Document:

exv10w2

 

EXHIBIT 10.2

BMR-SHADY GROVE ROAD HQ LLC,

a Maryland limited liability company

(Grantor)

to

LAWYERS TITLE REALTY SERVICES, INC.

(Trustee)

in favor of

KEYBANK NATIONAL ASSOCIATION,

a national banking association

(Lender)

THE OBLIGATIONS OF GRANTOR HEREUNDER REPRESENT A FUTURE CONTINGENT LIABILITY
AND NOT A PRESENT LIABILITY

INDEMNITY DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT, AND FIXTURE FILING

Dated: August 23, 2006

Location: 14200 Shady Grove Road, Rockville, Maryland 20850

RECORD AND RETURN TO:

Cynthia M. Hajost, Esq.

Ballard Spahr Andrews & Ingersoll

601 13th Street, N.W.

Suite 1000 South

Washington, D.C. 20005

Loan No.:

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE 1 — GRANTS OF SECURITY	 	 	4	 
	 

	 	SECTION 1.1. PROPERTY MORTGAGED
	 	 	4	 
	 

	 	SECTION 1.2. GROUND LEASE
	 	 	7	 
	 

	 	SECTION 1.3. ASSIGNMENT OF LEASES AND RENTS
	 	 	8	 
	 

	 	SECTION 1.4. SECURITY AGREEMENT
	 	 	8	 
	 

	 	SECTION 1.5. PLEDGE OF MONIES HELD
	 	 	9	 
	 

	 	SECTION 1.6. COMMON LAW PLEDGE/ASSIGNMENT
	 	 	9	 
	ARTICLE 2 — SECURED OBLIGATIONS	 	 	9	 
	 

	 	SECTION 2.1. SECURED OBLIGATIONS
	 	 	9	 
	ARTICLE 3 — GRANTOR COVENANTS	 	 	10	 
	 

	 	SECTION 3.1. PAYMENT OF SECURED OBLIGATIONS
	 	 	10	 
	 

	 	SECTION 3.2. INSURANCE
	 	 	10	 
	 

	 	SECTION 3.3. PAYMENT OF TAXES, ETC
	 	 	14	 
	 

	 	SECTION 3.4. TAX AND INSURANCE IMPOUND ACCOUNT
	 	 	15	 
	 

	 	SECTION 3.5. CONDEMNATION
	 	 	16	 
	 

	 	SECTION 3.6. LEASES AND RENTS
	 	 	17	 
	 

	 	SECTION 3.7. MAINTENANCE OF PROPERTY
	 	 	17	 
	 

	 	SECTION 3.8. WASTE
	 	 	18	 
	 

	 	SECTION 3.9. COMPLIANCE WITH LAWS
	 	 	18	 
	 

	 	SECTION 3.10. BOOKS AND RECORDS
	 	 	19	 
	 

	 	SECTION 3.11. PAYMENT FOR LABOR AND MATERIALS
	 	 	20	 
	 

	 	SECTION 3.12. PERFORMANCE OF OTHER AGREEMENTS
	 	 	21	 
	 

	 	SECTION 3.13. CHANGE OF NAME, IDENTITY OR STRUCTURE
	 	 	21	 
	 

	 	SECTION 3.14. EXISTENCE
	 	 	21	 
	ARTICLE 4 — SPECIAL COVENANTS	 	 	21	 
	 

	 	SECTION 4.1. PROPERTY USE
	 	 	21	 
	 

	 	SECTION 4.2. ERISA
	 	 	21	 
	 

	 	SECTION 4.3. SINGLE PURPOSE ENTITY
	 	 	22	 
	 

	 	SECTION 4.4. RESTORATION AFTER CASUALTY/CONDEMNATION
	 	 	28	 
	ARTICLE 5 — REPRESENTATIONS AND WARRANTIES	 	 	33	 
	 

	 	SECTION 5.1. WARRANTY OF TITLE
	 	 	33	 
	 

	 	SECTION 5.2. AUTHORITY
	 	 	33	 
	 

	 	SECTION 5.3. LEGAL STATUS AND AUTHORITY
	 	 	33	 
	 

	 	SECTION 5.4. VALIDITY OF DOCUMENTS
	 	 	33	 
	 

	 	SECTION 5.5. LITIGATION
	 	 	34	 
	 

	 	SECTION 5.6. STATUS OF PROPERTY
	 	 	34	 
	 

	 	SECTION 5.7. NO FOREIGN PERSON
	 	 	35	 
	 

	 	SECTION 5.8. SEPARATE TAX LOT
	 	 	35	 
	 

	 	SECTION 5.9. ERISA COMPLIANCE
	 	 	35	 
	 

	 	SECTION 5.10. LEASES
	 	 	35	 
	 

	 	SECTION 5.11. FINANCIAL CONDITION; NO PRIOR BANKRUPTCY
	 	 	36	 
	 

	 	SECTION 5.12. TAXES
	 	 	36	 

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	 	 	 	 	Page
	 

	 	SECTION 5.13. MAILING ADDRESS
	 	 	36	 
	 

	 	SECTION 5.14. NO CHANGE IN FACTS OR CIRCUMSTANCES
	 	 	36	 
	 

	 	SECTION 5.15. DISCLOSURE
	 	 	37	 
	 

	 	SECTION 5.16. REPRESENTATIONS
	 	 	37	 
	 

	 	SECTION 5.17. ILLEGAL ACTIVITY
	 	 	37	 
	 

	 	SECTION 5.18. MANAGEMENT
	 	 	37	 
	 

	 	SECTION 5.19. NON-CONSOLIDATION
	 	 	37	 
	ARTICLE 6 — GUARANTOR/CREDITOR RELATIONSHIP	 	 	38	 
	 

	 	SECTION 6.1. RELATIONSHIP OF GUARANTOR AND LENDER
	 	 	38	 
	 

	 	SECTION 6.2. NO RELIANCE ON LENDER
	 	 	38	 
	 

	 	SECTION 6.3. NO LENDER OBLIGATIONS
	 	 	38	 
	 

	 	SECTION 6.4. RELIANCE OF LENDER ON GRANTOR REPRESENTATIONS
	 	 	38	 
	ARTICLE 7 — FURTHER ASSURANCES	 	 	38	 
	 

	 	SECTION 7.1. RECORDING OF SECURITY INSTRUMENT, ETC
	 	 	39	 
	 

	 	SECTION 7.2. FURTHER ACTS, ETC
	 	 	39	 
	 

	 	SECTION 7.3. CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS
	 	 	39	 
	 

	 	SECTION 7.4. ESTOPPEL CERTIFICATES
	 	 	40	 
	 

	 	SECTION 7.5. REPLACEMENT DOCUMENTS
	 	 	41	 
	 

	 	SECTION 7.6. AMENDED FINANCING STATEMENTS
	 	 	41	 
	ARTICLE 8 — DUE ON SALE/ENCUMBRANCE/CHANGE IN GRANTOR	 	 	41	 
	 

	 	SECTION 8.1. NO SALE/ENCUMBRANCE/CHANGE OF OWNERSHIP WITHOUT CONSENT
	 	 	41	 
	 

	 	SECTION 8.2. CONDITIONS TO LENDER’S CONSENT
	 	 	43	 
	ARTICLE 9 — PREPAYMENT; DEFEASANCE	 	 	45	 
	ARTICLE 10 — DEFAULT	 	 	45	 
	 

	 	SECTION 10.1. EVENTS OF DEFAULT
	 	 	45	 
	ARTICLE 11 — RIGHTS AND REMEDIES	 	 	47	 
	 

	 	SECTION 11.1. REMEDIES
	 	 	47	 
	 

	 	SECTION 11.2. APPLICATION OF PROCEEDS IN CONNECTION WITH EXERCISE OF RIGHTS AND
REMEDIES
	 	 	51	 
	 

	 	SECTION 11.3. LENDER RIGHT TO CURE DEFAULTS
	 	 	52	 
	 

	 	SECTION 11.4. ACTIONS AND PROCEEDINGS
	 	 	52	 
	 

	 	SECTION 11.5. RECOVERY OF SUMS REQUIRED TO BE PAID
	 	 	52	 
	 

	 	SECTION 11.6. EXAMINATION OF BOOKS AND RECORDS
	 	 	52	 
	 

	 	SECTION 11.7. OTHER RIGHTS, ETC
	 	 	52	 
	 

	 	SECTION 11.8. LENDER RIGHT TO RELEASE
	 	 	53	 
	 

	 	SECTION 11.9. RIGHT OF ENTRY
	 	 	53	 
	 

	 	SECTION 11.10. RIGHTS PERTAINING TO SALES
	 	 	53	 
	 

	 	SECTION 11.11. RIGHT TO RELEASE INFORMATION
	 	 	55	 
	ARTICLE 12 — INDEMNIFICATION	 	 	56	 
	 

	 	SECTION 12.1. GENERAL INDEMNIFICATION
	 	 	56	 
	 

	 	SECTION 12.2. MORTGAGE AND/OR INTANGIBLE TAX
	 	 	57	 
	 

	 	SECTION 12.3. ERISA INDEMNIFICATION
	 	 	57	 

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	 	 	 	 	Page
	 

	 	SECTION 12.4. DUTY TO DEFEND, ATTORNEYS’ FEES AND OTHER FEES AND EXPENSES
	 	 	57	 
	ARTICLE 13 — WAIVERS	 	 	58	 
	 

	 	SECTION 13.1. WAIVER OF COUNTERCLAIM
	 	 	58	 
	 

	 	SECTION 13.2. MARSHALLING AND OTHER MATTERS
	 	 	58	 
	 

	 	SECTION 13.3. WAIVER OF NOTICE
	 	 	58	 
	 

	 	SECTION 13.4. WAIVER OF STATUTE OF LIMITATIONS
	 	 	58	 
	 

	 	SECTION 13.5. WAIVER OF TRIAL BY JURY
	 	 	58	 
	ARTICLE 14 — EXCULPATION	 	 	58	 
	ARTICLE 15 — NOTICES	 	 	59	 
	 

	 	SECTION 15.1. NOTICES
	 	 	59	 
	ARTICLE 16 —APPLICABLE LAW	 	 	59	 
	 

	 	SECTION 16.1. CHOICE OF LAW/JURISDICTION AND VENUE
	 	 	59	 
	 

	 	SECTION 16.2. USURY LAWS
	 	 	60	 
	 

	 	SECTION 16.3. PROVISIONS SUBJECT TO APPLICABLE LAW
	 	 	60	 
	 

	 	SECTION 16.4. INAPPLICABLE PROVISION
	 	 	60	 
	ARTICLE 17 — SECONDARY MARKET	 	 	60	 
	 

	 	SECTION 17.1. TRANSFER OF LOAN
	 	 	60	 
	 

	 	SECTION 17.2. SECONDARY MARKET TRANSACTIONS
	 	 	61	 
	 

	 	SECTION 17.3. COOPERATION; LIMITATIONS
	 	 	61	 
	 

	 	SECTION 17.4. INFORMATION
	 	 	62	 
	 

	 	SECTION 17.5. SEVERANCE
	 	 	62	 
	ARTICLE 18 — COSTS	 	 	63	 
	 

	 	SECTION 18.1. ORIGINATION, ADMINISTRATION, ENFORCEMENT, AND DEFENSE EXPENSES
	 	 	63	 
	ARTICLE 19 — CERTAIN DEFINITIONS, HEADINGS, RULE OF CONSTRUCTION	 	 	64	 
	 

	 	SECTION 19.1. GENERAL DEFINITIONS
	 	 	64	 
	 

	 	SECTION 19.2. HEADINGS, ETC
	 	 	64	 
	 

	 	SECTION 19.3. RULES OF CONSTRUCTION
	 	 	64	 
	ARTICLE 20 — MISCELLANEOUS	 	 	65	 
	 

	 	SECTION 20.1. NO ORAL CHANGE
	 	 	65	 
	 

	 	SECTION 20.2. LIABILITY
	 	 	65	 
	 

	 	SECTION 20.3. DUPLICATE ORIGINALS; COUNTERPARTS
	 	 	65	 
	 

	 	SECTION 20.4. SUBROGATION
	 	 	66	 
	 

	 	SECTION 20.5. ENTIRE AGREEMENT
	 	 	66	 
	 

	 	SECTION 20.6. LENDER’S RIGHT TO SUBORDINATE
	 	 	66	 
	ARTICLE 21 — TRUSTEE PROVISIONS	 	 	66	 
	 

	 	SECTION 21.1. CONCERNING THE TRUSTEE
	 	 	66	 
	 

	 	SECTION 21.2. TRUSTEE’S FEES
	 	 	67	 
	 

	 	SECTION 21.3. CERTAIN RIGHTS
	 	 	67	 
	 

	 	SECTION 21.4. PERFECTION OF APPOINTMENT
	 	 	67	 

iii 

 

EXHIBITS

	 	 	 
	Exhibit A
	 	Description of the Land

	Exhibit B
	 	Description of Future Land Development Parcel

	Exhibit C
	 	Modifications to Security Instrument (Subdivision and Release of Future Development Parcel)

	Exhibit D
	 	Description of Remaining Parcel

	Exhibit E
	 	Form of Release

i 

 

PREAMBLE

     THIS INDEMNITY DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT, AND FIXTURE
FILING (“Security Instrument”) is made as of August 23, 2006, by and among, BMR-SHADY GROVE ROAD HQ
LLC, a Maryland limited liability company having its principal place of business or residing at
17140 Bernardo Center Drive, Suite 222, San Diego, California 92128, Attention: General
Counsel/Financing, as grantor (“Grantor,” for all purposes of this Security Instrument, such term
shall include any successors or assigns of Grantor and any future owners of all or any part of the
Property), and LAWYERS TITLE REALTY SERVICES, INC. having an address at 101 Gateway Center Parkway,
Richmond, Virginia 23235 as trustee (the “Trustee”; such term includes the successor and assigns
of Trustee, including any parties appointed Trustee by any power of appointment reserved to
Lender), and KEYBANK NATIONAL ASSOCIATION, a national banking association having a place of
business at 911 Main Street, Suite #1500, Kansas City, Missouri 64105, as beneficiary (“Lender,”
such term includes all successors and assigns and all subsequent holders, if any, of the Indemnity
Guaranty that this Security Instrument secures).

PROPERTY ADDRESS: 14200 Shady Grove Road, Rockville, Maryland 20850

RECITALS

     A. BMR-Shady Grove B LLC, a Delaware limited liability company (“Borrower”) by its promissory
note of even date herewith given to Lender is indebted to Lender in the principal sum of
$147,000,000.00 (the “Loan”) in lawful money of the United States of America (the note together
with all extensions, renewals, modifications, consolidations, substitutions, replacements,
restatements and increases thereof shall collectively be referred to as the “Note”), with interest
from the date thereof at the rates set forth in the Note, principal and interest to be payable in
accordance with the terms and conditions provided in the Note.

     B. Grantor will benefit materially from the granting of the Loan by Lender, and as such,
Grantor has agreed to guarantee the Loan in full pursuant to an Indemnity Guaranty (the “Indemnity
Guaranty”) executed by Grantor dated the date hereof and grant this Security Instrument.

     C. Grantor’s obligations under the Indemnity Guaranty are secured this Security Instrument.

DEFINITIONS

     The terms set forth below are defined in the following Loan Documents or Sections and
Subsections of this Security Instrument and when used in this Security Instrument shall have the
meanings set forth in such Loan Documents (such Loan Documents being incorporated herein by
reference for such purposes), Sections, and Subsections unless the context clearly otherwise
requires. Certain other capitalized words and phrases that are used on a more limited basis are
defined in the Sections in which they are used.

 

 

Action: Section 16.1;

Administration and Enforcement Expenses: Section 18.1;

Applicable Laws: Subsection 3.9(a);

Application Deposit: Subsection 8.2(a)(iii);

Availability Threshold: Subsection: 4.4(a);

Bankruptcy Code: Subsection 1.1(f);

Borrower: Preamble;

Business Day: Section 15.1;

Business Income Insurance: Subsection 3.2(a)(ii);

Business Interruption Period: Subsection 3.2(a)(ii);

Casualty Loss: Section 4.4;

Commercial Property Insurance: Subsection 3.2(a)(i);

Condemnation Action: Section 4.4;

Condemnation Awards: Subsection 1.1(g);

Condemnation Restoration: Section 3.5;

Control: Subsection 8.1(b);

Conversion: Section 17.5;

Debt: Note;

Decision Power: Subsection 19.3(g);

Default Rate: Note;

Defeasance: Note;

Deliverables: Exhibit C;

Eligible Account: Section 3.4;

Eligible Institution: Section 3.4;

Encumbrance: Subsection 8.1(a);

Environmental Indemnity Agreement: Section 1.1;

ERISA: Subsection 4.2(a);

Estimated Rental Income: Subsection 3.2(a)(ii);

Event of Default: Section 10.1;

Financial Statement Reporting Deposit: Note;

Future Development Parcel: Exhibit B;

Governing State: Section 16.1;

Grantor: Preamble and Section 19.1;

Ground Lease: Section 1.2;

Ground Lessee: Section 1.2;

Ground Lessor: Section 1.2;

HGSI: Subsection 4.3(b)(vii);

HGSI Lease: Reserve and Security Agreement;

HGSI Option Agreement: Subsection 8.1(a);

Impound Account: Section 3.4;

Improvements: Subsection 1.1(c);

Indemnified Parties: Section 12.1;

Insurance Premiums: Subsection 3.2(b);

Insurance Restoration: Subsection 3.2(e);

Insured Property: Subsection 3.2(a)(i);

Interested Parties: Section 17.3;

2

 

Investor: Section 17.1;

Land: Subsection 1.1(a);

Late Charges: Note;

Leases: Subsection 1.1(f);

Leasing Report: Subsection 3.10(b);

Lender: Preamble and Section 20.1;

Liability Insurance: Subsection 3.2(a)(v);

Loan: Recitals;

Loan Application: Section 5.14;

Loan Documents: Note;

Loan Sale: Section 17.1;

Loan Splitting: Section 17.5;

Loan Tranching: Section 17.5;

Losses: Section 12.1;

Maturity Date: Note;

Monthly Insurance Impound: Section 3.4;

Monthly Payment: Note;

Monthly Tax Impound: Section 3.4;

Net Proceeds: Section 4.4;

Net Proceeds Account: Subsection 4.4(a);

New Grantor: Subsection 8.2(a)(iv);

New Guarantor: Subsection 8.2(a)(viii);

Non-Consolidation Opinion: Section 5.19;

Note: Recitals;

Other Charges: Subsection 3.3(a);

Participations: Section 17.1;

Partnership; Subsection 8.1(b);

Permitted Exceptions: Section 5.1;

Personal Property: Subsection 1.1(e);

Policies/Policy: Subsection 3.2(b);

Prepayment Consideration: Note;

Prohibited Transfer: Section 8.1;

Property: Section 1.1 and Section 20.1;

Qualifying Manager: Section 5.18;

Rating Agency: Section 5.18;

REIT: Subsection 8.1(b);

Release: Section 1.1;

Release Date: Exhibit C;

Remaining Parcel: Exhibit C and D;

REMIC: Section 17.2;

Rents: Subsection 1.1 (f);

Restoration: Section 4.4;

Restoration Consultant: Subsection 4.4(b)(iii);

Restoration Retainage: Subsection 4.4(b)(iv);

Restricted Party: Subsection 8.1(a);

Right of Entry Agreement: Subsection 11.1(h);

3

 

Sale: Subsection 8.1(a);

Secondary Market Transaction: Section 17.2;

Secured Obligations: Section 2.1;

Securities: Section 17.1;

Securitization: Section 17.1;

Security Instrument: Preamble;

Servicing Rights Transfers: Section 17.1;

Special Cause of Loss: Subsection 3.2(a)(i);

Tax Change Acceleration: Subsection 7.3(a);

Taxes: Subsection 3.3(a);

Terrorism Coverage: Subsection 3.2(c);

Transfer Fee: Subsection 8.2(a)(vi);

Trustee: Preamble;

Uniform Commercial Code: Subsection 1.1(e);

University Parcel: Subsection 8.1(a);

University of Maryland Option: Subsection 8.1(a);

Wachovia Ground Leases: Subsection 4.3(b)(vii).

ARTICLE 1 — GRANTS OF SECURITY

          SECTION 1.1. PROPERTY MORTGAGED. Grantor does hereby irrevocably deed, mortgage, grant,
bargain, sell, alien, enfeoff, hypothecate, remise, release, pledge, assign, warrant, transfer,
confirm, and convey to Trustee for the benefit of Lender a lien on, pledge of, and security
interest in, the following property, rights, interests, and estates now owned or hereafter acquired
by Grantor to the full extent of Grantor’s right, title, and interest therein, including hereafter
acquired rights, interests, and property, and all products and proceeds thereof and additions and
accessions thereto (sometimes collectively referred to herein as the “Property”):

     (a) Land. The real property described in Exhibit A attached hereto and
made a part hereof (the “Land”); TOGETHER with

     (b) Rights. Estates, and development rights now owned or hereafter acquired by
Grantor for use in connection with the Land and the development of the Land that may, from
time to time, by supplemental mortgage or otherwise, be expressly made subject to the lien
of this Security Instrument.

