
      Loan Amount

              	
                $27,250,000.00

              	 
	
                Initial
      Supportable Loan Amount at Closing

              	
                $24,250,000.00

              	 
	
                Initial
      Reserve Amount 

              	
                $3,000,000

              	 
	
                Loan
      Constant

              	
                7.2641881%

              	 


      

      


      


      If:

      
        	
                Pro-Forma
      Net Operating Income

              	
                $2,266,426.68

              	 
	
                Debt
      Service Coverage Ratio

              	
                1.20

              	 
	
                Loan
      Constant

              	
                7.2641881%

              	 


      

      


      Then:

      
        	
                Pro-Forma
      Net Operating Income  ̧
      Debt Service Coverage Ratio  ̧
      Interest Rate =

              
	
                Supportable
      Loan Amount

              
	
                OR

              
	
                $2,266,426.68 ̧
      1.20  ̧
      7.2641881% =

              
	
                $26,000,000

              


      

      


      


      
        	
                Supportable
      Loan Amount

              	
                $26,000,000

              
	
                Less:
      $24,250,000.00

              	
                1,750,000

              


      

      


      Therefore,
the Holdback Escrow Reserve Escrow Account would be released as
follows:

      
        	
                Original
      Balance in Escrow

              	
                $3,000,000

              
	
                Less:
      Amount to be released

              	
                $1,750,000

              
	
                Amount
      of existing balance to be maintained in Holdback Escrow Reserve
      Escrow

              	
                $1,250,000

              


      


      
        
          
          

        

        
          -112-