     (c) Improvements. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements now or
hereafter erected or located on the Land (the “Improvements”);

     (d) Easements and Appurtenances. All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development rights, riparian rights, and
all estates, rights, titles, interests, privileges, liberties, servitudes, tenements,
hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter
belonging, relating or pertaining to the Land and the Improvements and the reversion and

4

 

reversions, remainder and remainders, including any homestead or other claim at law or
in equity and any after-acquired title, franchises, licenses, and any reversions and
remainders thereof, and all land lying in the bed of any street, road or avenue, opened or
proposed, in front of or adjoining the Land, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of property, possession, claim and demand
whatsoever, both at law and in equity, of Grantor of, in, and to the Land and the
Improvements and every part and parcel thereof, with the appurtenances thereto;

     (e) Fixtures and Tangible Personal Property. All inventory, machinery,
furniture, equipment, and fixtures (including all heating, air conditioning, plumbing,
lighting, communications and elevator fixtures) and other property of every kind and nature
whatsoever located upon the Land or the Improvements or appurtenant thereto or used in
connection with the present or future operation or occupancy of the Land or the
Improvements, including all materials intended for construction, reconstruction,
refurbishment, renovation, alterations, and repairs to the Property (whether stored or
located on or off the Property) (all of the items described in Subsections 1.1(e)
through 1.1(m) below are herein sometimes collectively called the “Personal
Property”), including the right, title and interest of Grantor in and to any of the Personal
Property that may be subject to any security interests, as defined in the Maryland Uniform
Commercial Code (the “Uniform Commercial Code”) superior in lien to the lien of this
Security Instrument, such Personal Property to include, for example, the following: (1) all
furniture and furnishings, including carpets, rugs and other floor coverings, draperies,
drapery rods and brackets, awnings, window shades, Venetian blinds, curtains, lighting
fixtures, desk chairs, stools, pictures, lamps, ash trays, waste baskets, clocks, radios,
and all other furniture and furnishings of every kind and nature whatsoever; (2) all cash
registers, coin machines, computers, word processing equipment, adding machines,
calculators, check protectors, postage meters, desks, chairs, tables, room dividers, filing
cabinets, safes, vaults, time clocks, time card machines, and other office furniture,
equipment and supplies of every kind and nature whatsoever; (3) all right and interest of
Grantor in and to all equipment leases, personal property leases, conditional sales
contracts and similar agreements in and to the telephone system (including the switching
components thereof), television sets, computer systems, refrigerator/bars, and point of sale
computer systems and/or inventory control systems; (4) all apparatus, machinery, motors,
tools, insurance proceeds, leases, and equipment, including fire sprinklers and alarm
systems, air conditioning, heating, refrigerating, electronic monitoring, window or
structural cleaning rigs, maintenance equipment, equipment for the extermination or
exclusion of vermin or insects, equipment for removal of dust, debris, snow, refuse or
garbage, and all other equipment of every kind; (5) elevators, fittings, radiators, gas
ranges, mechanical equipment, and all plumbing, heating, lighting, cooking, laundry,
ventilating, refrigerating, incinerating, air conditioning, central energy and sprinkler
equipment and fixtures and appurtenances thereto; and (6) all renewals or replacements of
any of the foregoing, whether or not the same are or shall be attached to the Improvements;

     (f) Leases and Rents. All leases and other agreements affecting or relating to
the use, enjoyment or occupancy of all or any part of the Land or the Improvements
heretofore or hereafter entered into, whether before or after the filing by or against

5

 

Grantor of any petition for relief under 11 U.S.C. § 101 et seq. (the
“Bankruptcy Code”), as the same may be amended from time to time (the “Leases”) and all
right, title and interest of Grantor, its successors and assigns therein and thereunder,
including cash or securities deposited thereunder to secure the performance by the lessees
of their obligations thereunder and all rents, additional rents, royalties, licenses,
payments (including payments pursuant to the exercise of any purchase option by any tenant
under any Lease), fees (including termination fees), revenues, income, receipts, charges,
accounts, accounts receivable, issues and profits and other benefits (including all oil and
gas or other mineral royalties and bonuses) from the Land or the Improvements whether paid
or accruing before or after the filing by or against Grantor of any petition for relief
under the Bankruptcy Code (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 Secured Obligations;

     (g) Condemnation Awards. Subject to the rights of HGSI to make a separate
claim pursuant to the terms of the HGSI Lease, all awards or payments, including interest
thereon (collectively “Condemnation Awards”), which may heretofore and hereafter be made
with respect to the Property, whether from the exercise of the right of eminent domain
(including any transfer made in lieu of or in anticipation of the exercise of such right),
or for a change of grade, inverse condemnation or for any other injury to or decrease in the
value of the Property whether permanent or temporary;

     (h) Insurance Proceeds. All proceeds of and any unearned premiums on any
insurance policies covering the Property, including the right to receive and apply the
proceeds of any insurance judgments, or settlements made in lieu thereof, for damage to the
Property;

     (i) Tax Certiorari. All refunds, rebates or credits in connection with a
reduction in real estate taxes and assessments charged against the Property as a result of
tax certiorari or any applications or proceedings for reduction;

     (j) Miscellaneous Personal Property. All intangible property used in
connection with or generated by, located on or at or pertaining to the Property including
all general intangibles, payment intangibles, software, goodwill, trademarks, trade names,
service marks, logos, copyrights, option rights, purchase contracts, contract rights or
leases of personal property and security deposits received pursuant thereto, utility
contracts, service contracts, guaranties, warranties, telephone exchange numbers, licenses,
government permits and applications, approvals and other government rights relating to the
Property or the operation of the business thereon; all books and records; deposit accounts,
letter-of-credit rights, accounts, contract rights, instruments, chattel paper, investment
property, all rights of Grantor for payment of money for property sold, rented or lent, for
services rendered, for money lent, or advances or deposits made; all claims, actions, and
causes of action (including those arising in tort, including commercial tort claims) of
Grantor against others; all agreements, contracts, certificates, instruments (including
promissory notes, guaranties, liens and all writings which evidence a right to the payment
of money), franchises, permits, licenses, plans, specifications and other documents, now or
hereafter entered into, and all rights therein

6

 

and thereto, respecting or pertaining to the use, occupation, construction, management
or operation of the Property or any part thereof or respecting any business or activity
conducted on the Property or any part thereof and all right, title and interest of Grantor
therein and thereunder, including the right to receive and collect any sums payable to
Grantor thereunder; all extensions, improvements, betterments, replacements, renewals, or
additions and accessions to any of the foregoing; and any other intangible property of
Grantor related to the Property; and

     (k) Personal Property As Defined In Uniform Commercial Code. In addition to
any other property mentioned in this Section 1.1, all property in which a security
interest may be created pursuant to the Uniform Commercial Code (or any similar laws)
including all goods, inventory, equipment, accounts, accounts receivable, contract rights,
general intangibles, chattel paper, documents, documents of title, instruments, deposit
accounts, letter-of-credit rights, investment property, tort claims (including commercial
tort claims), and securities located on or generated by or used in connection with the
ownership or operation of the Property;

     (l) Conversion. All proceeds of the conversion, voluntary or involuntary, of
any of the foregoing including but not limited to proceeds of insurance and Condemnation
Awards, into cash or liquidation claims; and

     (m) Other Rights. Any and all other rights of Grantor in and to the items set
forth in Subsections (a) through (k) above.

     Notwithstanding the foregoing, Lender acknowledges that (a) the Future Development Parcel is
solely being included as part of the “Property” as an accommodation to the Lender until the
Remaining Parcel and the Future Development Parcel are subdivided in accordance with the provisions
of Exhibit C attached hereto, (b) the Future Development Parcel was not included in the
appraisal of the Property for Lender’s loan to value analysis, and (c) all interests of the Lender
with respect to the Future Development Parcel hereunder and under any of the other Loan Documents
will be released and terminated upon the satisfaction of the conditions set forth in Section 2 of
Exhibit C (the “Release”), except as specifically set forth in Section 8 of the
Environmental Indemnity Agreement executed by Grantor dated as of the date hereof (the
“Environmental Indemnity Agreement”). From and after the Release, all references to “Property” in
this Security Instrument and each other Loan Document shall solely refer to the Remaining Parcel
and shall not include any portion of the Future Development Parcel.

          SECTION 1.2. GROUND LEASE. Lender acknowledges that Grantor is entering into a Ground Lease
dated the date hereof (“Ground Lease”) between Grantor as Ground Lessor (“Ground Lessor”) and BMR
Shady Grove D LLC, a Delaware limited liability company, as Ground Lessee (“Ground Lessee”)
pursuant to which Grantor has leased its fee interest in the Future Development Parcel (as such
Future Development Parcel is described on Exhibit B). Lender further acknowledges that a
memorandum of the Ground Lease will be recorded with the Montgomery County Recorder’s Office prior
to the recording of this Security Instrument, but will be subordinated to this Security Instrument
pursuant to a Subordination, Non-Disturbance, and Attornment Agreement dated the date hereof. All
leasehold improvements owned by Ground Lessee are not part of the Property and are not subject to
the

7

 

terms of the lien of this Security Instrument. Lender hereby acknowledges that Ground Lessee
shall be entitled to obtain Ground Lease financing, provided in all events that such financing
shall impose no material additional obligation on Lender and shall not encumber Grantor’s fee
interest in the Property. Lender further acknowledges that Ground Lessee and Ground Lessor shall
have the right to modify, amend and terminate the Ground Lease without the consent of Lender;
provided, however, Lender’s prior consent, not to be unreasonably withheld or delayed, shall be
required in connection with any modification or amendment of the Ground Lease which materially
increases the obligations of Ground Lessor thereunder and provided that such modification,
amendment or termination shall not cause a violation of the provisions of Section 4.3 of
this Security Instrument.

          SECTION 1.3. ASSIGNMENT OF LEASES AND RENTS. Grantor hereby absolutely and unconditionally
assigns to Lender Grantor’s right, title and interest in and to all current and future Leases and
Rents, it being acknowledged by Grantor that this assignment constitutes, and is intended to
constitute a present, absolute assignment and not an assignment for additional security only.
Nevertheless, subject to the terms of this Section 1.3 and Section 3.6, Lender
grants to Grantor a revocable license to collect and receive the Rents. Grantor shall hold a
portion of the Rents sufficient to discharge all current sums due on the Secured Obligations for
use in the payment of such sums.

          SECTION 1.4. SECURITY AGREEMENT. This Security Instrument is both a real property mortgage
and a “security agreement” within the meaning of the Uniform Commercial Code. The Property
includes both real and personal property and all other rights and interests, whether tangible or
intangible in nature, of Grantor in the Property. By executing and delivering this Security
Instrument, Grantor hereby grants to Lender, as security for the Indemnity Guaranty, a security
interest in any of the Property that is deemed to be personal property to the full extent that such
property may be subject to the Uniform Commercial Code. This Security Instrument shall be and is
intended to serve as a financing statement under the Uniform Commercial Code with respect to the
Personal Property, and when filed shall serve as a financing statement for all intents and purposes
thereunder. Grantor authorizes Lender to file financing statements describing the Personal
Property. Upon the occurrence and during the continuance of an Event of Default, Lender shall be
entitled to all rights and remedies of a “secured party” under the Uniform Commercial Code. Upon
its recording in the real property records, this Security Instrument shall be effective as a
financing statement filed as a fixture filing and when filed shall serve as a financing statement
for all intents and purposes thereunder. For purposes of this filing, Grantor is the record owner
of the Property. The name and mailing address of Grantor, as debtor, and the name and mailing
address of Lender, as secured party, from which information concerning this Security Instrument may
be obtained, are set forth in the Preamble of this Security Instrument. Grantor shall immediately
advise the Lender in writing of any change in the state of Grantor’s organization, or Grantor’s
exact legal name, or the places where the Personal Property, or any part thereof, or the books and
records concerning the Personal Property, or any part thereof, are kept.

          If any of the Property is deemed to be personal property, this Security Instrument shall also
constitute a security agreement with respect to such personal property executed by Grantor as
debtor in favor of Lender as secured party. Upon the occurrence and during the continuation of an
Event of Default, Lender may, in addition to and not in derogation of any other rights and

8

 

remedies of Lender under the Loan Documents or applicable law, in accordance with Section
9-604 of the Uniform Commercial Code, as applicable, or other such provisions of the Uniform
Commercial Code, elect (i) to proceed under and have all the rights and remedies of a secured party
under Article 9 of the Uniform Commercial Code and any other applicable law, or (ii) to proceed as
to both the real property and the personal property in accordance with Lender’s rights and remedies
in respect of the real property encumbered by this Security Instrument, whereupon at any
foreclosure sale conducted pursuant to this Security Instrument the Trustee acting hereunder may
offer the real and personal property together as part of the same sale, with bids to be taken on
the whole of the real and personal property rather than separately.

          SECTION 1.5. PLEDGE OF MONIES HELD. Grantor hereby pledges to Lender any and all items and
monies now or hereafter held by Lender, including any sums deposited in the Impound Account or any
escrow, as additional security for Secured Obligations until expended or applied as provided in
this Security Instrument.

          SECTION 1.6. COMMON LAW PLEDGE/ASSIGNMENT. To the extent that the Uniform Commercial Code
does not apply to any item of the Personal Property, it is the intention of this Security
Instrument that Lender have a common law pledge and/or collateral assignment of such item of
Personal Property.

CONDITIONS TO GRANT

     TO HAVE AND TO HOLD the Property unto and to the use and benefit of Lender, and the successors
and assigns of Lender, forever;

     IN TRUST, WITH POWER OF SALE, to secure payment of the Secured Obligations at the time and in
the manner provided in the Indemnity Guaranty, this Security Instrument and the other Loan
Documents executed by Grantor;

     PROVIDED, HOWEVER, these presents are upon the express condition that, if Grantor shall pay
and perform the Secured Obligations at the time and in the manner provided in the Indemnity
Guaranty, this Security Instrument and the other Loan Documents to which Grantor is a party, and
shall abide by and comply with each and every covenant and condition set forth in the Indemnity
Guaranty, this Security Instrument, and the other Loan Documents to which Grantor is a party, these
presents and the estate hereby granted shall terminate.

ARTICLE 2 — SECURED OBLIGATIONS

          SECTION 2.1. SECURED OBLIGATIONS. This Security Instrument and the grants, assignments, and
transfers made in Article 1 are given for the purpose of securing the following, in such
order of priority as Lender may determine (the “Secured Obligations”):

     (a) the payment of the indebtedness and obligations evidenced by or arising under the
Indemnity Guaranty, together with all amendments or modifications thereto and substitutions
or replacements thereof.

     (b) the payment of all sums advanced pursuant to the Indemnity Guaranty, this Security
Instrument or any other Loan Document executed by Grantor to protect and

9

 

preserve the Property and the lien and the security interest created hereby or
otherwise, it being agreed by Grantor that any future advances made by Lender from time to
time under this Security Instrument, or the other Loan Documents executed by Grantor and
whether or not such advances are obligatory or are made at the option of Lender, or
otherwise, made for any purpose, and all interest accruing thereon, shall be equally secured
by this Security Instrument 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 Security Instrument;

     (c) the payment of all loans and advances by Lender, all liabilities, indemnities,
damages and claims of any kind or nature (in contract, tort or otherwise), including damages
incurred by Lender because Grantor has failed to perform under the Indemnity Guaranty, this
Security Instrument or the other Loan Documents executed by Grantor strictly in accordance
with their terms, and costs and expenses (including reasonable attorneys’ fees) incurred by
Lender in connection with the Secured Obligations or any part thereof (except on account of
Lender’s gross negligence or willful misconduct), or the servicing or administration thereof
or the enforcement of Lender’s remedies in the collection thereof, any renewal, extension,
modification, consolidation, change, substitution, replacement, restatement or increase of
the Secured Obligations or any part thereof, or the acquisition or perfection of the
security therefor, whether made or incurred at the request of Grantor or Lender and whether
or not evidenced by additional promissory notes or other instruments;

     (d) the performance of all other obligations of Grantor contained herein;

     (e) the performance of each obligation of Grantor contained in any Loan Document
executed by Grantor in addition to the payment of money; and

     (f) the performance of each obligation of Grantor contained in any renewal, extension,
modification, consolidation, change, substitution, replacement for, restatement or increase
of all or any part of the Indemnity Guaranty, this Security Instrument or any other Loan
Document executed by Grantor.

ARTICLE 3 — GRANTOR COVENANTS

     Grantor covenants and agrees that:

          SECTION 3.1. PAYMENT OF SECURED OBLIGATIONS. Grantor shall pay the Secured Obligations at
the time and in the manner, provided in the Indemnity Guaranty, this Security Instrument and other
Loan Documents executed by Grantor.

          SECTION 3.2. INSURANCE.

     (a) Insurance. Grantor shall obtain, (or cause to be obtained), and maintain,
(or cause to be maintained), insurance for Grantor and the Property providing at least the
following coverages:

10

 

     (i) Property Insurance. Insurance (“Commercial Property Insurance”)
with respect to the Improvements, including fixtures, machinery, equipment and any
other items of Property (collectively “Insured Property”) owned by Grantor and
typically insured by a commercial property insurance policy, insuring against any
peril now or hereafter included within the classification “Special Cause of Loss”
insuring against risks of direct physical loss, in an amount not less than one
hundred percent (100%) of the “Full Insurable Value” (as hereinafter defined) of the
Improvements and other Insured Property, with an “agreed amount” endorsement waiving
all co-insurance provisions. The term “Full Insurable Value” shall mean the full
replacement cost value of the Improvements and Insured Property (without taking into
account any depreciation, and exclusive of excavations, footings and foundations,
landscaping and paving) determined annually at Grantor’s sole cost and expense by an
insurer, a recognized independent insurance broker or an independent appraiser
selected by Grantor and reasonably approved by Lender, but in no event less than the
coverage required pursuant to the terms of any Lease. In addition, Grantor shall
obtain: (x) if any portion of the Improvements is currently or at any time in the
future located in a federally designated “special flood hazard area,” flood hazard
insurance in an amount equal to the lesser of (1) the outstanding principal balance
of the Secured Obligations or (2) the maximum amount of such insurance available
under the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of
1973 or the National Flood Insurance Reform Act of 1994, as each may be amended or
such greater amount as Lender shall require; and (y) earthquake or earth movement
insurance in amounts and in form and substance satisfactory to Lender in the event
that Property is located in an area with a high degree of seismic activity, provided
that the insurance pursuant to clauses (x) and (y) hereof shall be on terms
consistent with the “Special Cause of Loss” insurance policy required under this
subsection (i).

     (ii) Business Interruption. Business interruption and/or loss of
“rental income” insurance (“Business Income Insurance”) in an amount sufficient to
avoid any co-insurance penalty and to provide proceeds that will cover the estimated
annual gross income as reasonably determined by Lender (the “Estimated Rental
Income”) for a period (the “Business Interruption Period”) of not less than
twenty-four (24) months from the date of casualty or loss. Such Business Income
Insurance policy shall provide that, after the physical loss to the Improvements and
the other Insured Property has been repaired, the continued loss of Estimated Rental
Income will be insured during the applicable Business Interruption Period, and
notwithstanding that the policy may expire prior to the end of such period. The
term “rental income” to mean the sum of (A) the total then ascertainable Rents
payable under the Leases and (B) the total ascertainable amount of all other amounts
to be received by Grantor from third parties which are the legal obligation of the
tenants. The amount of Business Income Insurance coverage shall be adjusted
annually by Lender to reflect the projected rents payable during the next succeeding
Business Interruption Period;

11

 

     (iii) Boiler and Machinery. If applicable, comprehensive form boiler
and machinery insurance (without exclusion for explosion), on terms consistent with
those set forth for Commercial Property Insurance in Section 3.2(a)(i)
above;

     (iv) Builder’s Risk. During a Casualty Loss or a Condemnation Action
that affects in excess of twenty-five percent (25%) of the square footage of the
improvements located on the Remaining Parcel, (A) owner’s contingent or protective
liability insurance covering claims not covered by or under the terms or provisions
of the above mentioned commercial general liability insurance policy described in
Subsection 3.2(a)(v) below; and (B) the insurance provided for in
Subsection 3.2(a)(i) written in a so-called builder’s risk completed value
form, if applicable given the nature of the contemplated improvements, (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
Subsection 3.2(a)(i), (3) including permission to occupy the Property, and
(4) with an agreed amount endorsement waiving co-insurance provisions;

     (v) Liability Insurance. Commercial general liability insurance
(“Liability Insurance”) on an “occurrence” form, including bodily injury and
property damage liability, and insurance against any and all claims, including all
legal liability imposed upon Lender and all court costs and legal fees and expenses,
arising out of or connected with the possession, use, leasing, operation,
maintenance or condition of the Property. Such insurance shall provide commercial
general liability protection in an amount not less than Three Million Dollars
($3,000,000) each occurrence and Five Million Dollars ($5,000,000) in the aggregate
and Twenty Million Dollars ($20,000,000) of excess umbrella liability insurance;

     (vi) Workers Compensation Insurance. If the Property includes
commercial property, worker’s compensation insurance with respect to any employees
of Grantor, as required by any Governmental Authority or any Applicable Law; and

     (vii) Other Insurance. Such other insurance with respect to the
Property against loss or damage of the kinds from time to time customarily insured
against and generally required by institutional lenders for properties comparable to
the Property.

     (b) Insurance Policies. All insurance provided for in Subsection
3.2(a) hereof shall be obtained under valid and enforceable policies (the “Policies” or
in the singular, the “Policy”) issued by one or more insurers reasonably satisfactory to
Lender and having a rating of A:X or better by Best’s Key Rating Guide. All insurers
providing the insurance required under this Security Instrument shall be authorized to issue
insurance in the state in which the Property is located. The Policy referred to in
Subsection 3.2(a)(v) above shall name Lender as an additional insured and the
Policies referred to in Subsection 3.2(a)(i), (ii), (iii) and
(iv), and as applicable (vii), above shall provide that all proceeds be
payable to Lender as set forth in Section 4.4 hereof. The Policies referred to in
Subsections 3.2(a)(i), (iii), and (iv) shall also: (1) contain a
standard “non-contributory

12

 

mortgagee” endorsement or its equivalent relating, inter alia, to recovery by Lender
notwithstanding the negligent or willful acts or omission of Lender; (2) contain a waiver of
subrogation endorsement as to Lender; and (3) be reasonably approved by Lender as to
amounts, form, risk coverage, deductibles, loss payees and insureds. All Policies shall
contain (i) a provision that such Policies shall not be cancelled or terminated, nor shall
they expire, without at least ten (10) days prior written notice to Lender in each instance;
and (ii) include effective waivers by the insurer of all claims for Insurance Premiums
against any loss payees, additional insureds and named insureds (other than Grantor).
Certificates of insurance with respect to all renewal and replacement Policies shall be
delivered to Lender not less than ten (10) days prior to the expiration date of any of the
Policies required to be maintained hereunder which certificates shall bear notations
evidencing payment of applicable premiums (the “Insurance Premiums”). Duplicate originals
of such replacement Policies shall be delivered to Lender promptly after Grantor’s receipt
thereof but in any case within thirty (30) days after the effective date thereof. If
Grantor fails to maintain, (or cause to be maintained) and fails to deliver to Lender the
original Policies or certificates of insurance required by this Security Instrument, upon
ten (10) days prior notice to Grantor, Lender may procure such insurance at Grantor’s sole
cost and expense.

     (c) Terrorism Coverage. The commercial property and business income insurance
required pursuant to Section 3.2(a) hereof shall be required to cover perils of
terrorism and acts of terrorism (“Terrorism Coverage”) and Grantor shall maintain Commercial
Property Insurance and Business Income Insurance for loss resulting from perils, and acts of
terrorism on terms (including amounts) consistent with those required under Sections
3.2(a)(i) and (iii) above at all times during the term of the Secured
Obligations so long as (A) Lender reasonably determines that either (1) prudent owners of
real estate comparable to the Property are maintaining same, or (2) prudent institutional
lenders are requiring that such owners maintain such insurance; or (B) if such insurance is
obtainable from any insurer or the United States of America or any agency or instrumentality
thereof and the lack of such insurance in and of itself will result in a qualification,
downgrade or withdrawal of the then current rating assigned, or to be assigned, or prevent
ratings from being assigned, to the Securities or any class thereof in any applicable
Securitization. If Lender has waived the requirement that Grantor obtain Terrorism
Coverage, Lender may at any time require that Grantor obtain such Terrorism Coverage upon
thirty (30) days notice.

     (d) Compliance With Insurance Requirements. Grantor shall comply with all
insurance requirements and shall not bring or keep or permit to be brought or kept any
article upon any of the Property or cause or permit any condition to exist thereon which
would be prohibited by an insurance requirement, or would invalidate the insurance coverage
required hereunder to be maintained by Grantor on or with respect to any part of the
Property pursuant to this Section 3.2.

     (e) Restoration. If the Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, Grantor shall give prompt notice of such damage to Lender
and provided that Grantor shall have received the Net Proceeds, Grantor shall promptly
commence (or cause to be commenced) and diligently prosecute the completion of the

13

 

repair and restoration of the Property as nearly as possible to the condition the
Property was in immediately prior to such fire or other casualty, with such alterations as
may be reasonably approved by Lender (the “Insurance Restoration”) and otherwise in
accordance with Section 4.4 of this Security Instrument.

     (f) Blanket Insurance Policies. The insurance coverage required under
Section 3.2(a) may be effected under a blanket policy or policies covering the
Property and other properties and assets not constituting a part of the security hereunder;
provided that any such blanket policy shall specify the portion of the total coverage of
such policy that is allocated to the Property, and any sub-limit in such blanket policy
applicable to the Property, and shall in any case comply in all other respects with the
requirements of this Section 3.2. Lender may make such other requirements with
respect to blanket insurance as Lender may deem reasonably appropriate or desirable from
time to time.

     (g) Absolute Transfer On Foreclosure. In the event of a foreclosure of this
Security Instrument or other transfer of title to the Property extinguishing the Secured
Obligations or the lien of this Security Instrument to the extent permitted by the policies,
all right, title and interest of Grantor in and to any insurance policies then in force
shall pass to and are hereby assigned by Grantor to the purchaser or grantee.

          SECTION 3.3. PAYMENT OF TAXES, ETC.

     (a) Grantor shall pay, or cause to be paid, by their due date, all taxes, assessments,
water rates, sewer rents, governmental impositions, and other charges, including vault
charges and license fees for the use of vaults, chutes and similar areas adjoining the Land,
now or hereafter levied or assessed or imposed against the Property or any part thereof (the
“Taxes”), all ground rents, maintenance charges and similar charges, now or hereafter levied
or assessed or imposed against the Property or any part thereof (the “Other Charges”), and
all charges for utility services provided to the Property as same become due and payable.
Grantor shall deliver to Lender, promptly upon Lender’s request, evidence reasonably
satisfactory to Lender that the Taxes, Other Charges, and utility service charges have been
so paid or are not then delinquent. Grantor shall not suffer and shall promptly cause to be
paid and discharged any lien or charge whatsoever that may be or become a lien or charge
against the Property, except such liens or charges that have either been fully bonded and
discharged of record or in the alternative fully insured to the reasonable satisfaction of
Lender by the title company insuring the lien of this Security Instrument. Except to the
extent sums sufficient to pay all Taxes and Other Charges have been deposited with Lender in
accordance with the terms of this Security Instrument, Grantor shall furnish to Lender paid
receipts for the payment of the Taxes and Other Charges prior to the date the same shall
become delinquent.

     (b) Notwithstanding the provisions of Section 3.3(a), after prior written
notice to Lender, Grantor, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any of the Taxes, provided that (i) no Event
of Default has occurred and is continuing, (ii) Grantor is permitted to do so under the

14

 

provisions of any other mortgage, deed of trust or deed to secure debt affecting the
Property (it not being implied by this clause that any such encumbrance will be permitted),
(iii) such proceeding shall suspend the collection of the Taxes from Grantor and from the
Property or Grantor shall have paid all of the Taxes under protest, (iv) such proceeding
shall be permitted under and be conducted in accordance with the provisions of any other
instrument to which Grantor is subject and shall not constitute a default thereunder, (v)
neither the Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, cancelled or lost, (vi) Grantor shall set aside, or cause to be
set aside adequate reserves for the payment of the Taxes, together with all interest and
penalties thereon, unless all Taxes were paid under protest, and (vii) Grantor shall have
furnished the security as may be required in the proceeding, or as may be reasonably
requested by Lender to insure the payment of any contested Taxes, together with all interest
and penalties thereon.

          SECTION 3.4. TAX AND INSURANCE IMPOUND ACCOUNT. Grantor shall establish and maintain at all
times while an Event of Default shall occur and shall be continuing, an interest-bearing Eligible
Account (the “Impound Account”) with Lender for payment of Taxes and Insurance Premiums on the
Property and as additional security for the indebtedness secured hereby. Grantor shall deposit in
the Impound Account an amount reasonably determined by Lender to be sufficient (when added to the
monthly deposits described herein) to pay the next due installment of real estate taxes and
assessments on the Property at least one (1) month prior to the due date or the delinquency date
thereof (as Lender shall reasonably determine) and the next due annual insurance premiums with
respect to the Property at least one (1) month prior to the due date thereof. When required by this
Section 3.4, Grantor shall pay to Lender, on the first day of each month, deposits in an
amount equal to one-twelfth (1/12) of the amount of the annual Taxes that will next become due and
payable on the Property (the “Monthly Tax Impound”), plus one-twelfth (1/12) of the amount of the
annual Insurance Premiums that will next become due and payable on insurance policies which Grantor
is required to maintain hereunder (the “Monthly Insurance Impound”), each as estimated and
reasonably determined by Lender. The Monthly Tax Impound or Monthly Insurance Impound shall be
added together and shall be paid together as an aggregate sum by Grantor to Lender. If Lender at
any time reasonably determines that the Monthly Tax Impounds or Monthly Insurance Impounds are
insufficient, Lender may in its reasonable discretion adjust the required monthly payments of such
amounts, and Grantor shall be obligated to pay the increased amounts for the Monthly Tax Impounds
or Monthly Insurance Impounds commencing on the next Monthly Payment Date. At any time when
Grantor is obligated to make the Monthly Tax Impounds and the Monthly Insurance Impounds, all sums
in the Impound Account shall be held by Lender in the Impound Account and shall be used to pay
Taxes and Insurance Premiums due and payable during the time Grantor is required to make deposits
to the Impound Account, to the extent that the proceeds are sufficient and provided that Grantor
has provided to Lender the bills for payment thereof in accordance with the next sentence before
the same become due and payable. Grantor shall be responsible for ensuring the receipt by Lender,
at least thirty (30) days prior to the respective due date or the delinquency date for payment
thereof (as Lender shall reasonably determine), of all bills, invoices and statements for all Taxes
and Insurance Premiums. If an Event of Default shall no longer continue after Grantor has made
deposits under this Section 3.4, Lender shall return the balance remaining in the Impound
Account to Grantor. In making any payment from the Impound Account, Lender shall be entitled to
rely on any bill, statement or

15

 

estimate procured from the appropriate public office or insurance company or agent without any
inquiry into the accuracy of such bill, statement or estimate and without any inquiry into the
accuracy, validity, enforceability or contestability of any tax, assessment, valuation, sale,
forfeiture, tax lien or title or claim thereof. All interest or other earnings on funds deposited
in the Impound Account shall be solely for the account of Grantor. If the total funds in the
Impound Account shall exceed the amount of payments actually applied by Lender for the purposes of
the Impound Account, such excess may be credited by Lender on subsequent payments to be made
hereunder or, at the option of Lender, refunded to Grantor. In allocating such excess, Lender may
deal with the person shown on the records of Lender to be the owner of the Property. If, however,
the Impound Account shall not contain sufficient funds to pay the sums required when the same shall
become due and payable, Grantor shall, within ten (10) days after receipt of written notice
thereof, deposit with Lender the full amount of any such deficiency. The Impound Account may or
may not be in a separate physical account, but shall be denoted as a separate account as a matter
of Lender’s bookkeeping.

For purposes of this Security Instrument, the following terms shall have the following meanings:

     “Eligible Account” means a separate and identifiable account from all other funds held by the
holding institution that (i) is either (a) an account or accounts maintained with a federal or
state chartered depository institution or trust company which complies with the definition of
Eligible Institution 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 or trust company, is subject to regulations
substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital surplus of at
least $50,000,000 and subject to supervision or examination by federal and state authority, and
(ii) constitutes “cash” or a “cash item” within the meaning of Section 856(c)(4)(A) of the Internal
Revenue Code of 1986, as amended. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument; and

     “Eligible Institution” means a depository institution or trust company insured by the Federal
Deposit Insurance Corporation, the short term unsecured debt obligations or commercial paper of
which are rated at least “A-1” by S&P, “P-1” by Moody’s and “F-1” by Fitch in the case of accounts
in which funds are held for thirty (30) days or less (or, in the case of accounts in which funds
are held for more than thirty (30) days, the long term unsecured debt obligations of which are
rated at least “AA” by Fitch and S&P and “Aa2” by Moody’s).

          SECTION 3.5. CONDEMNATION. Subject to the terms of the Leases, Grantor shall promptly give
Lender notice of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Lender copies of any and all papers served in connection with such
proceedings. Lender may participate in any such proceedings to the extent permitted by law.
Grantor shall deliver to Lender all instruments requested by it to permit such participation.
Grantor shall, at its expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any
such proceedings. Grantor shall not make any agreement in lieu of condemnation of the Property or
any portion thereof without the prior written consent of Lender in each instance, which consent
shall not be unreasonably withheld or delayed in the case of a taking of an insubstantial portion
of the Property as reasonably

16

 

determined by Lender. Notwithstanding any taking by any public or quasi-public authority
through eminent domain or otherwise (including any transfer made in lieu of or in anticipation of
the exercise of such taking) and whether or not any Condemnation Awards are made available to
Grantor for the completion of the repair and restoration of the Property as nearly as possible to
the condition the Property was in immediately prior to the condemnation or transfer in lieu of
condemnation, with such alterations as may be reasonably approved by Lender in accordance with
Section 4.4 (a “Condemnation Restoration”), the Secured Obligations shall be payable at the
time and in the manner provided for in the Indemnity Guaranty, this Security Instrument and the
applicable Loan Documents and shall not in any way be reduced until any Condemnation Award shall
have been actually received and applied by Lender, after the deduction of expenses of collection,
to the reduction or discharge of the Secured Obligations. Lender shall not be limited to the
interest paid on the Condemnation Awards by the condemning authority but shall be entitled to
receive out of the Condemnation Awards interest at the rate or rates provided herein or in the
Indemnity Guaranty. Grantor shall cause Condemnation Awards payable to Grantor in any condemnation
or transfer made in lieu of or in anticipation of the exercise of such taking to be paid directly
to Lender. Lender shall apply any such Condemnation Awards (after deducting any expenses of
collection) to the reduction or discharge of the Secured Obligations (whether or not then due and
payable). No Prepayment Consideration shall be payable solely in connection with such Condemnation
Awards. For the purposes of determining whether Prepayment Consideration shall be payable under
this Section 3.5, a criminal action seeking or resulting in a forfeiture of the Property
shall not be deemed a condemnation or eminent domain proceeding and any payment made pursuant to or
in connection with such forfeiture action shall be subject to the payment of Prepayment
Consideration. If the Property or any portion thereof is taken by the power of eminent domain,
Grantor shall promptly commence and diligently prosecute the Condemnation Restoration in accordance
with Section 4.4 of this Security Instrument. If the Property is sold, through foreclosure
or otherwise, prior to the receipt by Lender of the award or payment, Lender shall have the right,
whether or not a deficiency judgment on the Indemnity Guaranty shall have been sought, recovered or
denied, to receive the Condemnation Awards or a portion thereof sufficient to fully satisfy the
Secured Obligations.

          SECTION 3.6. LEASES AND RENTS. Grantor shall comply at all times with that certain Indemnity
Assignment of Leases and Rents of even date herewith executed by Grantor in favor of Lender, which
is incorporated herein by this reference as though fully set forth herein. All Rents generated by
or derived from the Property shall first be utilized solely for current expenses directly
attributable to the ownership and operation of the Property, including current expenses relating to
Grantor’s liabilities and obligations with respect to the Secured Obligations, and none of the
Rents generated by or derived from the Property shall be diverted by Grantor and utilized for any
other purpose unless all such current expenses attributable to the ownership and operation of the
Property have been fully paid and satisfied.

          SECTION 3.7. MAINTENANCE OF PROPERTY. Grantor shall cause the Property to be maintained in a
good and safe condition and repair, subject to normal wear and tear. Material Improvements and
Personal Property shall not be removed, demolished or materially altered (unless such Personal
Property is replaced with personal property of equal or better quality) without the consent of
Lender which consent shall not be unreasonably withheld. Grantor shall promptly repair, replace or
rebuild any material improvements which may be destroyed by any casualty, or become damaged, worn
or dilapidated or which may be affected by

17

 

any proceeding of the character referred to in Section 3.5 hereof and shall complete
and pay for any structure at any time in the process of construction or repair on the Land.
Grantor shall not initiate, join in, acquiesce in, or consent to any material change in any private
restrictive covenant, zoning law or other public or private restriction, limiting or defining the
uses that may be made of the Property or any part thereof without Lender’s prior written consent,
which consent shall not be unreasonably withheld, except as specifically permitted pursuant to
Exhibit C. If under applicable zoning provisions the use of all or any portion of the
Property is or shall become a nonconforming use, Grantor will not cause or permit the nonconforming
use or Improvement to be discontinued or abandoned without the express written consent of Lender;
provided, however, in the event such nonconforming use or Improvement is not in
compliance with Applicable Laws, Grantor shall have the right to cause or permit such nonconforming
use or Improvement to be discontinued or abandoned to comply with Applicable Laws.

          SECTION 3.8. WASTE. Grantor shall not commit or suffer any waste of the Property (“waste”
meaning the diminution in the Property’s value resulting from Grantor’s gross negligence or willful
failure to manage, maintain repair and otherwise operate the Property in a commercially reasonable
manner) or make any change in the use of the Property which will in any way materially increase the
risk of fire or other hazard arising out of the operation of the Property, or take any action that
might invalidate or give cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way materially impair the value of the Property or the security of this
Security Instrument. Grantor shall not, without the prior written consent of Lender, permit any
drilling or exploration for or extraction, removal, or production of any minerals from the surface
or the subsurface of the Land, regardless of the depth thereof or the method of mining or
extraction thereof.

          SECTION 3.9. COMPLIANCE WITH LAWS.

     (a) Grantor shall promptly comply with all existing and future federal, state and local
laws, orders, ordinances, governmental rules and regulations or court orders affecting the
Property and the use thereof (“Applicable Law”).

     (b) Grantor shall maintain all necessary certificates, licenses and other approvals,
governmental and otherwise, necessary for the Property and the conduct of its business and
all required zoning, building code, land use, environmental and other similar permits or
approvals, in full force and effect and shall not take or omit to take any action that would
subject any of the foregoing to revocation, suspension, forfeiture or modification.

     (c) Grantor shall from time to time, upon Lender’s request when Lender has determined
that it has reasonable grounds to believe that the Property is not in compliance with
Applicable Laws, provide Lender with evidence reasonably satisfactory to Lender that the
Property complies with all Applicable Laws or is exempt from compliance with Applicable
Laws.

     (d) Notwithstanding any provisions set forth herein or in any document regarding
Lender’s approval of alterations of the Property (subject to any rights of tenants under the
Leases), Grantor shall not alter the Property in any manner that would

18

 

materially increase Grantor’s responsibilities for compliance with Applicable Laws
without the prior written approval of Lender, which approval shall not be unreasonably
withheld. Lender’s approval of the plans, specifications, or working drawings for
alterations of the Property shall create no responsibility or liability on behalf of Lender
for their completeness, design, sufficiency or their compliance with Applicable Laws. The
foregoing shall apply to tenant improvements constructed by Grantor or by any of its
tenants. Lender may condition any such approval upon receipt of a certificate of compliance
with Applicable Laws from an independent architect, engineer, or other person reasonably
acceptable to Lender.

     (e) Grantor shall give prompt notice to Lender of the receipt by Grantor of any written
notice related to a violation of any Applicable Laws and of the written notice of
commencement of any proceedings or investigations which relate to compliance with Applicable
Laws.

     (f) After prior written notice to Lender, Grantor, at its own expense, may contest by
appropriate legal proceeding, promptly initiated and conducted in good faith and with due
diligence, the Applicable Laws affecting the Property, provided that (i) no Event of Default
has occurred and is continuing; (ii) Grantor is permitted to do so under the provisions of
any other mortgage, deed of trust or deed to secure debt affecting the Property; (iii) such
proceeding shall be permitted under and be conducted in accordance with the provisions of
any other instrument to which Grantor is subject and shall not constitute a default
thereunder; (iv) neither the Property nor any part thereof or interest therein nor any of
the tenants or occupants thereof shall be affected in any material adverse way as a result
of such proceeding; and (v) Grantor shall have furnished to Lender all other items
reasonably requested by Lender.

          SECTION 3.10. BOOKS AND RECORDS.

     (a) Grantor shall keep adequate books and records of account in accordance with methods
reasonably acceptable to Lender and consistently applied, and shall furnish to Lender:

     (i) Within ninety (90) days after the close of each fiscal year of Grantor,
Grantor shall deliver or cause to be delivered to Lender the following financial
reports, each of which shall be certified by Grantor’s chief financial officer or
another person reasonably acceptable to Lender: (A) an annual rent roll; (B) an
annual operating statement of the Property; and (C) an annual balance sheet and
profit-and-loss statement of Grantor and Borrower.

     (ii) For the first twelve (12) months after the date of this Security
Instrument, Grantor shall deliver, or cause to be delivered, all of the following
with respect to the previous calendar month within twenty-one (21) days after the
close of each calendar month, in each case to be certified by Grantor’s chief
financial officer or another person reasonably acceptable to Lender: (A) monthly
rent roll(s); (B) monthly operating statement(s) of the Property; and (C)
year-to-date operating statement(s) of the Property.

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     (iii) Beginning thirteen (13) months after the date of this Security
Instrument, Grantor shall deliver, or cause to be delivered, all of the following
with respect to the previous fiscal quarter within thirty (30) days after the close
of each fiscal quarter, all to be certified by Grantor’s chief financial officer or
another person reasonably acceptable to Lender: (A) a quarterly rent roll; (B) a
quarterly operating statement of the Property; and (C) a year-to-date operating
statement of the Property.

     (b) Not later than each February 1 during the term of the Loan upon Lender’s request,
Grantor shall deliver to Lender, for Lender’s approval, not to be unreasonably withheld, a
report (the “Leasing Report”) setting forth the minimum economic terms that Grantor proposes
for use in connection with the standard lease form for leases of portions of the Property
during the twelve month period beginning upon such anniversary date. The terms set forth in
the Leasing Report shall reflect the prevailing market conditions for like properties in the
locality of the Property.

     (c) Immediately upon Grantor’s receipt of such information, but in no event less
frequently than annually, Grantor shall deliver to Lender upon request, in form satisfactory
to Lender, information regarding the sales and/or receipts of each tenant of the Property
who is required to report such information to Grantor pursuant to such tenant’s Lease or
otherwise.

     (d) Upon request, Grantor and its affiliates shall furnish to Lender:

     (i) a property management report for the Property, showing the number of
inquiries made and/or rental applications received from tenants or prospective
tenants and deposits received from tenants and any other information requested by
Lender, in reasonable detail and certified by Grantor to be true and complete, but
not more frequently than quarterly; and

     (ii) an accounting of all security deposits held in connection with any Lease
of any part of the Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of the
financial institutions in which such security deposits are held and the name of the
person to contact at such financial institution, along with any authority or release
necessary for Lender to obtain information regarding such accounts directly from
such financial institutions;

     (e) Grantor shall furnish Lender with such other additional financial or management
information as may, from time to time, be reasonably required by, and in form and substance
satisfactory to, Lender.

Notwithstanding the foregoing Sections 3.10 (b), (c), and (d) shall not
apply in the event that the Remaining Parcel is leased to a single tenant.

          SECTION 3.11. PAYMENT FOR LABOR AND MATERIALS. Grantor shall promptly pay when due all bills
and costs for labor, materials, and specifically fabricated

20

 

materials incurred in connection with the Property and never permit to exist beyond the due
date thereof in respect of the Property or any part thereof any lien or security interest, even
though inferior to the liens and the security interests hereof, and in any event never permit to be
created or exist in respect of the Property or any part thereof any other or additional lien or
security interest other than the liens or security interests hereof, except for the Permitted
Exceptions. Notwithstanding the foregoing, after prior written notice to Lender, Grantor may, at
its own expense, contest any mechanic’s lien affecting the Property by appropriate legal
proceedings, promptly initiated and conducted in good faith and with due diligence as reasonably
determined by Lender, provided that all of the following conditions are satisfied in Lender’s
discretion: (i) no Event of Default has occurred and is continuing; (ii) Grantor is permitted to
do so under the provisions of any other mortgage, deed of trust or deed to secure debt affecting
the Property; (iii) such proceeding shall be permitted under and be conducted in accordance with
the provisions of any other instrument to which Grantor or the Property is subject and shall not
constitute a default thereunder; (iv) neither the Property, any part thereof or interest therein,
any of the tenants or occupants thereof, nor Grantor shall be affected in any material adverse way
as a result of such proceeding; and (v) such lien shall have been fully bonded against to Lender’s
reasonable satisfaction or discharged of record; (vi) Grantor shall have furnished to Lender all
other items reasonably requested by Lender, including title insurance coverage.

          SECTION 3.12. PERFORMANCE OF OTHER AGREEMENTS. Grantor shall observe and perform each and
every term required to be observed or performed by Grantor pursuant to the terms of any agreement
or recorded instrument affecting or pertaining to the Property.

          SECTION 3.13. CHANGE OF NAME, IDENTITY OR STRUCTURE. Except as may be expressly permitted
under Article 8, Grantor shall not change Grantor’s name, identity (including its trade
name or names) or Grantor’s state of organization or its identification number, without notifying
the Lender of such change in writing at least thirty (30) days prior to the effective date of such
change.

          SECTION 3.14. EXISTENCE. Grantor shall continuously maintain (a) its existence and shall not
dissolve or permit its dissolution, (b) its rights to do business in the state where the Property
is located and (c) its franchises and trade names.

ARTICLE 4 — SPECIAL COVENANTS

     Grantor covenants and agrees that:

          SECTION 4.1. PROPERTY USE. The Property shall be used only for the use approved by Lender in
connection with the making of the Loan and for no other use without the prior written consent of
Lender, which consent shall not be unreasonably withheld.

          SECTION 4.2. ERISA.

     (a) Grantor shall not engage in any transaction that would cause any obligation, or
action taken or to be taken, hereunder (or the exercise by Lender of any of its rights under
the Indemnity Guaranty, this Security Instrument and any other Loan Document executed by
Grantor) to be a non-exempt (under a statutory or administrative

21

 

class exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”).

     (b) Grantor further covenants and agrees to deliver to Lender such certifications or
other evidence from time to time throughout the term of the Security Instrument, as
requested by Lender, that (i) Grantor is not an “employee benefit plan” as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within
the meaning of Section 3(3) of ERISA; (ii) Grantor is not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental plans; and
(iii) one or more of the following circumstances is true:

     (i) Equity interests in Grantor are publicly offered securities, within the
meaning of 29 C.F.R. § 2510.3-101(b)(2);

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

     (iii) Grantor qualifies as an “operating company” or a “real estate operating
company” within the meaning of 29 C.F.R. § 2510.3-101(c) or (e) or an investment
company registered under The Investment Company Act of 1940.

          SECTION 4.3. SINGLE PURPOSE ENTITY.

     (a) Grantor represents, warrants and covenants as follows:

     (i) Grantor is organized solely to acquire, improve, lease, operate, manage,
own, hold for investment and sell or otherwise dispose of the Property and to engage
in any and all other activities as may be necessary in connection with the
foregoing. Grantor shall engage in no other business, it shall have no other
purpose, it shall not own or acquire any real or personal property other than
property related to the Property or in the furtherance of the purposes of Grantor as
stated herein, and it shall not incur, create, or assume any indebtedness or
liabilities, secured or unsecured, direct or contingent, other than (i) the Secured
Obligations and (ii) unsecured indebtedness that represents trade payables or
accrued expenses occurring in the normal course of business of owning and operating
the Property that is not evidenced by a promissory note and is due and payable
within thirty (30) days after the date incurred.

     (ii) Grantor shall not commingle its assets with those of any other entity;

     (iii) Grantor shall hold its assets in its own name;

     (iv) Grantor shall conduct its own business in its own name;

     (v) Grantor shall maintain its bank accounts, books, records and financial
statements in accordance with generally accepted accounting principles,

22

 

keeping such bank accounts, books, records and financial statements separate
from those of any person or entity, and not permit the listing of its assets on the
financial statements of any other person or entity other than BioMed Realty, L.P.,
BMR-Shady Grove Holdings LLC and BioMed Realty Trust, Inc. (and their respective
successors and assigns permitted herein);

     (vi) Grantor shall maintain its books, records, resolutions and agreements as
official records;

     (vii) Grantor shall pay its own liabilities out of its own funds;

     (viii) Grantor shall maintain adequate capital in light of its contemplated
business operations;

     (ix) Grantor shall observe all limited liability company and other
organizational formalities;

     (x) Except as provided in the Loan Documents and the transactions contemplated
thereby (including but not limited to the Ground Lease), Grantor shall maintain an
arm’s-length relationship with Affiliates and enter into transactions with
Affiliates only on a commercially reasonable basis;

     (xi) Except with regard to the Secured Obligations, Grantor shall not guarantee
or become obligated for the debts of any other entity or hold out its credit as
being available to satisfy the obligations of others;

     (xii) Grantor shall not acquire the obligations or securities of its Affiliates
or owners, including partners, members or shareholders;

     (xiii) Grantor shall not make loans to any other person or entity;

     (xiv) Grantor shall allocate fairly and reasonably any overhead for shared
office space;

     (xv) Grantor shall use separate stationary, invoices and checks;

     (xvi) Grantor shall file its own tax returns (except to the extent it is a
disregarded entity not required to file tax returns under applicable law or it is
prohibited by Applicable Laws from doing so);

     (xvii) Grantor shall not pledge its assets for the benefit of any other person
or entity other than the pledge to Lender in connection with Secured Obligations;

     (xviii) Grantor shall hold itself out as a separate entity, and not fail to
correct any known misunderstanding regarding its separate identity;

23

 

     (xix) Grantor shall not identify itself as a division or subsidiary of any
person or entity, other than as an indirect wholly-owned subsidiary of BioMed
Realty, L.P., and BioMed Realty Trust, Inc. and a direct subsidiary of BMR-Shady
Grove Holdings LLC (and their respective successors and assigns permitted herein);

     (xx) Grantor shall not maintain its assets in such a manner that will be costly
or difficult to segregate, ascertain or identify its individual assets from those of
any other person or entity; and

     (xxi) Grantor shall at all times be member managed and shall have at least one
(1) Independent Manager and one (1) “springing” member. The managing member of
Grantor shall be an “SPE Component Entity” which means a limited liability company
(i) whose sole asset is its membership interests in Grantor and Borrower, (ii) which
has restrictions and requirements in its organizational documents which are
substantially similar to those set forth above, and (iii) whose organizational
documents provide that such entity will not engage in business or activity other
than owning an interest in Grantor and Borrower, will not acquire or own any assets
other than its membership interest in Grantor and Borrower, will not incur any debt,
secured or unsecured, direct or contingent, other than unsecured trade payables or
accrued expenses incurred in the ordinary course of business related to the
ownership of the interest in Grantor that are due and payable within thirty (30)
days after the date incurred. Upon the withdrawal, dissolution or other event that
causes an SPE Component Entity to be disassociated from Grantor, a new SPE Component
Entity meeting all the criteria described above shall be appointed and (i) a new
non-consolidation opinion with respect to the SPE Component Entity, acceptable to
Lender in its sole discretion, shall be delivered to Lender and (ii) written
confirmation shall be obtained from each of the applicable rating agencies which
have assigned a rating to any security backed in whole or part by the Secured
Obligations, that the change in the SPE Component Entity will not result in the
qualification, downgrade or withdraw of any such rating. Such SPE Component Entity
shall be the sole member of Grantor, shall have one (1) Independent Manager and one
(1) “springing” member.

     (b) Grantor represents and warrants as follows:

     (i) Grantor is and always has been duly formed, validly existing, and in good
standing under applicable law in the State of Maryland, the state in which its
assets are located, and was not qualified to do business in any other jurisdiction;

     (ii) Grantor is not now, nor has ever been, party to any lawsuit, arbitration,
summons or legal proceeding that is still pending or that resulted in a judgment
against it that has not been paid in full;

24

 

     (iii) To Grantor’s actual knowledge, Grantor is in compliance with all laws,
regulations and orders applicable to it and has received all permits necessary for
it to own the Property;

     (iv) Grantor has no liens of any nature against it except for tax liens not yet
due and payable;

     (v) Grantor is not aware of any pending or threatened litigation;

     (vi) Grantor has never owned any asset or property other than the Property (the
approximately 50 acre parcel in Rockville, Maryland legally described as Parcel A
and Outlot A in block lettered “A” in the subdivision known as Traville, as per plat
thereof recorded as Plat No. 21961 in the Land Records of Montgomery County,
Maryland) and incidental personal property necessary for the ownership or operation
of the Property;

     (vii) Except with regard to rents paid under the November 7, 2001 Ground Lease
with Genome Statutory Trust 2001A and under the Amended and Restated Ground Lease
dated June 30, 2003, with Wachovia Development Corporation (collectively, the
“Wachovia Ground Leases”) which were credited on the books of Human Genome Sciences,
Inc. (“HGSI”), and which Wachovia Ground Leases have been terminated, Grantor has
not commingled its assets with those of any other entity;

     (viii) Grantor has held its assets in its own name;

     (ix) Grantor has conducted its own business in its current name or previous
name, Traville LLC;

     (x) Grantor has provided Lender with complete financial statements, that
reflect a fair and accurate view of Grantor’s financial position;

     (xi) On or prior to May 23, 2006, Grantor had not maintained any books,
records, or agreements as official records other than such books and records
necessary to duly form Grantor and to execute and deliver the Wachovia Ground Leases
and the 2001 and 2003 deeds of trust granted as further security for the 2001 and
2003 structured lease financings on behalf of HGSI (collectively, the “HGSI
Mortgages”) (the HGSI Mortgages were satisfied and released as of a matter of record
on June 1, 2006 at Liber 32420, folio 654, in the Montgomery County, Maryland Land
Records). After May 23, 2006, Grantor has maintained its bank accounts, books,
records and financial statements in accordance with generally accepted accounting
principles, keeping such bank accounts, books, records, and financial statements
separate from those of any person or entity, and has not permitted the listing of
its assets on the financial statements of any other person or entity other than
BioMed Realty, L.P., BMR-Shady Grove Holdings LLC, and BioMed Realty Trust, Inc.;

25

 

     (xii) Except with regard to payments by HGSI of real estate taxes and property
maintenance costs on Grantor’s behalf on or prior to May 23, 2006, Grantor has paid
its own liabilities out of its own funds and all taxes owed by Grantor have been
paid except for tax returns which are on extension;

     (xiii) Grantor has maintained adequate capital in light of its contemplated
business operations;

     (xiv) Grantor has observed all limited liability company organizational
formalities;

     (xv) Except as provided in the Loan Documents and the transactions contemplated
thereby (including but not limited to the Ground Lease), Grantor has maintained an
arm’s-length relationship with affiliates and entered into transactions with
affiliates only on a commercially reasonable basis;

     (xvi) On or prior to May 23, 2006, Grantor neither had any employees nor paid
the salaries of any other entity’s employees; and after May 23, 2006, Grantor has no
employees of its own and no employees are necessary in light of Grantor’s
contemplated business operations;

     (xvii) Except with regard to the (i) interests created under the HGSI Mortgages
(which have since been satisfied and released), and (ii) the guaranty of the
obligations of Borrower under the Indemnity Guaranty dated the date hereof for the
benefit of Lender and the interests created under this Security Instrument, Grantor
has not guaranteed or become obligated for the debts of any other entity or held out
its credit as being available to satisfy the obligations of others;

     (xviii) Grantor has not acquired the obligations or securities of its
affiliates or owners, including partners, members or shareholders;

     (xix) Grantor has not made loans to any other person or entity;

     (xx) On or prior to May 23, 2006, Grantor did not have the need for any office
space, whether physically segregated or shared and after May 23, 2006, Grantor has
not had any need for any office space, but if the need arises for office space,
Grantor shall allocate fairly and reasonably any overhead for any shared office
space;

     (xxi) On or prior to May 23, 2006, Grantor has had only occasional need for
correspondence, and after May 23, 2006, Grantor has used separate stationary,
invoices and checks;

     (xxii) Grantor has filed its tax returns (except to the extent it has been a
disregarded entity not required to file tax returns under applicable law), except
that Grantor has filed an extension for its 2005 Federal and Maryland income tax
returns;

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     (xxiii) Except with regard to the HGSI Mortgages and this Security Instrument,
Grantor has not pledged its assets for the benefit of any other person or entity;

     (xxiv) After May 23, 2006, Grantor has not failed to correct any known
misunderstanding regarding its separate identity, and Grantor has held itself out as
a separate entity;

     (xxv) Except for on or prior to May 23, 2006, when Grantor identified itself as
a subsidiary of HGSI, Grantor has not identified itself as a division or subsidiary
of any person or entity, other than as an indirect wholly-owned subsidiary of BioMed
Realty, L.P. and BioMed Realty Trust, Inc. and a direct subsidiary of BMR-Shady
Grove Holdings LLC;

     (xxvi) Grantor has maintained its assets in such a manner that it would not be
costly or difficult to segregate, ascertain or identify its individual assets from
those of any other person or entity; and after May 23, 2006, Grantor has separately
maintained its assets from any other person or entity;

     (xxvii) Grantor has not permitted any entity to control its daily business
decisions other than on or prior to May 23, 2006, by its sole member HGSI, and after
May 23, 2006, by BMR-Shady Grove Holdings LLC, BioMed Realty, L.P. and BioMed Realty
Trust, Inc.;

     (xxviii) Grantor has materially complied with the assumptions as to
separateness referenced in the non-consolidation opinion dated as of the date hereof
by Latham & Watkins LLP after May 23, 2006; and

     (xxix) Neither Grantor, nor any of its affiliates, has had any contractual or
legal relationship with HGSI or any of its affiliates, other than the contractual
relationships set forth in that certain Agreement of Purchase of Sale dated May 2,
2006, and any documents entered into in connection with the acquisition of Grantor
by BioMed Realty, L.P. from HGSI.

For purposes of this Section 4.3, the following terms shall have the following
meanings:

     “Affiliate” means a person or entity that directly or indirectly (through one or more
intermediaries) controls, is controlled by, or is under the common control of or with, the
person or entity specified;

     “control” means, (i) whether directly or indirectly, ownership or control of the power
to vote ten percent (10%) or more of the outstanding equity interests of any such entity,
(ii) the control in any manner of the election of more than one director or trustee (or
persons exercising similar functions) of such entity, or (iii) the possession, of the power
to direct or cause the direction of the management and/or policies of such entity, whether
through the ownership of voting securities, by contract, or otherwise;

27

 

     “Independent Manager” means a natural person reasonably satisfactory to Lender who is
not at the time of such person’s initial appointment, and shall not have been at any time
during the preceding five years, and shall not be at anytime while serving as an independent
manager of such SPE Component Entity, either (i) a shareholder or other equity owner of,
officer, director (other than an Independent Manager of SPE Component Entity), partner,
attorney, counsel, member or employee of, the SPE Component Entity, Grantor or any of their
respective shareholders, partners, members, subsidiaries or Affiliates, (ii) a customer of,
or supplier to, or any other person or entity that derives any of its purchases or revenues
from activities with, the SPE Component Entity, Grantor or any of their respective
shareholders, partners, members, subsidiaries or Affiliates, (iii) a person or entity who
controls or is under common control with any such shareholder, partner, officer, director,
member, employee, supplier, customer or Affiliates, or (iv) a member of the immediate family
of any such shareholder, director, officer, partner, member, employee, supplier, customer or
Affiliates;

     “person” means any individual, corporation, partnership, limited liability company,
joint venture, association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization, or government or any agency or political subdivision thereof.

          SECTION 4.4. RESTORATION AFTER CASUALTY/CONDEMNATION. For the purposes of this Section
4.4, the term “Net Proceeds” shall mean, as applicable, (1) the net amount of all insurance
proceeds under the Policies carried pursuant to Subsections 3.2(a)(i) (Property Insurance),
(iii) (Boiler and Machinery), (iv) (Builder’s Risk), and (v) (Liability
Insurance) of this Security Instrument as a result of such damage or destruction, or (2) the net
amount of all proceeds from insurance or Condemnation Awards relating to the Condemnation Action,
in each case after deduction of Lender’s reasonable costs and expenses (including reasonable
counsel fees), if any, in collecting the same. If the Property is damaged or destroyed, in whole
or in part, by fire or other casualty (a “Casualty Loss”) or if the Property or any portion thereof
is taken, or threatened to be taken, in any condemnation or eminent domain proceeding (whether
instituted or threatened, a “Condemnation Action”), the following provisions shall apply in
connection with any Insurance Restoration or Condemnation Restoration (collectively the
“Restoration”):

     (a) The Net Proceeds shall be disbursed directly to Grantor if each of the following
conditions are satisfied: (i) the Net Proceeds do not exceed $1,000,000.00 (“Availability
Threshold”), (ii) the cost of completing the Restoration as reasonably estimated by Grantor
is less than or equal to the Availability Threshold, (iii) the Property and the use thereof
after the Restoration will be in compliance with, and permitted under, all applicable zoning
laws, ordinances, rules and regulations; (iv) no mechanics’ or materialmen’s liens shall
have been filed that have not either been fully bonded and discharged of record or in the
alternative fully insured to the reasonable satisfaction of Lender by the title company
insuring the lien of this Security Instrument; and (v) if reasonably required by Lender,
Grantor shall have (or shall have caused HGSI or its permitted successors or assigns
pursuant to the HGSI Lease to have) procured performance and payment bonds reasonably
acceptable to Lender in an amount and form, and from a surety, reasonably acceptable to
Lender, and naming Lender and Grantor as

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an additional obligee. Grantor shall be permitted and is obligated to settle any
insurance claims with respect to the Net Proceeds that are, in the aggregate, less than or
equal to the Availability Threshold unless an Event of Default has occurred and is
continuing. Lender shall have the right to participate in and approve any settlement for
insurance claims with respect to the Net Proceeds that in the aggregate are equal to or
greater than the Availability Threshold. Grantor hereby grants to Lender an irrevocable
power of attorney coupled with an interest for the purpose of filing and prosecuting such
claim and collecting and making receipt for any such payment, which such power may be
exercised by Lender after the occurrence and during the continuation of an Event of Default.
If the Net Proceeds are received by Grantor, such Net Proceeds shall, prior to
disbursement, be held in trust for Lender and shall be segregated from other funds of
Grantor to be used to pay for the cost of the Restoration in accordance with the terms
hereof. Grantor shall commence and diligently prosecute to completion the Restoration of
the Property (or shall cause the same) to as nearly as possible the condition it was in
immediately prior to such Casualty Loss or Condemnation Action. Notwithstanding the
foregoing, in the event that: (a) the Net Proceeds do not exceed the Availability Threshold,
(b) there is then an Event of Default under the Loan Documents, and (c) there is not
an Event of Default as defined in and under the HGSI Lease pursuant to which Grantor has
taken action to take possession of the Remaining Parcel or to terminate the HGSI Lease,
Lender shall hold the Net Proceeds in a segregated interest-bearing Eligible Account (the
“Net Proceeds Account”) to be made available to HGSI in accordance with the provisions of
Section 19.3 and Section 19.4.1 of the HGSI Lease.

     (b) If the Net Proceeds are greater than the Availability Threshold, such Net Proceeds
shall, subject to the provisions of the Leases with respect to which subordination and
non-disturbance agreements binding upon Lender have been entered into concerning the
deposits of Net Proceeds, be forthwith paid to Lender to be held by Lender in the Net
Proceeds Account to be made available to Grantor for the Restoration in accordance with the
provisions of this Subsection 4.4(b):

     (i) The Net Proceeds shall be made available to Grantor for payment of, or
reimbursement of Grantor’s reasonable and customary expenses in connection with, the
Restoration, subject to the following conditions:

     (A) Lender is furnished, within a reasonable period of time prior to
request for initial disbursement, with (i) an estimate of the costs of the
Restoration, which estimate shall be accompanied by an independent
architect’s certification as to such costs, and (ii) appropriate plans and
specifications for the Restoration, which plans and specifications shall be
subject to Lender’s approval (which approval shall not be unreasonably
withheld or delayed);

     (B) Lender reasonably determines that the Net Proceeds, together with
any cash or cash equivalent deposited by Grantor with Lender, are sufficient
to cover the costs of the Restoration as certified by the independent
architect;

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     (C) if the Net Proceeds are Condemnation Awards, less than twenty-five
percent (25%) of the square footage of the improvements located on the
Remaining Parcel is taken;

     (D) Lender reasonably determines that any operating deficits, including
all Secured Obligations or any required payments that will be incurred with
respect to the Property as a result of the occurrence of any such Casualty
Loss or Condemnation Action, whichever the case may be, will be payable out
of (1) business interruption and/or loss of “rental income” insurance, or
(2) other funds of Grantor;

     (E) Lender reasonably determines that, upon the completion of the
Restoration and related lease-up, if applicable, the net cash flow of the
Property will be restored to a level sufficient to cover all carrying costs
and operating expenses of the Property, including the Secured Obligations at
a debt service coverage ratio (after deducting replacement reserve
requirements and reserves for tenant improvements and leasing commissions
from net operating income) equal to or greater than the debt service
coverage ratio calculated and used by Lender in connection with the
origination of the Secured Obligations (i.e., 1.25%) or, if lower, the debt
service coverage ratio that existed as of the date immediately preceding
such Casualty Loss or Condemnation Action;

     (F) the Restoration can reasonably be completed on or before the
earliest to occur of (1) twenty-four (24) months from the date of the
Casualty Loss or Condemnation Action, (2) six (6) months prior to the
Maturity Date, (3) the earliest date required for such completion under the
terms of any Leases, or (4) such time as may be required under applicable
zoning law, ordinance, rule or regulation in order to repair and restore the
Property to as nearly as possible the condition it was in immediately prior
to such Casualty Loss or Condemnation Action;

     (G) the Property and the use thereof after the Restoration will be in
compliance with, and permitted under, all applicable zoning laws,
ordinances, rules and regulations; and

     (H) such Casualty Loss or Condemnation Action does not materially
impair post-Restoration access to the Land or the Improvements.

Notwithstanding the foregoing, in the event that: (a) the Net Proceeds are greater than the
Availability Threshold, (b) there is then an Event of Default under the Loan Documents, and
(c) there is not an Event of Default under the HGSI Lease pursuant to which Grantor
has taken action to take possession of the Remaining Parcel or to terminate the HGSI Lease,
Lender shall hold the Net Proceeds in the Net Proceeds Account to be made available to HGSI
in accordance with the provisions of Section 19.3 and Section 19.4.2 of the HGSI Lease.

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     (ii) The Net Proceeds shall be held by Lender and constitute additional
security for the obligations until disbursed pursuant to this Subsection
4.4(b). The Net Proceeds shall be disbursed by Lender to, or as directed by,
Grantor from time to time during the course of the Restoration, upon receipt of
evidence satisfactory to Lender that (A) all materials installed and work and labor
performed (except to the extent that they are to be paid for out of the requested
disbursement) in connection with the Restoration have been paid for in full, and (B)
there exist no notices of pendency, stop orders, mechanic’s or materialman’s liens
or notices of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the Property arising out of the Restoration that have not
either been fully bonded and discharged of record or in the alternative fully
insured to the reasonable satisfaction of Lender by the title company insuring the
lien of this Security Instrument.

     (iii) Lender shall have the use of the plans and specifications and all
permits, licenses and approvals required or obtained in connection with the
Restoration. The identity of the contractors, subcontractors and materialmen
engaged in the Restoration, as well as the contracts under which they have been
engaged, shall be subject to prior review and approval by Lender, an independent
consulting engineer, architect, or other expert selected by Lender (the “Restoration
Consultant”) such approval not to be unreasonably withheld or delayed. Grantor
shall pay all reasonable costs and expenses incurred by Lender in connection with
making the Net Proceeds available for the Restoration including the reasonable fees
and expenses of Lender’s attorneys and the Restoration Consultant.

     (iv) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time to
time for work in place as part of the Restoration, as certified by the Restoration
Consultant, minus the Restoration Retainage. The term “Restoration Retainage” as
used in this Subsection 4.4(b) shall mean an amount equal to ten percent
(10%) of the costs actually incurred for work in place as part of the Restoration,
as certified by the Restoration Consultant. The Restoration Retainage shall in no
event, and notwithstanding anything to the contrary set forth above in this
Subsection 4.4(b), be less than the amount actually held back by Grantor
from contractors, subcontractors and materialmen engaged in the Restoration. The
Restoration Retainage shall be released when the Restoration Consultant certifies to
Lender that the Restoration has been completed in accordance with the provisions of
this Subsection 4.4(b) and that all approvals necessary for the re-occupancy
and use of the Property have been obtained from all appropriate governmental and
quasi-governmental authorities, and Lender receives evidence reasonably satisfactory
to Lender that the costs of the Restoration have been paid in full or will be paid
in full out of the Restoration Retainage; provided, however, that Lender will
release the portion of the Restoration Retainage being held with respect to any
contractor, subcontractor or materialman engaged in the Restoration as of the date
upon which the Restoration Consultant certifies to Lender that the contractor,
subcontractor or materialman

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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, and 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
insuring the lien of this Security Instrument. If required by Lender, the surety
company, if any, that issued a payment or performance bond with respect to the
contractor, subcontractor or materialman shall approve the release of any such
portion of the Restoration Retainage.

     (v) Lender shall not be obligated to make disbursements of the Net Proceeds
more frequently than twice every calendar month.

     (vi) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in Lender’s reasonable determination, be sufficient to pay in full the balance
of the costs that are estimated by the Restoration Consultant to be incurred in
connection with the completion of the Restoration, Grantor shall deposit the
deficiency (the “Net Proceeds Deficiency”) with Lender before any further
disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency
deposited with Lender shall be held by Lender and shall be disbursed for costs
actually incurred in connection with the Restoration on the same conditions
applicable to the disbursement of the Net Proceeds, and until so disbursed pursuant
to this Subsection 4.4(b) shall constitute additional security for the
obligations.

     (vii) The excess, if any, of the Net Proceeds and the remaining balance, if
any, of the Net Proceeds Deficiency deposited with Lender after the Restoration
Consultant certifies to Lender that the Restoration has been completed in accordance
with the provisions of this Subsection 4.4(b), and the receipt by Lender of
evidence satisfactory to Lender that all costs incurred in connection with the
Restoration have been paid in full, shall be promptly remitted by Lender to Grantor,
provided no Event of Default shall have occurred and shall be continuing.

     (viii) All interest or other earnings on funds deposited in the Net Proceeds
Account shall be solely for the account of Grantor.

     (c) All Net Proceeds not required (i) to be made available for the Restoration or (ii)
to be returned to Grantor as excess Net Proceeds pursuant to Subsection 4.4(b)(vii)
shall be retained and applied by Lender toward the payment of the Debt whether or not then
due and payable in such order, priority and proportions as Lender shall deem proper or, at
the discretion of Lender, the same shall be paid, either in whole or in part, to Grantor.
If Lender shall receive and retain Net Proceeds, the lien of this Security Instrument shall
be reduced only by the amount received and retained by Lender and actually applied by Lender
in reduction of the Secured Obligations, and Prepayment Consideration shall only be required
and payable solely in connection with such application where an Event of Default existed as
of the date of such Casualty Loss and

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Lender had accelerated the entire Debt evidenced by the Note and/or the Secured
Obligations prior to the date of such Casualty Loss.

ARTICLE 5 — REPRESENTATIONS AND WARRANTIES

     Grantor represents and warrants to Lender that:

          SECTION 5.1. WARRANTY OF TITLE. Grantor has good, marketable and indefeasible title to the
Property and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer,
and convey the same and that Grantor possesses an unencumbered fee simple absolute estate in the
Land and the Improvements, and that it owns the Property free and clear of all liens, encumbrances
and charges whatsoever except for: (a) the lien created by the Loan Documents; (b) those exceptions
shown in the title insurance policy insuring the lien of this Security Instrument; and (c) liens,
if any, for impositions imposed by any governmental or quasi-governmental authorities not yet due
or delinquent (the “Permitted Exceptions”), none of which, individually or in the aggregate,
materially (a) interfere with the benefits of the security intended to be provided by this Security
Instrument, (b) affect the value or marketability of the Property, (c) impair the use or operation
of the Property for the uses currently made thereof, or (d) impair Grantor’s ability to pay its
obligations in a timely manner Grantor shall forever warrant, defend and preserve the title and
the validity and priority of the lien of this Security Instrument and shall forever warrant and
defend the same to Lender against the claims of all persons whomsoever.

          SECTION 5.2. AUTHORITY. Grantor (and the undersigned representative of Grantor, if any) has
full power, authority and legal right to execute this Security Instrument, and to mortgage, grant,
bargain, sell, pledge, assign, warrant, transfer and convey the Property pursuant to the terms
hereof and to keep and observe all of the terms of this Security Instrument on Grantor’s part to be
performed.

          SECTION 5.3. LEGAL STATUS AND AUTHORITY. Grantor (a) is duly organized, validly existing and
in good standing under the laws of its state of organization or incorporation; (b) is duly
qualified to transact business and is in good standing in the State of Maryland; and (c) has all
necessary approvals, governmental and otherwise, and full power and authority to own the Property
and carry on its business as now conducted and proposed to be conducted. Grantor now has and shall
continue to have the full right, power and authority to lease the Property, to encumber the
Property as provided herein and to perform all of the Secured Obligations.

          SECTION 5.4. VALIDITY OF DOCUMENTS. (a) The execution, delivery and performance of the
Indemnity Guaranty, this Security Instrument and the Loan Documents executed by Grantor (i) are
within the power and authority of Grantor; (ii) have been authorized by all requisite
organizational action; (iii) have received all necessary approvals and consents, corporate,
governmental or otherwise; (iv) will not violate, conflict with, result in a breach of or
constitute (with notice or lapse of time, or both) a default under any provision of law, any order
or judgment of any court or governmental authority, the articles of incorporation, by-laws,
partnership or operating agreement, or other governing instrument of Grantor or any indenture,
agreement or other instrument to which Grantor is a party or by which it or any of its assets or

33

 

the Property is or may be bound or affected; (v) will not result in the creation or imposition
of any lien, charge or encumbrance whatsoever upon any of its assets, except the lien and security
interest created hereby; and (vi) will not require any authorization or license from, or any filing
with, any governmental or other body (except for the recordation of this instrument in appropriate
land records in the State where the Property is located and except for Uniform Commercial Code
filings relating to the security interest created hereby), and (b) the Indemnity Guaranty, this
Security Instrument and the Loan Documents executed by Grantor constitute the legal, valid and
binding obligations of Grantor.

          SECTION 5.5. LITIGATION. To the best of Grantor’s knowledge, there is no action, suit or
proceeding, judicial, administrative or otherwise (including any condemnation or similar
proceeding), pending and there is no claim, suit or proceeding, or, to the best of Grantor’s
knowledge, threatened or contemplated against Grantor, if any, or against or affecting the Property
that (a) has not been disclosed to Lender, and has a material, adverse effect on the Property or
Grantor’s ability to perform its obligations under the Secured Obligations or (b) is not adequately
covered by insurance, each as reasonably determined by Lender.

          SECTION 5.6. STATUS OF PROPERTY.

     (a) No portion of the Improvements is located in an area identified by the Secretary of
Housing and Urban Development or any successor thereto as an area having special flood
hazards pursuant to the National Flood Insurance Act of 1968 or the Flood Disaster
Protection Act of 1973, or the National Flood Insurance Reform Act of 1994, as each may be
amended, or any successor law, or, if any portion of the Improvements is now or at any time
in the future located within any such area, Grantor has obtained and will maintain the
insurance prescribed in Section 3.2 hereof.

     (b) To Grantor’s actual knowledge, Grantor has obtained all necessary certificates,
licenses and other approvals, governmental and otherwise, necessary for the Property and the
conduct of its business and all required zoning, building code, land use, environmental and
other similar permits or approvals, all of which are in full force and effect as of the date
hereof and not subject to revocation, suspension, forfeiture or modification.

     (c) To Grantor’s actual knowledge, the Property and the present and contemplated use
and occupancy thereof are in full compliance with all applicable zoning ordinances, building
codes, land use and other similar laws.

     (d) The Property is served by all utilities required for the current or contemplated
use thereof. All utility service is provided by public utilities and the Property has
accepted or is equipped to accept such utility service.

     (e) All public roads and streets necessary for service of and access to the Property
for the current or contemplated use thereof have been completed, are serviceable and
all-weather and are physically and legally open for use by the public.

     (f) The Property is free from damage caused by fire or other casualty.

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     (g) All costs and expenses of any and all labor, materials, supplies and equipment used
in the construction of the Improvements have been paid in full; subject to ongoing payments
for any tenant improvements currently being made to the building interior in accordance with
the HGSI Lease, which shall be fully paid when completed.

     (h) Grantor has paid in full for, and is the owner of, all furnishings, fixtures and
equipment (other than tenants’ property) used in connection with the operation of the
Property, free and clear of any and all security interests, liens or encumbrances, except
the lien and security interest created hereby.

     (i) To Grantor’s actual knowledge, all liquid and solid waste disposal, septic and
sewer systems located on the Property are in a good and safe condition and repair and in
compliance with all Applicable Laws.

     (j) All security deposits relating to the Leases reflected on the certified rent roll
delivered to Lender have been collected by Grantor except as noted on the certified rent
roll.

     (k) Grantor has received no written notice of an actual or threatened condemnation or
eminent domain proceeding by any public or quasi-public authority.

     (l) All the Improvements lie within the boundaries of the Property.

          SECTION 5.7. NO FOREIGN PERSON. Grantor is not a “foreign person” within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended and the related Treasury
Department regulations, including temporary regulations.

          SECTION 5.8. SEPARATE TAX LOT. The Property is assessed for real estate tax purposes as one
or more wholly independent tax lot or lots, separate from any adjoining land or improvements not
constituting a part of such lot or lots, and no other land or improvements is assessed and taxed
together with the Property or any portion thereof.

          SECTION 5.9. ERISA COMPLIANCE.

     (a) As of the date hereof and throughout the term of this Security Instrument, (i)
Grantor is not and will not be an “employee benefit plan” as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, and (ii) the assets of Grantor do not and will
not constitute “plan assets” of one or more such plans for purposes of Title I of ERISA; and

     (b) As of the date hereof and throughout the term of this Security Instrument, (i)
Grantor is not and will not be a “governmental plan” within the meaning of Section 3(3) of
ERISA, and (ii) transactions by or with Grantor are not and will not be subject to state
statutes applicable to Grantor regulating investments of and fiduciary obligations with
respect to governmental plans.

          SECTION 5.10. LEASES. Except as disclosed in the rent roll for the Property delivered to and
reasonably approved by Lender, if any, (a) Grantor is the sole owner of the

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entire lessor’s interest in the Leases; (b) the Leases are valid and enforceable; (c) the
current terms of the Leases including all effective alterations, modifications and amendments to
the Leases are reflected in the certified rent roll delivered to and approved by Lender; (d) none
of the Rents reserved in the Leases have been assigned or otherwise pledged or hypothecated (except
to Lender); (e) none of the Rents have been collected for more than one (1) month in advance
(except a security deposit shall not be deemed rent collected in advance); (f) the premises demised
under the Leases have been completed (other than with respect to the Future Development Parcel and
tenant improvements that are being constructed in accordance with the HGSI Lease) and the tenants
under the Leases have accepted the same and have taken possession of the same on a rent-paying
basis; (g) there exist no offsets or defenses to the payment of any portion of the Rents; (h)
Grantor has received no written notice from any tenant challenging the validity or enforceability
of any Lease; (i) there are no agreements with the tenants under the Leases other than expressly
set forth in each Lease; (j) the Leases are valid and enforceable against Grantor and the tenants
set forth therein; (k) except for the HGSI Option Agreement and the University of Maryland Option,
no Lease contains an option to purchase, right of first refusal to purchase, or any other similar
provision; (l) no person or entity has any possessory interest in, or right to occupy, the Property
except under and pursuant to a Lease; (m) each Lease is subordinate to this Security Instrument,
either pursuant to its terms or a recorded subordination agreement (other than the University of
Maryland Option and the Right of Entry Agreement); (n) no Lease has the benefit of a
non-disturbance agreement that would be considered unacceptable to prudent institutional lenders;
provided that the non-disturbance agreements executed by HGSI and Ground Lessee delivered to Lender
in connection with the execution of this Security Instrument are acceptable (other than the
University of Maryland Option and the Right of Entry Agreement); and (o) no brokerage commissions
or finders fees are due and payable regarding any Lease.

          SECTION 5.11. FINANCIAL CONDITION; NO PRIOR BANKRUPTCY. Grantor is solvent, and no
bankruptcy, reorganization, insolvency or similar proceeding under any state or federal law with
respect to Grantor has been initiated, and it has received reasonably equivalent value for the
granting of this Security Instrument.

          SECTION 5.12. TAXES. Grantor has filed, or timely obtained extensions for the filing of, all
federal, state, county, municipal, and city income and other tax returns required to have been
filed by them and have paid all taxes and related liabilities which have become due pursuant to
such returns or pursuant to any assessments received by them except for Grantor’s tax returns which
are currently on extension. Grantor knows of no basis for any additional assessment in respect of
any such taxes and related liabilities for prior years.

          SECTION 5.13. MAILING ADDRESS. Grantor’s mailing address, as set forth in the opening
paragraph hereof or as changed in accordance with Article 16, is true and correct.

          SECTION 5.14. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the application for
the loan submitted to Lender (the “Loan Application”) and in all financial statements, rent rolls,
reports, certificates and other documents submitted in connection with the Loan Application or in
satisfaction of the terms thereof, are accurate, complete and correct in all material respects.
There has been no adverse change in any

36

 

condition, fact, circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading.

          SECTION 5.15. DISCLOSURE. Grantor has disclosed to Lender all material facts and has not
failed to disclose any material fact of which Grantor has actual knowledge that could cause any
representation or warranty made herein to be materially misleading.

          SECTION 5.16. REPRESENTATIONS. Each of the representations and the warranties made by
Grantor herein or in any other Loan Document is true and correct in all material respects.

          SECTION 5.17. ILLEGAL ACTIVITY. No portion of the Property has been or will be purchased,
improved, fixtured, equipped or furnished with proceeds of any criminal or other illegal activity
and to the best of Grantor’s knowledge, there are no illegal activities or activities relating to
controlled substances at the Property.

          SECTION 5.18. MANAGEMENT. The Property shall be managed by either (i) Grantor or, if
reasonably approved by Lender, an affiliate of Grantor, for so long as Grantor or said affiliate of
Grantor possesses sufficient experience in managing and operating commercial properties similar in
size, scope, uses and value as the Property, as reasonably determined by Lender; or (ii) a
professional property management company reasonably approved in writing by Lender. Management by
an affiliate of Grantor or a professional property management company shall be pursuant to a
written agreement reasonably approved by Lender. In no event shall any manager be removed or
replaced, or shall the terms of any management agreement be modified or amended without the prior
written consent of Lender, which consent shall not be unreasonably withheld. If (i) an Event of
Default has occurred and is continuing, (ii) a default has occurred under any management contract
then in effect that is not cured within any applicable grace or cure period, or (iii) any manager
of the Property becomes bankrupt or insolvent, Lender shall have the right to immediately
terminate, or to direct Grantor to immediately terminate, such manager, and to retain, or to direct
Grantor to retain, a new manager approved by Lender. Lender’s approval of a replacement property
manager shall not be unreasonably withheld provided the proposed property manager is a Qualifying
Manager (as hereinafter defined). As used herein, “Qualifying Manager” means a reputable and
experienced management organization reasonably satisfactory to Lender, which organization or its
principals possess at least seven (7) years experience in managing commercial properties similar in
size, scope, use and value of the Property and which, on the date Lender determines whether such
management organization is a Qualifying Manager, (i) manages a quantity of square footage
reasonably acceptable to Lender of the same property type as the Property, and (ii) upon Lender’s
request, obtains prior written confirmation from Standard & Poor’s Ratings Services, a Division of
McGraw-Hill Companies, Inc., and, any other nationally recognized credit rating agency reasonably
approved by Lender (each a “Rating Agency”) that management of the Property by such management
organization will not cause a downgrading, withdrawal or qualification of the then current rating
of the Securities issued in connection with any Securitization.

          SECTION 5.19. NON-CONSOLIDATION. If Lender has required the delivery of a substantive
non-consolidation opinion by Grantor’s counsel in connection with the closing of the Secured
Obligations, all of the assumptions made in such non-consolidation

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opinion letter and any subsequent non-consolidation opinion delivered in accordance with the
terms and conditions of this Security Instrument, or the other Loan Documents, including any
certificates or exhibits attached to such opinion (the “Non-Consolidation Opinion”), are true and
correct in all material respects. Grantor has complied and will comply with all of the assumptions
made with respect to it in the Non-Consolidation Opinion. Each entity other than Grantor with
respect to which an assumption is made in the Non-Consolidation Opinion has complied and will
continue to comply with all of the assumptions made with respect to it in the Non-Consolidation
Opinion.

ARTICLE 6 — GUARANTOR/CREDITOR RELATIONSHIP

          SECTION 6.1. RELATIONSHIP OF GUARANTOR AND LENDER. The relationship between Grantor and
Lender is solely that of guarantor and creditor, and Lender has no fiduciary or other special
relationship with Grantor, and no term or condition of any of the Indemnity Guaranty, this Security
Instrument or the Loan Documents shall be construed so as to deem the relationship between Grantor
and Lender to be other than that of guarantor and creditor.

          SECTION 6.2. NO RELIANCE ON LENDER. The members, partners, principals or shareholders of
Grantor, as applicable, are experienced in the ownership and operation of properties similar to the
Property, and Grantor and Lender are relying solely upon such expertise in connection with the
ownership and operation of the Property. Grantor is not relying on Lender’s expertise, business
acumen or advice in connection with the Property.

          SECTION 6.3. NO LENDER OBLIGATIONS. Notwithstanding any provision of the Loan Documents,
Lender is not undertaking the performance of (i) any obligations under the Leases; or (ii) any
obligations with respect to such agreements, contracts, certificates, instruments, franchises,
permits, trademarks, licenses and other documents. By accepting or approving anything required to
be observed, performed or fulfilled or to be given to Lender pursuant to the Loan Documents,
including any officer’s certificate, balance sheet, statement of profit and loss or other financial
statement, survey, appraisal, or insurance policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, the legality or the effectiveness of same, and such
acceptance or approval thereof shall not constitute any warranty or affirmation with respect
thereto by Lender.

          SECTION 6.4. RELIANCE OF LENDER ON GRANTOR REPRESENTATIONS. Grantor recognizes and
acknowledges that in accepting the Loan Documents, Lender is expressly and primarily relying on the
truth and accuracy of the warranties and representations set forth herein without any obligation to
investigate the Property and notwithstanding any investigation of the Property by Lender; that such
reliance existed on the part of Lender prior to the date hereof; that the warranties and
representations are a material inducement to Lender in accepting the Loan Documents executed by
Grantor; and that Lender would not be willing to make the Loan and accept this Security Instrument
in the absence of the warranties and representations as set forth herein.

ARTICLE 7 — FURTHER ASSURANCES

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          SECTION 7.1. RECORDING OF SECURITY INSTRUMENT, ETC. Grantor forthwith upon the execution and
delivery of this Security Instrument and thereafter, from time to time, shall cause this Security
Instrument and any of the Loan Documents to which Grantor is a party 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 to protect and perfect the lien or
security interest hereof upon, and the interest of Lender in, the Property. Grantor shall pay all
taxes, filing, registration or recording fees, and all expenses incident to the preparation,
execution, acknowledgment and/or recording of the Indemnity Guaranty, this Security Instrument, the
Loan Documents to which Grantor is a party, any mortgage supplemental hereto, any security
instrument with respect to the Property and any instrument of further assurance, and any
modification or amendment of the foregoing documents, and all federal, state, county and municipal
taxes, duties, imposts, assessments and charges arising out of or in connection with the execution
and delivery of this Security Instrument, any mortgage supplemental hereto, any security instrument
with respect to the Property or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by law so to do.

          SECTION 7.2. FURTHER ACTS, ETC. Grantor shall, at the cost of Grantor, and without expense
to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, mortgages, 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, granted,
bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now
or hereafter so to be, or which Grantor may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of the terms of this
Security Instrument, including promptly notifying Lender of any commercial tort claim in which
Grantor has an interest and executing any documentation required by Lender to create and perfect
any security interest in such commercial tort claim, or for filing, registering or recording this
Security Instrument, or for complying with all Applicable Laws. Grantor, on demand, shall execute
and deliver and hereby authorizes Lender to execute in the name of Grantor, or without the
signature of Grantor to the extent Lender may lawfully do so, one or more financing statements,
chattel mortgages or other instruments, to evidence or perfect more effectively the security
interest of Lender in the Property. Grantor grants to Lender an irrevocable power of attorney
coupled with an interest for the purpose of exercising and perfecting any and all rights and
remedies available to Lender pursuant to this Section 7.2 or Section 7.1 during the
continuance of an Event of Default.

          SECTION 7.3. CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP LAWS.

     (a) If any law is enacted or adopted or amended after the date of this Security
Instrument that deducts the amount of the Secured Obligations from the value of the Property
for the purpose of taxation or which imposes a tax, either directly or indirectly, on the
Secured Obligations or Lender’s interest in the Property, Grantor shall pay the tax, with
interest and penalties thereon, if any. If Lender is advised by its counsel that the
payment of tax by Grantor would be unlawful or taxable to Lender or unenforceable or

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provide the basis for a defense of usury, then Lender shall have the option to declare
the Secured Obligations immediately due and payable (a “Tax Change Acceleration”) by giving
Grantor not less than ninety (90) days’ written notice of such Tax Change Acceleration. No
Prepayment Consideration shall be payable solely in connection with a Tax Change
Acceleration.

     (b) Neither Borrower nor Grantor shall claim or demand or be entitled to any credit or
credits on account of the Secured Obligations for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall otherwise be made
or claimed from the assessed value of the Property, or any part thereof, for real estate tax
purposes by reason of this Security Instrument or the Secured Obligations. If such claim,
credit or deduction shall be required by law, Lender shall have the option, by written
notice of not less than ninety (90) days, to declare the Secured Obligations immediately due
and payable.

     (c) If at any time the United States of America, any State thereof or any subdivision
of any such State or other governmental authorities shall require revenue or other stamps to
be affixed to the Indemnity Guaranty, this Security Instrument, or any of the Loan Documents
or impose any other tax or charge on the same, Grantor (or Borrower, as applicable) shall
pay for the same, with interest and penalties thereon, if any.

          SECTION 7.4. ESTOPPEL CERTIFICATES.

     (a) Within ten days after any request by Lender, Grantor shall furnish Lender or any
proposed assignee of the Secured Obligations with a statement, duly acknowledged and
certified, setting forth (i) the original principal amount of the Secured Obligations, (ii)
the unpaid principal amount of the Secured Obligations, (iii) the rate of interest of the
Secured Obligations, (iv) the terms of payment and Maturity Date, (v) the date installments
of interest and/or principal were last paid, (vi) that, except as provided in such
statement, there are no Events of Default under this Security Instrument or any of the other
Loan Documents to which Grantor is a party, (vii) that the Loan Documents to which Grantor
is a party are valid, legal and binding obligations and have not been modified or if
modified, giving particulars of such modification, (viii) whether any offsets or defenses
exist against the obligations secured hereby and, if any are alleged to exist, a detailed
description thereof, (ix) that all Leases are in full force and effect and (provided the
Property is not a residential multifamily property) have not been modified (or if modified,
setting forth all modifications), (x) the date to which the Rents thereunder have been paid
pursuant to the Leases, (xi) whether or not, to the best knowledge of Grantor, any of the
lessees under the Leases are in default under the Leases, and, if any of the lessees are in
default, setting forth the specific nature of all such defaults, (xii) the amount of
security deposits held by Grantor under each Lease and that such amounts are consistent with
the amounts required under each Lease, and (xiii) as to any other matters reasonably
requested by Lender and reasonably related to the Leases, the obligations secured hereby,
the Property or this Security Instrument.

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     (b) Within fifteen (15) days after any request by Lender, Grantor shall furnish
Lender with duly executed estoppel certificates from any one or more lessees as required by
Lender attesting to such facts regarding any Lease as Lender, may reasonably require,
including attestations that each Lease covered thereby is in full force and effect with no
defaults thereunder on the part of any party, that none of the Rents have been paid more
than one month in advance, except as security, and that the lessee claims no defense or
offset against the full and timely performance of its obligations under the Lease.
Notwithstanding the foregoing, if the terms of any Lease do not require the lessee to
deliver an estoppel certificate upon request, Grantor agrees that it shall use its
commercially reasonable best efforts to deliver to Lender, promptly upon request, such an
estoppel certificate with respect to such Lease. In the case of estoppel certificates
regarding the HGSI Lease, such estoppel certificates shall be in the same form as submitted
to Lender in connection with the execution of this Security Instrument.

          SECTION 7.5. REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an officer of Lender as
to the loss, theft, destruction or mutilation of the Indemnity Guaranty, or any Loan Document to
which Grantor is a party that is not of public record, and, in the case of any such mutilation,
upon surrender and cancellation of such Indemnity Guaranty or Loan Document, Grantor shall issue or
shall cause in lieu thereof, a replacement Indemnity Guaranty or Loan Document, dated the date of
such lost, stolen, destroyed or mutilated Indemnity Guaranty, or Loan Document in the same
principal amount thereof and otherwise of like tenor.

          SECTION 7.6. AMENDED FINANCING STATEMENTS. Grantor hereby authorizes Lender to file or
caused to be filed any financing statement or financing statement change that Lender deems
reasonably necessary or desirable to establish or maintain the validity, perfection and priority of
the security interest granted herein.

ARTICLE 8 — DUE ON SALE/ENCUMBRANCE/CHANGE IN GRANTOR

          SECTION 8.1. NO SALE/ENCUMBRANCE/CHANGE OF OWNERSHIP WITHOUT CONSENT.

     (a) Except as otherwise expressly provided in this Security Instrument, Grantor shall
not cause or permit any of the following (each a “Prohibited Transfer”) to occur without the
prior written consent of Lender in each instance: the voluntary or involuntary sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options
with respect to, or any other transfer or disposition of (directly or indirectly,
voluntarily or involuntarily, by operation of law or otherwise, and whether or not for
consideration or of record) of a legal or beneficial interest (each a “Sale or Encumbrance”)
of (1) the Property (provided that (a) the Option Agreement dated May 1, 2006 with HGSI (the
“HGSI Option Agreement”) shall not be deemed a Prohibited Transfer, provided, however, the
conveyance of any portion of the Property pursuant thereto, shall be a Prohibited Transfer
which shall require Lender’s prior consent, (b) the conveyance of a portion of the Future
Development Parcel (the “University Parcel”) to the University of Maryland or its affiliate
or assignee pursuant to the option contained in that certain Real Estate Contract by and
between Travilah Park Development Corporation and Grantor (as successor in interest to HGSI)
dated as of May

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8, 2001 (the “University of Maryland Option”), shall not be deemed a Prohibited
Transfer, and (c) the conveyance of the Future Development Parcel to one of Grantor’s
affiliates pursuant to Section 2 of Exhibit C, shall not be deemed a Prohibited
Transfer), other than pursuant to Leases of space in the Improvements to tenants in
accordance with the provisions of Section 3.7, or (2) permit a Sale or Encumbrance
of an interest in Grantor, or any shareholder, partner, member or non-member manager, or any
direct or indirect legal or beneficial owner of Grantor or any manager of Grantor (each a
“Restricted Party”). A Prohibited Transfer shall include (i) an installment sales agreement
wherein Grantor agrees to sell the Property or any part thereof for a price to be paid in
installments; (ii) an agreement by Grantor leasing all or a substantial part of the Property
for other than actual occupancy by a space tenant thereunder or a sale, assignment or other
transfer of, or the grant of a security interest in, Grantor’s right, title and interest in
and to any Leases or any Rents; (iii) if a Restricted Party is a corporation, any merger,
consolidation or Sale or Encumbrance of such corporation’s stock or the creation or issuance
of new stock in one or a series of transactions; (iv) if a Restricted Party is a limited or
general partnership or joint venture, any merger or consolidation or the change, removal,
resignation or addition of a general partner or the Sale or Encumbrance of the partnership
interest of any general or limited partner or any profits or proceeds relating to such
partnership interests or the creation or issuance of new limited partnership interests; (v)
if a Restricted Party is a limited liability company, any merger or consolidation or the
change, removal, resignation or addition of a managing member, non-member manager (or any
member) or the Sale or Encumbrance of the membership interest of a managing member or any
member or any profits or proceeds relating to such membership interest, or the Sale or
Encumbrance of non-managing membership interests or the creation or issuance of new
non-managing membership interests, (vi) if a Restricted Party is a trust or nominee trust,
any merger, consolidation or the Sale or Encumbrance of the legal or beneficial interest in
a Restricted Party or the creation or issuance of new legal or beneficial interests; or
(vii) the removal or the resignation of any manager (including any manager in which Grantor
has, directly or indirectly, any legal, beneficial or economic interest other than in
accordance with Section 5.18). Notwithstanding the foregoing, in no event shall
this Section 8.1 restrict the sale, encumbrance or other transfer of the Future
Development Parcel from and after the Release, and in no event shall a Release effected
pursuant to Exhibit C be deemed a Prohibited Transfer or otherwise made subject to
the provisions of this Article 8.

     (b) Notwithstanding the provisions of Sections 8.1(a), each of the following
shall not be deemed to be a Prohibited Transfer: (1) any merger or consolidation of BioMed
Realty Trust, Inc. (the “REIT”) or Sale or Encumbrance of securities of the REIT, so long as
BioMed Realty, L.P.’s (the “Partnership”) sole general partner continues to be the REIT; (2)
any merger or consolidation of the Partnership or Sale or Encumbrance of the REIT’s
partnership interests in the Partnership, so long as the REIT’s stockholders have approved
of such merger, consolidation or Sale or Encumbrance in accordance with the laws of the
State of organization of the REIT; (3) a transfer by devise or descent or by operation of
law upon the death of a member, partner or shareholder of a Restricted Party; and (4) any
Sale or Encumbrance, in one or a series of transactions, of not more than forty-nine percent
(49%) of the stock or membership interests (as the case may be) in a Restricted Party,
provided, however: (i) BMR-Shady

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Grove Holdings LLC shall at all times own 100% of the membership interests in Grantor
and the Partnership shall own 100% of BMR-Shady Grove Holdings LLC, and (ii) no such
transfers shall result in a change in “Control” in the Restricted Party. For the purpose of
this Article 8, “Control” shall mean the power to direct the management and policies
of a Restricted Party, directly or indirectly, whether through the ownership of voting
securities or other beneficial interests, by contract or otherwise.

          SECTION 8.2. CONDITIONS TO LENDER’S CONSENT.

     (a) Without limiting Lender’s discretion to approve or disapprove any request from
Grantor for the approval of a Prohibited Transfer, Lender shall condition its consent to any
approval of a Prohibited Transfer upon the satisfaction of the following minimum conditions:

     (i) Lender has received Grantor’s written request for the transfer;

     (ii) no Event of Default has occurred and is continuing;

     (iii) Grantor has paid a deposit in the amount of $5,000 (the “Application
Deposit.”) The Application Deposit shall be applied towards the legal fees and
expenses incurred by Lender in connection with such request for a transfer;

     (iv) Lender has reasonably determined that the credit check, and UCC,
bankruptcy, judgment and litigation searches with respect to the proposed new
owner/assignee (the “New Grantor”) and the new borrower (the “New Borrower”) are
acceptable; provided, however, the requirements of this Section 8.2(iv)
shall not apply to an entity which is owned by BioMed Realty, L.P. whether through
one or more entities;

     (v) Lender has reasonably determined that the Property has suffered no material
deterioration of its financial condition, cash flow, operating income, physical
condition, management and operation;

     (vi) Grantor remits to Lender a fee (the “Transfer Fee”) in the amount of
twenty-five basis points (.25%) of the outstanding principal balance of the Secured
Obligations as of the date such transfer is consummated for the first Prohibited
Transfer and fifty basis points (.50%) of the outstanding principal of the Secured
Obligations as of the date of a second Prohibited Transfer; provided that no
Transfer Fee shall be due in connection with a Prohibited Transfer approved under
this Section 8.2 to an entity which is owned by BioMed Realty, L.P. whether
through one or more entities provided that all of the other requirements of this
Section 8.2 must be satisfied;

     (vii) New Grantor and New Borrower have executed and delivered such
documentation and agreements evidencing the transfer and, the assumption of the
Indemnity Guaranty, the Secured Obligations and the Loan Documents to which Grantor
is a party, and with respect to the New Borrower, the assumption of the

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Debt and the Loan Documents to which Borrower is a party, as may be required by
Lender, including 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 transfer, and an
indemnification with respect thereto. All such documentation shall be in form and
substance reasonably satisfactory to Lender;

     (viii) A person or entity associated with New Grantor approved by Lender in its
reasonable discretion (a “New Guarantor”) agrees to be liable for the obligations of
the current guarantor or indemnitor under the Key Principal Guaranty, the Indemnity
Agreement and the Environmental Indemnity Agreement by executing a new guaranty,
indemnity agreement and environmental indemnity agreement in substantially similar
form to any such existing agreements, Lender shall release Grantor from its
obligations arising under the Loan Documents on and after the date of such new
guaranty, indemnity agreement, and environmental indemnity agreement, and any
current guarantor from its obligations under any guaranty or environmental indemnity
agreement as to acts or events or omissions occurring or obligations arising after
the date of the assumption, provided however such release shall not apply to any
acts or events or omissions which occurred prior to the date of the assumption of
the Secured Obligations, whether or not the effects of or damages from such acts or
events or omissions are apparent or ascertainable as of the date of such assumption;

     (ix) Lender has reasonably determined that New Grantor is in compliance with
the covenants set forth in this Security Instrument, including the covenants in
Section 4.3 hereof and the New Borrower is in compliance with the special
purpose entity covenants in the Borrower’s Certificate and Agreement;

     (x) Grantor has delivered to Lender, without any cost or expense to Lender,
such endorsements to Lender’s title insurance policy, hazard insurance endorsements
or certificates and other similar materials as Lender may deem necessary, all in
form and substance reasonably satisfactory to Lender, including an endorsement or
endorsements to the 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, with no
additional exceptions added to such policy other than those which have been
previously approved by Lender in its reasonable discretion and insuring that fee
simple title to the Property is vested in the New Grantor;

     (xi) New Grantor, New Guarantor and New Borrower have furnished, all documents
evidencing each such party’s capacity and good standing, and the qualification of
the signers to execute any assumption or other agreement, which papers shall include
certified copies of all documents relating to the organization and formation of New
Grantor, New Guarantor and New Borrower and the entities, which are partners or
members, as applicable, of New Grantor, New Guarantor, and New Borrower;

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     (xii) Grantor has reimbursed Lender for all reasonable costs and expenses
incurred by Lender in connection with such transfer (including but not limited to
title and UCC searches, credit checks and reasonable attorney’s fees), whether or
not any requested transfer is approved or consummated; and

     (xiii) New Grantor, New Guarantor, and New Borrower have delivered or caused to
be delivered such other documents and instruments, including legal opinions, as
Lender shall reasonably require, including, if required by any pooling and servicing
agreement following a securitization or otherwise deemed necessary or desirable by
Lender, the prior written confirmation by each applicable Rating Agency of the
proposed transfer.

     (b) All reasonable expenses incurred by Lender shall be payable by Grantor whether or
not Lender consents to the Prohibited Transfer. 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 Secured Obligations immediately due and payable upon a Prohibited Transfer which
requires Lender’s prior written consent. This provision shall apply to every Prohibited
Transfer under Section 8.2, whether or not Lender has consented to any previous
Prohibited Transfer.

ARTICLE 9 — PREPAYMENT; DEFEASANCE

     The Debt may be prepaid or defeased only in accordance with the terms of the Note. If
Borrower has the right to prepay the Loan pursuant to the terms of the Note, Lender shall only be
obligated to release the lien of this Security Instrument if the Secured Obligations have been paid
in full, including the payment of any Prepayment Consideration, and the Indemnity Guaranty has been
canceled in its entirety. If Grantor has the right to cause the Property to be released from the
lien of the Security Instrument and the other Loan Documents pursuant to a Defeasance, Lender shall
only be obligated to release the lien of this Security Instrument if the Defeasance has been
consummated in accordance with the terms of the Note and the Secured Obligations have been paid in
full.

ARTICLE 10 — DEFAULT

          SECTION 10.1. EVENTS OF DEFAULT. Grantor acknowledges that Lender has relied upon all of the
terms, covenants or conditions of the Indemnity Guaranty, this Security Instrument and the other
Loan Documents in making the Loan to Borrower and in accepting the Indemnity Guaranty, and that the
breach of or default in any such term, covenant and condition may result in the acceleration of the
Secured Obligations and the exercise of Lender’s remedies hereunder and under the other Loan
Documents. The occurrence of any one or more of the following events shall constitute an “Event of
Default” under the Indemnity Guaranty, this Security Instrument and each of the other Loan
Documents:

     (a) Except for costs and expenses referenced in Section 10.1(b), Grantor fails
to make the full and punctual payment when due under the Indemnity Agreement, this Security
Instrument or any other Loan Document executed by Grantor, in each instance within five (5)
days after the date on which such payment is due;

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     (b) Grantor fails to make full and punctual payment of any cost and expenses due
hereunder or under the Indemnity Guaranty or any other Loan Document executed by Grantor
(other than any payment described in subclauses (a), which failure is not cured on or before
the fifth (5th) day after Lender’s written notice that such payment is required);

     (c) Grantor fails to make or cause to be made, the full and punctual payment of Taxes
as required hereby;

     (d) Grantor fails to make or cause to be made, the full and punctual payment of Other
Charges as required hereby, which failure is not cured on or before the tenth
(10th) day on which such payment is due;

     (e) Grantor fails to keep the Policies in full force and effect, or fails within five
(5) Business Days after notice to promptly deliver copies thereof to Lender upon request;

     (f) if Grantor violates Section 4.3, or a Prohibited Transfer occurs in
violation of the provisions of Article 8;

     (g) if any representation or warranty of Grantor in any guaranty or in any certificate,
report, financial statement or other instrument or document prepared by or on behalf of
Grantor and furnished to Lender shall have been false or misleading in any material respect
when made, provided no Event of Default shall occur pursuant hereto if within thirty (30)
days of the date in which Grantor receives notice of such false or misleading statement,
Grantor shall eliminate or otherwise address to the satisfaction of Lender any material
adverse effects relating to such false or misleading statement;

     (h) if (i) Grantor shall make an assignment for the benefit of creditors or Grantor is
not paying its debts as and when the same become due; Grantor shall commence any case,
proceeding or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or
relief of debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part of its
assets, or Grantor shall make an assignment for the benefit of its creditors; or (ii) there
shall be commenced against Grantor, any case, proceeding or other action of a nature
referred to in clause (i) above which is not dismissed or stayed within sixty (60) days; or
(iii) there shall be commenced against Grantor, any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process against all or
any substantial part of its assets which is not dismissed or stayed within sixty (60) days;
or (iv) Grantor shall take any action in furtherance of, or indicating its consent to,
approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) Grantor shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they become due;

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     (i) any exercise by the holder of any other deed of trust or security agreement
covering any part of the Property whether it be superior or junior in priority to this
Security Instrument (it not being implied by this clause that any such encumbrance will be
permitted);

     (j) the Property becomes subject to any mechanic’s, materialman’s or other lien (other
than a lien for local real estate taxes and assessments not then due and payable), and such
lien shall remain undischarged of record (by payment, bonding or otherwise) for a period of
thirty (30) calendar days, such thirty (30) day period shall be extended for so long as it
shall be required for Grantor in the exercise of due diligence to cure such default, it
being agreed that no such extension shall be for a period in excess of ninety (90) days;

     (k) the occurrence of an Event of Default under the Indemnity Guaranty or any other
Loan Document to which Grantor is a party (as “Event of Default” is defined in such Loan
Document);

     (l) if a Non-Consolidation Opinion was required in connection with the Loan, any of the
assumptions contained in the non-consolidation opinion were not true and correct as of the
date of such opinion; or

     (m) any breach or default hereunder by Grantor (including breach of or default under
any covenant herein), other than a default or breach set forth in any of Sections
10.1(a) through (k), if such breach or default is not cured within thirty (30)
days after written notice from Lender to Grantor (provided that Grantor shall not be
entitled to a cure period hereunder if such breach or default is not capable of being
cured), provided however that (i) if such breach or default cannot reasonably be cured
within such thirty (30) day period (including on account of cure periods afforded tenants
under any Lease), and (ii) Grantor is diligently and expeditiously proceeding to cure the
same, such thirty (30) day period shall be extended for so long as it shall require Grantor
in the exercise of due diligence to cure such default, it being agreed that no such
extension shall be for a period in excess of one hundred twenty (120) days, unless, only in
the case of cures that require construction or remedial work, such cure cannot with
diligence be completed within such one hundred twenty (120) day period, in which case such
period shall be extended for an additional one hundred twenty (120) days or such longer
period as Lender shall reasonably determine.

ARTICLE 11 — RIGHTS AND REMEDIES

          SECTION 11.1. REMEDIES. Upon the occurrence and during the continuance of any Event of
Default, Grantor agrees that Lender may take such action, without notice or demand, as it deems
advisable to protect and enforce its rights against Grantor and in and to the Property, including
the following actions, each of which may be pursued concurrently or otherwise, without notice or
demand, at such time and in such order as Lender may determine, without impairing or otherwise
affecting the other rights and remedies of Lender:

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     (a) declare the entire unpaid Secured Obligations secured by the Indemnity Guaranty and
this Security Instrument to be immediately due and payable;

     (b) institute proceedings, judicial or otherwise, for the complete foreclosure of this
Security Instrument under any applicable provision of law in which case the Property or any
interest therein may be sold for cash or upon credit in one or more parcels or in several
interests or portions and in any order or manner;

     (c) with or without entry, to the extent permitted and pursuant to the procedures
provided by applicable law, institute proceedings for the partial foreclosure of this
Security Instrument for Secured Obligations then due and payable, but such proceeding shall
not affect the continuing lien and security interest of this Security Instrument for the
balance of the Secured Obligations not then due, which shall remain unimpaired and without
loss of priority;

     (d) sell for cash or upon credit the Property or any part thereof and all estate,
claim, demand, right, title and interest of Grantor therein and rights of redemption
thereof, pursuant to power of sale or otherwise, at one or more sales, as an entity or in
parcels, at such time and place, upon such terms and after such notice thereof as may be
required or permitted by law;

     (e) institute an action, suit or proceeding in equity for the specific performance of
any covenant, condition or agreement contained herein, in the Indemnity Guaranty, this
Security Instrument or in the Loan Documents;

     (f) recover judgment on the Indemnity Guaranty either before, during or after any
proceedings for the enforcement of this Security Instrument or the Loan Documents;

     (g) apply for the appointment of a receiver, trustee, liquidator or conservator of the
Property on an ex parte basis (any required notice of such appointment or any proceeding to
appoint the same being hereby expressly waived) and without regard for the adequacy of the
security for the Indemnity Guaranty and this Security Instrument and without regard for the
solvency of Grantor or of any person, firm or other entity liable for the payment of the
Indemnity Guaranty and this Security Instrument or any other Secured Obligations;

     (h) subject to any applicable law, the license granted to Grantor under Section
1.2 shall automatically be revoked and Lender may enter into or upon the Property
(subject to any rights of tenants under the Leases and the rights of the University of
Maryland under the Right of Entry Agreement dated October 14, 2005, as amended by that
certain Amendment to Right of Entry Agreement dated as of November 17, 2005 by and between
the University of Maryland and Traville LLC (as amended, the “Right of Entry Agreement”)),
either personally or by its agents, nominees or attorneys and dispossess Grantor and its
agents and servants therefrom, without liability for trespass, damages or otherwise and
exclude Grantor and its agents or servants wholly therefrom, and take possession of all
books, records and accounts relating thereto and Grantor agrees to surrender possession of
the Property and of such books, records and accounts to

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Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every part of the Property and
conduct the business thereat; (ii) complete any construction on the Property in such manner
and form as Lender deems advisable; (iii) make alterations, additions, renewals,
replacements and improvements to or on the Property; (iv) exercise all rights and powers of
Grantor with respect to the Property, whether in the name of Grantor or otherwise, including
the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand,
sue for, collect and receive all Rents of the Property and every part thereof; (v) require
Grantor 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 occupied by Grantor; (vi) require Grantor to vacate and surrender possession of
the Property to Lender or to such receiver and, in default thereof, Grantor may be evicted
by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the
payment of the Secured Obligations, in such order, priority and proportions as Lender shall
deem appropriate after deducting therefrom all expenses (including attorneys’ fees) incurred
in connection with the aforesaid operations and all amounts necessary to pay the Taxes,
Other Charges, insurance and other expenses in connection with the Property, as well as just
and reasonable compensation for the services of Lender, its counsel, agents and employees;

     (i) exercise any and all rights and remedies granted to a secured party upon default
under the Uniform Commercial Code, including (i) the right to take possession of the
Personal Property or any part thereof, and to take such other measures as Lender may deem
necessary for the care, protection and preservation of the Personal Property, and (ii)
request Grantor at its expense to assemble the Personal Property and make it available to
Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other
intended action by Lender with respect to the Personal Property sent to Grantor in
accordance with the provisions hereof at least ten (10) days prior to such action, shall
constitute reasonable notice to Grantor;

     (j) apply any sums then deposited in the Impound Account and any other sums held in
escrow or otherwise by Lender in accordance with the terms of this Security Instrument or
any Loan Document to which Grantor is a party to the payment of the following items in any
order that Lender may determine:

     (i) Taxes and Other Charges;

     (ii) Insurance Premiums;

     (iii) Interest on the unpaid principal balance of the Secured Obligations;

     (iv) amortization of the unpaid principal balance of the Secured Obligations;
and all other sums payable pursuant to the Indemnity Guaranty, this Security
Instrument and the Loan Documents to which Grantor is a party, including advances
made by Lender pursuant to the terms of this Security Instrument;

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     (k) surrender the Policies maintained pursuant to Article 3 hereof, collect the
unearned Insurance Premiums and apply such sums as a credit to the Secured Obligations in
such priority and proportion as Lender shall deem proper, and in connection therewith,
Grantor hereby appoints Lender as agent and attorney-in-fact (which is coupled with an
interest and is therefore irrevocable) for Grantor to collect such Insurance Premiums;

     (l) apply the undisbursed balance of any Net Proceeds or any Net Proceeds Deficiency
deposit, together with interest thereon, to the payment of the Secured Obligations in such
order, priority and proportions as Lender shall deem to be appropriate in its discretion;

     (m) prohibit Grantor and anyone claiming for or through Grantor from making use of or
withdrawing any sums from any lockbox, escrow or similar account; or

     (n) pursue such other remedies as Lender may have under any of the Loan Documents or
applicable law.

     Grantor agrees that if Lender accelerates the whole or any part of the principal sum evidenced
by the Note and/or guaranteed by the Indemnity Guaranty after the occurrence and during the
continuance of an Event of Default, or applies any proceeds as if such application had been made as
a result of such acceleration pursuant to the provisions hereof, then unless and until Lender
subsequently waives such Event of Default in writing or unless such reinstatement is required by
applicable law, Grantor waives any right to prepay the principal sum guaranteed by the Indemnity
Guaranty in whole or in part without premium.

     Grantor, in accordance with the provisions of the General Laws of the State of Maryland, the
Maryland Rules of Procedure, or any other general or local laws of the State of Maryland relating
to mortgages and deeds of trusts, including any amendments, supplements, or additions thereto, does
hereby: (1) declare its assent to the passing of a decree for the sale of the Property at any time
after the recording of this Security Instrument, such sale to take place after the occurrence and
during the continuance of an Event of Default, as herein provided; (2) authorize the Trustees or
its duly authorized attorney, after any such default shall have occurred, to sell the Property.
Such sale may be of the Property as a whole and it shall not be the duty of the party selling to
sell the same in parts or in lots but such party may do so. The sale shall be made after
publishing notice of time, place and terms of sale at least once a week for three (3) successive
weeks, the first publication shall be given not less than 15 days prior to sale and the last
publication not more than one (1) week prior to sale, in a newspaper of general circulation in the
county where the foreclosure action is pending. The party selling shall also give such other
notice as required by law and as he may deem expedient; and the terms of the sale may be all cash
on ratification of the sale or such other terms as the party selling may deem expedient.

     Trustee may postpone such sale from time to time by giving notice of such postponement in the
same manner in which any original notice of sale was given or by an announcement or proclamation
made to the persons assembled at the time and place previously appointed and noticed for such sale
or postponed sale, and on the date of such sale or the date to which such sale may have been
postponed Trustee may sell the Property to the highest bidder. Lender or its agents may bid and
purchase at such sale. Trustee in conducting said sale may act either in

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person or through the agency of an auctioneer and may establish as one of the conditions of
such sale that all bids and payments for said Property be made in cash. In addition to the
foregoing, the Trustee is hereby authorized to disclose in any public notice of sale that such sale
of the Property shall be made subject to one or more of the tenancies entered into subsequent to
the recording of this Security Instrument, or otherwise subordinated thereto, in accordance with
the provisions of Section 7 — 105(f)(2) of the Real Property Article of the Maryland Code, as may
be amended from time to time.

     Upon such sale, Trustee shall make, execute, and after due payment is made, deliver to the
purchaser or purchasers a deed or deeds for the Security Instrument or part thereof sold. On any
sale of the Property hereunder, whether under the above assent to a decree or under the above power
of sale or otherwise, the proceeds of sale shall be applied as follows: first to the payment of
all expenses incident to the sale, including attorneys’ fees and costs rendered to the Trustee in
connection with its duties hereunder and any commission due any auctioneer which calls the sale
(not to exceed the maximum amount permitted by law or rule); and also a commission to the party
making the sale equal to the lesser of (i) 2.5% of the successful bid amount, or (ii) the
commission allowed Trustees for making sales of property under a decree of court of equity in the
State of Maryland; second, to the payment of all claims of Lender hereunder, whether the same shall
have been matured or not including interest thereon until final ratification of the auditor’s
report; and third, the balance, if any, to Grantor. It is agreed that half of the above
commissions and all of the above costs and expenses shall be paid by Grantor in the event the
mortgage debt is paid in full after any advertisement of the Property but before any sale thereof.

     In the event of such a sale of the Property or any part thereof and the execution of a deed or
deeds therefor under these trusts, any recital therein of the occurrence of an Event of Default or
of the giving or recording of any notice or demand by Trustee or Lender regarding such sale shall
be conclusive proof thereof, and the receipt of the purchase money recited therein shall fully
discharge the purchaser from any obligation for the proper application of the proceeds of sale in
accordance with these trusts.

     In the event of a sale, by foreclosure, power of sale, or otherwise, of less than all of the
Property, this Security Instrument shall continue as a lien and security interest on the remaining
portion of the Property unimpaired and without loss of priority. Notwithstanding the provisions of
this Section 11.1 to the contrary, if any Event of Default as described in Subsection
10.1(h)(i) or (ii) shall occur, the entire unpaid indebtedness secured by the Indemnity
Guaranty and Grantor’s obligations under this Security Instrument and the other Loan Documents
shall be automatically due and payable, without any further notice, demand or other action by
Lender.

          SECTION 11.2. APPLICATION OF PROCEEDS IN CONNECTION WITH EXERCISE OF RIGHTS AND REMEDIES.
The purchase money proceeds and avails of any disposition of the Property, or any part thereof, or
any other sums collected by Lender pursuant to the Indemnity Guaranty, this Security Instrument or
the Loan Documents, may be applied by Lender to the payment of the Secured Obligations in such
priority and proportions as Lender in its discretion shall deem proper.

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          SECTION 11.3. LENDER RIGHT TO CURE DEFAULTS. Upon the occurrence of any Event of Default,
and while such Event of Default is continuing Lender may, but without any obligation to do so and
without notice to or demand on Grantor and without releasing Grantor from any obligation hereunder,
cure the same in such manner and to such extent as Lender may deem necessary to protect the
security hereof. Subject to any rights of tenants under the Leases and the rights of the
University of Maryland under the Right of Entry Agreement, Lender is authorized to enter upon the
Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its
interest in the Property or to foreclose this Security Instrument or collect the Secured
Obligations, and the cost and expense thereof (including reasonable attorneys’ fees to the extent
permitted by law), with interest as provided in this Section 11.3, shall constitute a
portion of the indebtedness secured by the Indemnity Guaranty and Grantor’s obligations under this
Security Instrument and the other Loan Documents and shall be due and payable to Lender upon
demand. All such costs and expenses incurred by Lender 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 after notice from Lender that such cost or expense was incurred to the
date of payment to Lender. All such costs and expenses incurred by Lender together with interest
thereon calculated at the Default Rate shall be deemed to constitute a portion of the Secured
Obligations and shall be immediately due and payable upon demand by Lender therefor.

          SECTION 11.4. ACTIONS AND PROCEEDINGS. After the occurrence and during the continuance of an
Event of Default, Lender has the right to appear in and defend any action or proceeding brought
with respect to the Property and to bring any action or proceeding, in the name and on behalf of
Grantor, that Lender, in its discretion, decides should be brought to protect its interest in the
Property.

          SECTION 11.5. 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 that constitute a part of the Secured Obligations as
the same become due, without regard to whether or not the balance of the Secured Obligations 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 Grantor existing at the time such earlier action
was commenced.

          SECTION 11.6. EXAMINATION OF BOOKS AND RECORDS. Lender, its agents, accountants and
attorneys shall have the right upon prior written notice to examine the records, books, management
and other papers Borrower or Grantor which reflect upon their financial condition, at the Property
or at the office where the books and records are located. Lender and its agents shall have the
right upon notice to make copies and extracts from the foregoing records and other papers. In
addition, Lender, its agents, accountants and attorneys shall have the right to examine and audit
the books and records of Grantor pertaining to the income, expenses and operation of the Property
during reasonable business hours at any office where the books and records are located. Unless an
Event of Default shall have occurred and be continuing, Lender shall exercise its rights under this
Section 11.6 once per calendar year.

          SECTION 11.7. OTHER RIGHTS, ETC.

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     (a) The failure of Lender to insist upon strict performance of any term hereof shall
not be deemed to be a waiver of any term of this Security Instrument. Grantor shall not be
relieved of Grantor’s obligations hereunder by reason of (i) the failure of Lender to comply
with any request of Grantor to take any action to foreclose this Security Instrument or
otherwise enforce any of the provisions hereof or of the Indemnity Guaranty or the Loan
Documents, (ii) the release, regardless of consideration, of the whole or any part of the
Property, or of any person liable for the Secured Obligations or any portion thereof, or
(iii) any agreement or stipulation by Lender extending the time of payment or otherwise
modifying or supplementing the terms of the Secured Obligations.

     (b) It is agreed that the risk of loss or damage to the Property is on Grantor, and
Lender shall have no liability whatsoever for decline in value of the Property, for failure
to maintain the Policies, or for failure to determine whether insurance in force is adequate
as to the amount of risks insured. Possession by Lender shall not be deemed an election of
judicial relief, if any such possession is requested or obtained, with respect to any
Property or collateral not in Lender’s possession.

     (c) Lender may resort for the payment of the Secured Obligations to any other security
held by Lender in such order and manner as Lender, in its discretion, may elect. Lender may
take action to recover the Secured Obligations, or any portion thereof, or to enforce any
covenant hereof without prejudice to the right of Lender thereafter to foreclose this
Security Instrument. 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 to every right and remedy now or hereafter
afforded at law or in equity.

          SECTION 11.8. LENDER RIGHT TO RELEASE. Lender may release any portion of the Property or any
portion of the Secured Obligations for such consideration as Lender may require without, as to the
remainder of the Property or the Secured Obligations, in any way impairing or affecting the lien or
priority of this Security Instrument, or improving the position of any subordinate lienholder with
respect thereto, except to the extent that the obligations hereunder shall have been reduced by the
actual monetary consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender may require without
being accountable for so doing to any other lienholder. This Security Instrument shall continue as
a lien and security interest in the remaining portion of the Property.

          SECTION 11.9. RIGHT OF ENTRY. Subject to the right of tenants under Leases and the rights of
the University of Maryland under the Right of Entry Agreement, Lender and its agents shall have
the right upon prior written notice to enter and inspect the Property at all reasonable times upon
notice to Grantor.

          SECTION 11.10. RIGHTS PERTAINING TO SALES. The following provisions shall, to the extent
permitted by law, apply to any sale or sales of all or any portion of the Property under or by
virtue of this Security Instrument, whether under any power of sale

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herein granted or by virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale:

     (a) Trustee (for purposes of this Subsection 11.10 only, the term “Trustee”
shall be interpreted to include any public officer or other person having the responsibility
to conduct any sale of all or part of the Property pursuant to this Security Instrument) may
conduct any number of sales from time to time. The power of sale shall not be exhausted by
any one or more of such sales as to any part of the Property that has not been sold or by
any sale that is not completed or is defective until the Secured Obligations have been paid
in full.

     (b) Any sale may be postponed or adjourned by public announcement at the time and place
appointed for such sale or for such postponed or adjourned sale, and such sale may be
completed at the time and place so announced without further notice.

     (c) Lender is hereby appointed the true and lawful attorney-in-fact of Grantor, which
appointment is irrevocable and shall be deemed to be coupled with an interest, in Grantor’s
name and stead, to make all necessary conveyances, assignments, transfers and deliveries of
the Property and rights so sold, and for that purpose Lender may execute all necessary
instruments to accomplish the same, and may substitute one or more persons with like power,
and Grantor hereby ratifies and confirms all that said attorney or such substitute or
substitutes shall lawfully do by virtue thereof. Nevertheless, Grantor, if requested by
Lender, shall ratify and confirm any such sale or sales by executing and delivering to
Lender or such purchaser or purchasers, as applicable, all such instruments as may be
advisable, in Lender’s judgment, for the purposes designated in such request.

     (d) Any and all statements of fact or other recitals made in any of the instruments
referred to in Subsection 11.10(c) given by Lender concerning nonpayment of the
Secured Obligations, occurrence of any Event of Default, any declaration by Lender that all
or any of the Secured Obligations is due and payable, any request to sell, any
representation that notice of time, place and terms of sale and property or rights to be
sold was duly given, or that any other act or thing was duly done by Lender, shall be taken
as prima facie evidence of the truth of the facts so stated and recited absent manifest
error.

     (e) The receipt by Trustee of the purchase money paid at any such sale, or the receipt
of any other person authorized to give the same, shall be sufficient discharge therefor to
any purchaser of any property or rights sold as aforesaid, and no purchaser, or its
representatives, grantees or assigns, after paying such purchase price and receiving such
receipt, shall be bound to see to the application of such purchase price or any part thereof
upon or for any trust or purpose of this Security Instrument or, in any manner whatsoever,
be answerable for any loss, misapplication or non-application of any such purchase money, or
part thereof, or be bound to inquire as to the authorization, necessity, expediency or
regularity of any such sale.

     (f) Any such sale or sales shall operate to divest all of the estate, right, title,
interest, claim and demand whatsoever, whether at law or in equity, of Grantor in and to

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the properties and rights so sold, and shall be a perpetual bar both at law and in
equity against Grantor and any and all persons claiming or who may claim the same, or any
part thereof, by, through or under Grantor to the fullest extent permitted by applicable
law.

     (g) Upon any such sale or sales, Lender may bid for and acquire the Property and, in
lieu of paying cash therefor, may make settlement for the purchase price by crediting
against the Secured Obligations the amount of the bid made therefor, after deducting
therefrom the expenses of the sale, the cost of any enforcement proceeding hereunder and any
other sums that Lender is authorized to charge to Grantor under the terms of the Indemnity
Guaranty, this Security Instrument, or any other Loan Document to which Grantor is a party
to the extent necessary to satisfy such bid.

     (h) If Grantor, or any person claiming by, through or under Grantor, shall transfer or
refuse or fail to surrender possession of the Property after any sale thereof, then Grantor
or such person shall be deemed a tenant at sufferance of the purchaser at such sale, subject
to eviction by means of unlawful detainer proceedings or other appropriate proceedings, and
to any other right or remedy available hereunder or under applicable law.

     (i) Upon any such sale, it shall not be necessary for Trustee, Lender or any public
officer acting under execution or order of court to have present or constructively in its
possession any or all of the Property.

     (j) In the event of any sale referred to in this Section 11.10, the entire
Secured Obligations, if not previously due and payable, immediately thereupon shall,
notwithstanding anything to the contrary in any other Loan Document, become due and payable.

     (k) This instrument shall be effective as a mortgage. If a sale hereunder shall be
commenced by Trustee, Lender may, at any time before the sale of the Property, direct the
Trustee to abandon the sale, and may institute suit for the collection of the Secured
Obligations or part thereof and for the foreclosure of this Security Instrument. If Lender
shall institute suit for the collection of the Secured Obligations part thereof, and for the
foreclosure of this Security Instrument, Lender may at any time before the entry of final
judgment in said suit dismiss the same (or part thereof) and direct the Trustee to sell the
Property in accordance with the provisions of this Security Instrument. Lender may pursue
its rights and remedies against any guarantor or other party liable for any of the
obligations in such a suit for foreclosure or by separate suit, whether or not the Trustee
is also pursuing a sale under the terms hereof.

          SECTION 11.11. RIGHT TO RELEASE INFORMATION. Following the occurrence and during the
continuance of any Event of Default, Lender may forward to any broker, prospective purchaser of the
Property or the Loan, or other person or entity all documents and information which Lender now has
or may hereafter acquire relating to the Secured Obligations, Grantor, the Property and any other
matter in connection with the Secured Obligations, whether furnished by Grantor or otherwise, as
Lender determines necessary or desirable in connection with Lender’s rights under this Security
Instrument. Grantor irrevocably

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waives any and all rights it may have to limit or prevent such disclosure, including any right
of privacy or any claims arising therefrom.

ARTICLE 12 — INDEMNIFICATION

          SECTION 12.1. GENERAL INDEMNIFICATION. Grantor shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all
claims, suits, liabilities (including strict liabilities), actions, proceedings, obligations,
debts, damages, losses, costs, expenses, diminution in value, fines, penalties, charges, fees,
expenses, judgments, awards, amounts paid in settlement, or punitive damages, of whatever kind or
nature (including reasonable attorneys’ fees and other costs) (the “Losses”) imposed upon or
incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of
or in any way relating to any one or more of the following (but excluding in each case Losses
arising out of Indemnified Parties’ gross negligence or willful misconduct): (a) ownership,
servicing or administration of this Security Instrument, the Property or any interest therein or
the receipt of any Rents or other income or proceeds from the Property; (b) any amendment to, or
restructuring of, the Secured Obligations, and the Indemnity Guaranty, this Security Instrument, or
any other Loan Document to which Grantor is a party; (c) any and all lawful actions that may be
taken by Lender in connection with the enforcement of the provisions of this Security Instrument or
the Indemnity Guaranty or any other Loan Document to which Grantor is a party, whether or not suit
is filed in connection with same, or in connection with Grantor and/or any member, partner, joint
venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state
bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or death of persons or
loss of or damage to property occurring in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (e) any
use, nonuse or condition in, on or about the Property or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (f) any failure on
the part of Grantor to perform or be in compliance with any of the terms of this Security
Instrument; (g) performance of any labor or services or the furnishing of any materials or other
property in respect of the Property or any part thereof; (h) 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 Security Instrument, or to supply a copy thereof in a timely fashion to the
recipient of the proceeds of the transaction in connection with which this Security Instrument is
made; (i) any failure of the Property to be in material compliance with any Applicable Laws; (j)
any and all claims and demands whatsoever that may be asserted against Lender by reason of any
alleged obligations or undertakings on its part to perform or discharge any of the terms,
covenants, or agreements contained in any Lease or otherwise; (k) any and all claims or demands by
any third parties; (l) the payment of any commission, charge or brokerage fee to anyone which may
be payable in connection with the funding of the Loan secured by this Security Instrument; or (m)
any misrepresentation made by Grantor in this Security Instrument or other Loan Document.

     Any amounts payable to Lender by reason of the application of this Article 12 shall
become immediately due and payable and shall bear interest at the Default Rate from the date loss
or damage is sustained by Lender until paid, and be secured by the Indemnity Agreement and this
Security Instrument. The obligations and liabilities of Grantor under this Article 12

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shall survive any termination, satisfaction, or assignment of this Security Instrument and the
exercise by Lender of any of its rights or remedies hereunder including the acquisition of the
Property by foreclosure or a conveyance in lieu of foreclosure.

     As used in this Security Instrument, the term “Indemnified Parties” means Lender and any
person or entity who is or will have been involved in the origination of this Loan, any person or
entity who is or will have been involved in the servicing of this Loan (whether or not such person
or entity has any ownership interest therein), any person or entity in whose name the encumbrance
created by this Security Instrument is or will have been recorded, persons and entities who may
hold or acquire or will have held a full or partial interest in this Loan (including Investors or
prospective Investors in the Securities (as such terms are defined in Section 19.1 hereof),
as well as custodians, trustees and other fiduciaries who hold or have held a full or partial
interest in this Loan for the benefit of third parties) as well as the respective directors,
officers, shareholders, members, partners, employees, agents, attorneys, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any
and all of the foregoing (including any other person or entity who holds or acquires or will have
held a participation or other full or partial interest in this loan or the Property, whether during
the term of the Secured Obligations or as a part of or following a foreclosure of this Security
Instrument and including any successors by merger, consolidation or acquisition of all or a
substantial portion of Lender’s assets and business).

          SECTION 12.2. MORTGAGE AND/OR INTANGIBLE TAX. Grantor shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any
and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly
or indirectly arising out of or in any way relating to any tax on the making and/or recording of
this Security Instrument or the Indemnity Guaranty.

          SECTION 12.3. ERISA INDEMNIFICATION. Grantor shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all
Losses (including attorneys’ fees and costs incurred in the investigation, defense, and settlement
of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan,
and in obtaining any individual prohibited transaction exemption under ERISA that may be required,
in Lender’s discretion) that Lender may incur, directly or indirectly, as a result of a default
under Section 4.2 or 5.9, except to the extent caused by the gross negligence or
willful misconduct of Indemnified Parties.

          SECTION 12.4. DUTY TO DEFEND, ATTORNEYS’ FEES AND OTHER FEES AND EXPENSES. Upon written
request by any Indemnified Party, Grantor shall defend such Indemnified Party (if requested by any
Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals
reasonably approved by the Indemnified Parties. Notwithstanding the foregoing, any Indemnified
Parties may engage their own attorneys and other professionals to defend or assist them, and, at
the option of Indemnified Parties, their attorneys shall control the resolution of any claim or
proceeding. Upon demand, Grantor shall pay or reimburse, the Indemnified Parties for the payment
of reasonable fees and disbursements of attorneys, accountants, financial advisors, engineers,
environmental consultants, laboratories and other professionals in connection therewith.

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ARTICLE 13 — WAIVERS

          SECTION 13.1. WAIVER OF COUNTERCLAIM. Grantor hereby waives the right to assert a
counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding
brought against it by Lender arising out of or in any way connected with this Security Instrument,
the Indemnity Guaranty, any of the other Loan Documents executed by Grantor, or the Secured
Obligations.

          SECTION 13.2. MARSHALLING AND OTHER MATTERS. Grantor hereby waives, to the extent permitted
by law, the benefit of all homestead, appraisement, valuation, stay, extension, reinstatement and
redemption laws now or hereafter in force and all rights of marshalling in the event of or in
connection with any sale hereunder of the Property or any part thereof or any interest therein.
Further, Grantor 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 Grantor, and on behalf of each
and every person acquiring any interest in or title to the Property subsequent to the date of this
Security Instrument and on behalf of all persons to the extent permitted by Applicable Law, and
hereby waives any defense Grantor might assert or have by reason of Lender’s failure to make any
tenant or lessee of the Property a party defendant in any foreclosure proceeding or action
instituted by Lender.

          SECTION 13.3. WAIVER OF NOTICE. To the extent permitted by Applicable Law, Grantor 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 Grantor and except with respect to matters for which Lender is required by Applicable Law
to give notice, and Grantor hereby expressly waives the right to receive any notice from Lender
with respect to any matter for which this Security Instrument does not specifically and expressly
provide for the giving of notice by Lender to Grantor.

          SECTION 13.4. WAIVER OF STATUTE OF LIMITATIONS. Grantor hereby expressly waives and releases
to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to
payment of the Secured Obligations or performance of its other obligations under this Security
Instrument.

          SECTION 13.5. WAIVER OF TRIAL BY JURY. GRANTOR AND LENDER HEREBY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM,
WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE SECURED OBLIGATIONS,
THE INDEMNITY GUARANTY, THIS SECURITY INSTRUMENT OR ANY OTHER LOAN DOCUMENT OR ANY ACTS OR
OMISSIONS OF GRANTOR OR LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION
THEREWITH.

ARTICLE 14 — EXCULPATION

     To the extent of any conflict between the provisions of this Security Instrument and Section
20 of the Note, the provisions of Section 20 of the Note shall control.

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ARTICLE 15 — NOTICES

          SECTION 15.1. NOTICES. Any notice required or permitted to be given hereunder must be in
writing and given (a) by depositing same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt requested; (b) by
delivering the same in person to such party; (c) by transmitting a facsimile copy to the correct
facsimile number of the intended recipient (with a second copy to be sent to the intended recipient
by any other means permitted under this Section 15.1); or (d) by depositing the same into
the custody of a nationally recognized overnight delivery service addressed to the party to be
notified. In the event of mailing, notices shall be deemed effective three (3) days after posting;
in the event of overnight delivery, notices shall be deemed effective on the next Business Day
following deposit with the delivery service; in the event of personal service or facsimile
transmissions, notices shall be deemed effective when delivered. For purposes of notice, the
addresses of the parties shall be as set forth in the Preamble to this Security Instrument. A copy
of any notice sent, transmitted or delivered to Lender shall also be delivered to Cynthia M.
Hajost, Esq., Ballard Spahr Andrews & Ingersoll, LLP, 601 13th Street, Suite 1000 South,
N.W., Washington, D.C. 20005, facsimile number: (202) 626-9007. From time to time, either party
may designate another address than the address set forth in the Preamble by giving the other party
no less than ten (10) days advance notice of such change of address in accordance with the notice
provisions hereof.

     For purposes of this Subsection, “Business Day” shall mean a day on which commercial banks are
not authorized or required by law to close in the State in which the Land is located.

ARTICLE 16 — APPLICABLE LAW

          SECTION 16.1. CHOICE OF LAW/JURISDICTION AND VENUE. This Security Instrument shall be
governed, construed, applied and enforced in accordance with the laws of the State of Maryland
without regard to the conflicts of law provisions thereof (“Governing State”). Grantor and Lender
hereby consent to personal jurisdiction in the Governing State. JURISDICTION AND VENUE OF ANY
ACTION BROUGHT TO ENFORCE THIS SECURITY INSTRUMENT OR ANY OTHER LOAN DOCUMENT TO WHICH GRANTOR IS A
PARTY OR ANY ACTION RELATING TO THE SECURED OBLIGATIONS (“ACTION”) SHALL BE BROUGHT IN A STATE OR
FEDERAL COURT OF APPROPRIATE JURISDICTION LOCATED IN THE GOVERNING STATE. GRANTOR HEREBY CONSENT
AND SUBMIT TO THE PERSONAL JURISDICTION OF THE STATE COURTS OF THE GOVERNING STATE AND OF FEDERAL
COURTS LOCATED IN THE GOVERNING STATE IN CONNECTION WITH ANY ACTION AND HEREBY WAIVES ANY AND ALL
PERSONAL RIGHTS UNDER THE LAWS OF ANY OTHER STATE TO OBJECT TO JURISDICTION WITHIN SUCH GOVERNING
STATE FOR PURPOSES OF ANY ACTION. Grantor hereby waives and agrees not to assert, as a defense to
any Action or a motion to transfer venue of any Action, (i) any claim that it is not subject to
such jurisdiction, (ii) any claim that any Action may not be brought against it or is not
maintainable in those courts or that this Security Instrument may not be enforced in or by those
courts, or that it is exempt or immune from execution, (iii) that the Action is brought in an inconvenient forum, or (iv) that
the venue for the Action is in any way improper.

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          SECTION 16.2. USURY LAWS. This Security Instrument and the Indemnity Guaranty are subject to
the express condition that at no time shall Grantor be obligated or required to pay interest on the
Secured Obligations at a rate which could subject the holder of the Secured Obligations to either
civil or criminal liability as a result of being in excess of the maximum interest rate which
Grantor is permitted by applicable law to contract or agree to pay. If by the terms of this
Security Instrument or the Indemnity Guaranty, Grantor is at any time required or obligated to pay
interest on the Secured Obligations at a rate in excess of such maximum rate, the rate of interest
under the Secured Obligations 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 Secured Obligations. All sums paid or agreed to be paid to Lender for the use, forbearance, or
detention of the Secured Obligations shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of the Secured
Obligations until payment in full so that the rate or amount of interest on account of the Secured
Obligations does not exceed the maximum lawful rate of interest from time to time in effect and
applicable to the Secured Obligations for so long as the Secured Obligations is outstanding.

          SECTION 16.3. PROVISIONS SUBJECT TO APPLICABLE LAW. All rights, powers and remedies provided
in this Security Instrument may be exercised only to the extent that the exercise thereof does not
violate any applicable provisions of law and are intended to be limited to the extent necessary so
that they will not render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any Applicable Law.

          SECTION 16.4. INAPPLICABLE PROVISION. If any term of this Security Instrument or any
application thereof shall be invalid or unenforceable, the remainder of this Security Instrument
and any other application of the term shall not be affected thereby.

ARTICLE 17 — SECONDARY MARKET

          SECTION 17.1. TRANSFER OF LOAN. Lender may at any time, (a) sell, transfer or assign the
Indemnity Guaranty, this Security Instrument, and the other Loan Documents (a “Loan Sale”), (b) any
or all servicing rights with respect thereto (“Servicing Rights Transfers”), (c) grant
participations therein (“Participations”), or (d) issue mortgage pass-through certificates or other
securities (“Securities”) evidencing a beneficial interest in a rated or unrated public offering or
private placement (a “Securitization”). Lender may forward to each purchaser, transferee,
assignee, servicer, participant, or investor (including any broker or authorized representative
thereof) in such Loan Sale, Servicing Rights Transfers, Participations or Securities (collectively,
the “Investor”) or any of Fitch IBCA, Inc., Moody’s Investors Service, Inc. and Standard & Poor’s
Ratings Services, a Division of McGraw-Hill Companies, Inc. or any successor thereto, and any
other nationally recognized statistical rating organization rating such Securities, each
prospective Investor, and any organization maintaining databases on the underwriting and
performance of commercial mortgage loans, all documents and information
that Lender now has or may hereafter acquire relating to the Secured Obligations, Grantor,
Borrower, the Property and any other matter relating to the Loan, whether furnished by Grantor,
Borrower or otherwise, as Lender reasonably determines necessary or desirable. Grantor

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irrevocably waives any and all rights it may have to limit or prevent such disclosure, including any right of
privacy or any claims arising therefrom. Lender shall pay all costs and expenses incurred in
connection with any Loan Sale, Servicing Rights Transfer, Participation or Securitization pursuant
to this Article 17.

          SECTION 17.2. SECONDARY MARKET TRANSACTIONS. Lender shall have the right to engage in one or
more Secondary Market Transactions (as hereinafter defined) with respect to the Loan, and to
structure and restructure all or any part of the Loan, including in multiple tranches, as a
wraparound loan, or for inclusion in a “real estate mortgage investment conduit” (a “REMIC”) within
the meaning of Section 860D of the Internal Revenue Code of 1986, as amended, or other
Securitization. Without limitation, Lender shall have the right to cause the Secured Obligations
and the Security Instrument to be split into a first and a second mortgage loan, or into one or
more loans secured by mortgages in whatever proportion Lender determines, and thereafter to engage
in Secondary Market Transactions with respect to all or any part of the indebtedness and loan
documentation. Grantor acknowledges that it is the intention of the parties that all or a portion
of the Loan will be securitized and that all or a portion of the Loan will be rated by one or more
Rating Agencies. Grantor further acknowledges that additional structural modifications may be
required to satisfy issues raised by any Rating Agencies. As used herein, “Secondary Market
Transaction” means any of (i) the sale, assignment, or other transfer of all or any portion of the
Secured Obligations or the Loan Documents or any interest therein to one or more Investors, (ii)
the sale, assignment, or other transfer of one or more participation interests in the Secured
Obligations or Loan Documents to one or more Investors, (iii) the transfer or deposit of all or any
portion of the Secured Obligations or Loan Documents to or with one or more trusts or other
entities which may sell certificates or other instruments to Investors evidencing an ownership
interest in the assets of such trust or the right to receive income or proceeds therefrom or (iv)
any other Securitization backed in whole or in part by the Loan or any interest therein.

          SECTION 17.3. COOPERATION; LIMITATIONS. Grantor shall cooperate in good faith with Lender in
effecting any such restructuring or Secondary Market Transaction. Such cooperation shall include
executing and delivering such amendments to the Loan Documents and the organizational documents of
Grantor and any constituent entities as Lender or any Rating Agency, purchaser; transferee,
assignee, trustee, servicer or potential Investor (the Rating Agencies and all of the foregoing
parties are herein collectively referred to as “Interested Parties”) may request, provided however,
that no such amendment shall modify (i) the interest rate payable under the Secured Obligations
(except as set forth in Section 17.5); (ii) the stated maturity date of the Secured
Obligations, (iii) the amortization of the principal amount of the Secured Obligations, (iv) any
other material economic terms of the Secured Obligations, (v) the non-recourse provisions of the
Secured Obligations or (vi) any provision, the effect of which would materially increase Grantor’s
and Borrower’s obligations or materially decrease Grantor’s and Borrower’s rights under the Loan
Documents. Such cooperation also shall include using best efforts to obtain such certificates and
assurances from governmental entities and others as Lender may request. Grantor shall not be
required to provide additional collateral that was not initially contemplated by the parties to
effect any such restructuring or Secondary Market Transaction. Grantor shall not be required to pay any third party costs and expenses incurred
by Lender in connection with any such Secondary Market Transaction unless otherwise payable by
Grantor under this Security Instrument or the other Loan Documents.

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           SECTION 17.4. INFORMATION. Grantor, at its sole cost and expense, shall provide such access
to personnel and such information and documents relating to Grantor, its constituent persons or
entities, the Property (subject to the terms of the Leases provided no Event of Default shall exist
and be continuing) and the business and operations of all of the foregoing and such opinions of
counsel (including Non-Consolidation Opinions) as Lender, any Rating Agency or any other Interested
Party may request (and in form and substance reasonably acceptable to Lender and each Interested
Party) in connection with any such Secondary Market Transaction including updated financial
information, appraisals, market studies, environmental reviews (Phase I’s and, if appropriate,
Phase II’s), property condition reports and other due diligence investigations together with
appropriate verification of such updated information and reports through letters of auditors and
consultants and, as of the closing date of the Secondary Market Transaction, updated
representations and warranties made in the Loan Documents and such additional representations and
warranties as any Rating Agency or other Interested Party may request. If requested by any Rating
Agency or required by Lender, provide revisions or “bringdowns” to any opinions delivered at
Closing (including Non-Consolidation Opinions), or if required new versions of such opinions,
addressed to Lender, any trustee under any Securitization backed in whole or in part by the Loan,
any Rating Agency that assigns a rating to any securities in connection therewith and any investor
purchasing securities therein. Lender shall be permitted to share all such information with the
investment banking firms, Rating Agencies, accounting firms, law firms, other third party advisory
firms,
potential investors, servicers and other service providers and other parties involved in any
proposed Secondary Market Transaction. Grantor understands that any such information may be
incorporated into any offering circular, prospectus, prospectus supplement, private placement
memorandum or other offering documents for any Secondary Market Transaction. Lender and all of the
aforesaid third-party advisors and professional firms and investors shall be entitled to rely upon
such information.

          SECTION 17.5. SEVERANCE. In connection with any Secondary Market Transaction, Grantor shall,
at the request of Lender and at its sole cost and expense (a) sever the Secured Obligations into
two or more portions in such individual amounts as Lender may determine, each of which portion
shall be secured by a mortgage lien on the Property (“Loan Splitting”) or (b) sever the Secured
Obligations into two or more tranches in such individual amounts as Lender may determine (“Loan
Tranching”; Loan Splitting and Loan Tranching are collectively referred to herein as a
“Conversion”). To effectuate a Loan Split, Grantor, as applicable, shall, upon written request of
Lender, execute, acknowledge and deliver to Lender and/or its designee or designees substitute
notes, guarantees and security instruments in such principal amounts, aggregating not more than the
then unpaid principal amount of the Secured Obligations, and containing terms, provisions and
clauses no less favorable to Grantor than those contained herein and in the Indemnity Guaranty, and
such other documents and instruments as may be required by Lender to effect the splitting of the
Loan Documents. Any such Loan Tranching shall be evidenced by Lender’s then standard form “A/B
Loan”. Any Conversion shall not preclude any further Conversion or modification of the Secured
Obligations by agreement of Grantor and Lender. In the event any portion of the Secured
Obligations is converted into an “A/B Loan”, the interest rate on any one or more components of the Secured
Obligations may be changed at Lender’s request provided that the weighted average interest rate of
all components of the Secured Obligations shall in no event exceed the interest rate set forth in
the Secured Obligations. Grantor shall cooperate with all of Lender’s requests made in

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connection with a Conversion and shall deliver such documents as Lender may reasonably request in connection
therewith, including any opinion letters which Lender may request, all of which shall be in form
and substance acceptable to Lender. The aggregate of the principal amount of all such portions
shall in no event exceed the then principal balance of the Secured Obligations.

ARTICLE 18 — COSTS

          SECTION 18.1. ORIGINATION, ADMINISTRATION, ENFORCEMENT, AND DEFENSE EXPENSES. Grantor shall
pay Lender, on demand, all Administration and Enforcement Expenses (as hereinafter defined) now or
hereafter incurred by Lender, together with interest thereon at the Default Rate from the date paid
or incurred by Lender until such fees and expenses are paid by Grantor, whether or not an Event of
Default then exists. For the purpose of this Security Instrument, “Administration and Enforcement
Expenses” shall mean all fees and expenses incurred at any time or from time to time by Lender,
including reasonable legal (whether for the purpose of advice, negotiation, documentation, defense,
enforcement or otherwise), accounting, financial advisory, auditing, rating agency, appraisal,
valuation, title or title insurance, engineering, environmental, collection agency, or other expert
or consulting or similar services, in connection with: (a) the origination of the Secured
Obligations, including the negotiation and preparation of this Security Instrument, any other Loan
Document and any amendments or modifications of the Secured Obligations or the Loan Documents,
whether or not consummated; (b) the administration, servicing or enforcement of the Secured
Obligations or the Loan Documents, including any request for interpretation or modification of the
Loan Documents or any matter related to the Secured Obligations or the servicing thereof (which
shall include the consideration of any requests for consents, waivers, modifications, approvals,
lease reviews or similar matters and any proposed transfer of the Property or any interest
therein), (c) any litigation, contest, dispute, suit, arbitration, mediation, proceeding or action
(whether instituted by or against Lender, including actions brought by or on behalf of Grantor or
Grantor’s bankruptcy estate or any indemnitor or guarantor of the Secured Obligations or any other
person) in any way relating to the Secured Obligations or the Loan Documents including in
connection with any bankruptcy, reorganization, insolvency, or receivership proceeding; (d) any
attempt to enforce any rights of Lender against Grantor or any other person that may be obligated
to Lender by virtue of any Loan Document or otherwise whether or not litigation is commenced in
pursuance of such rights; and (e) protection, enforcement against, or liquidation of the Property
or any other collateral Secured Obligations, including any attempt to inspect, verify, preserve,
restore, collect, sell, liquidate or otherwise dispose of or realize upon the Indemnity Guaranty,
the Property or any other collateral for the Secured Obligations. All Administration and
Enforcement Expenses shall be additional indebtedness included as part of the Secured Obligations
hereunder secured by the Property, and may be funded, if Lender so elects, by Lender paying the
same to the appropriate persons and thus making an advance on Grantor’s behalf. Grantor further
acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal
of the Property or any part thereof, whether required by law, regulation, Lender or any
governmental or quasi-governmental
authority. Wherever it is provided for herein that Grantor pay any costs and expenses, such costs
and expenses shall include all legal fees and disbursements of Lender, whether of retained firms,
the reimbursement for the expenses of in-house staff or otherwise.

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ARTICLE 19 — CERTAIN DEFINITIONS, HEADINGS, RULE OF CONSTRUCTION

          SECTION 19.1. GENERAL DEFINITIONS. Unless the context clearly indicates a contrary intent or
unless otherwise specifically provided herein, words used in this Security Instrument may be used
interchangeably in singular or plural form and any subsequent owner or owners of the Property or
any part thereof or any interest therein and Grantor in its capacity as debtor-in-possession after
the commencement of a proceeding under the Bankruptcy Code; “Lender” shall mean “Lender and any
subsequent holder of the Secured Obligations,” the word “Note” shall mean “the Note and any other
evidence of indebtedness secured by the Indemnity Guaranty and this Security Instrument,” the word
“Indemnity Guaranty” shall mean “the Indemnity Guaranty and any other evidence of indebtedness
secured by this Security Instrument,” the word “person” shall include an individual, corporation,
limited liability company, partnership, trust, unincorporated association, government, governmental
authority, and any other entity, the word “Property” shall include any portion of the Property and
any interest therein, and the phrases “attorneys’ fees” and “counsel fees” shall include any and
all attorneys’, paralegal and law clerk fees and disbursements, including fees and disbursements at
the pre-trial, trial and appellate levels incurred or paid by Lender (a) in protecting its interest
in the Property, the Leases and the Rents, (b) relating to or arising out of any lawsuit or
proceeding brought by or against Lender in any court or other forum (including actions or
proceedings brought by or on behalf of Grantor’s bankruptcy estate or any guarantor or indemnitor),
or (c) in enforcing its rights under this Security Instrument.

          SECTION 19.2. HEADINGS, ETC. The headings and captions of various Sections 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.

          SECTION 19.3. RULES OF CONSTRUCTION.

     The following rules of construction shall be applicable for all purposes of this Security
Instrument and all documents or instruments supplemental hereto, unless the context otherwise
clearly requires:

     (a) The terms “include,” “including” and similar terms shall be construed as if
followed by the phrase “without being limited to”;

     (b) any pronoun used herein shall be deemed to cover all genders, and words importing
the singular number shall mean and include the plural number, and vice versa;

     (c) all captions to the Sections hereof are used for convenience and reference only and
in no way define, limit or describe the scope or intent of, or in any way affect, this
Security Instrument;

     (d) the words “hereof”, “herein”, “hereby”, “hereunder”, and similar terms in this
Security Instrument refer to this Security Instrument as a whole and not to any particular
provision or section of this Security Instrument;

     (e) No inference in favor of or against any party shall be drawn from the fact that
such party has drafted any portion hereof or any other Loan Document;

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     (f)
The cover page (if any) of, all recitals set forth in, and all Exhibits to, this
Security Instrument are hereby incorporated herein; and

     (g) Wherever Lender’s judgment, consent, approval or discretion is required under this
Security Instrument or any other Loan Document for any matter or thing or Lender shall have
an option, election, or right of determination or any other power to decide any matter
relating to the terms and conditions of this Security Instrument, including any right to
determine that something is satisfactory or not (“Decision Power”), such Decision Power
shall be exercised in the sole and absolute discretion of Lender unless otherwise expressly
stated to be reasonably exercised. Such Decision Power and each other power granted to
Lender upon this Security Instrument or any other Loan Document may be exercised by Lender
or by any authorized agent of Lender (including any servicer and/or attorney-in-fact), and
Grantor hereby expressly agrees to recognize the exercise of such Decision Power by such
authorized agent. Without limiting the generality of the foregoing, any authorized agent of
Lender (including any servicer and/or attorney-in-fact) is hereby specifically authorized to
remove a trustee and select and appoint a successor trustee.

ARTICLE 20 — MISCELLANEOUS

          SECTION 20.1. NO ORAL CHANGE. This Security Instrument, and any provisions hereof, including
the provisions of this Section, may not be modified, amended, waived, extended, changed, discharged
or terminated orally or by any act or failure to act on the part of Grantor 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, and the parties hereby:
(a) expressly agree that it shall not be reasonable for any of them to rely on any alleged,
non-written amendment to this Security Instrument; (b) irrevocably waive any and all right to
enforce any alleged, non-written amendment to this Security Instrument; and (c) expressly agree
that it shall be beyond the scope of authority (apparent or otherwise) for any of their respective
agents to agree to any non-written modification of this Security Instrument.

          SECTION 20.2. LIABILITY. Under no circumstances whatsoever shall Lender have any liability
for consequential or incidental damages under this Security Instrument or any other Loan Document
to which Grantor is a party. Lender shall have no duties or responsibilities except those
expressly set forth in this Security Instrument and the other Loan Documents. Neither Lender nor
any of its officer, directors, employees or agents shall be liable for any action taken or omitted
by them as such hereunder or in connection herewith, unless caused by their gross negligence or
willful misconduct. This Security Instrument shall be
binding upon and inure to the benefit of Grantor and Lender and their respective successors
and assigns forever.

          SECTION 20.3. DUPLICATE ORIGINALS; COUNTERPARTS. This Security Instrument may be executed in
any number of duplicate originals and each duplicate original shall be deemed to be an original.
This Security Instrument may be executed in several counterparts, each of which counterpart shall
be deemed an original instrument and all of which together shall
constitute a single Security
Instrument. The failure of any party hereto to execute

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 this Security Instrument, or any
counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

          SECTION 20.4. SUBROGATION. If any or all of the proceeds of the Indemnity Guaranty have been
used to extinguish, extend or renew any indebtedness heretofore existing against the Property,
then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims,
liens, titles, and interests existing against the Property heretofore held by, or in favor of, the
holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any,
are not waived but rather are continued in full force and effect in favor of Lender and are merged
with the lien and security interest created herein as cumulative security for the repayment of the
Secured Obligations, the performance and discharge of Grantor’s obligations hereunder, under the
Indemnity Guaranty and any other Loan Document, and the performance and discharge of the
obligations.

          SECTION 20.5. ENTIRE AGREEMENT. The Indemnity Guaranty, this Security Instrument and any other
Loan Document to which Grantor is a party, constitute the entire understanding and agreement
between Grantor and Lender with respect to the transactions arising in connection with the Secured
Obligations and supersede all prior written or oral understandings and agreements between Grantor
and Lender with respect thereto. Grantor hereby acknowledges that, except as incorporated in
writing in the Indemnity Guaranty, this Security Instrument and any other Loan Document to which
Grantor is a party, there are not, and were not, and no persons are or were authorized by Lender to
make, any representations, understandings, stipulations, agreements or promises, oral or written,
with respect to the transaction which is the subject of the Indemnity Guaranty, this Security
Instrument and any other Loan Document to which Grantor is a party.

          SECTION 20.6. LENDER’S RIGHT TO SUBORDINATE. Lender may, at its election, subordinate the
lien of this Security Instrument and any or all of Lender’s rights, titles or interests hereunder
to any lien, leasehold interest, easement, plat, covenant, restriction, dedication, encumbrance or
other matter affecting the Property or any part thereof by recording a written declaration of such
subordination in the office of the register or recorder of deeds or similar filing officer for the
county in which the Land is located. If foreclosure sale occurs hereunder after the recording of
any such declaration, the title received by the purchaser at such sale shall be subject to the
matters specified in such declaration, but such declaration shall not otherwise affect the validity
or terms of this Security Instrument or any other Loan Document or the priority of any lien or
security interest created hereunder or under any other Loan Document. Without limitation of the
foregoing, Lender shall have the right to unilaterally modify any Loan Document to release any lien
on any portion of the Property.

ARTICLE 21 — TRUSTEE PROVISIONS

          SECTION 21.1. CONCERNING THE TRUSTEE. Trustee, by acceptance of this Security Instrument,
covenants to perform and fulfill the trusts herein created and hereby waives any statutory fee and
agrees to accept reasonable compensation, in lieu thereof, for any services rendered by Trustee in
accordance with the terms hereof. Trustee may resign at any time upon giving thirty (30) days
notice to Grantor and to Lender. Lender may remove Trustee at any time or from time to time and
select a successor trustee. In the event of the death,

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removal, resignation, refusal to act, or
inability to act of Trustee, or in its discretion for any reason whatsoever Lender may, without
notice and without specifying any reason therefor and without applying to any court, select and
appoint a successor trustee, by an instrument recorded wherever this Security Instrument is
recorded and all powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon
become vested in such successor. Such substitute trustee shall not be required to give bond for
the faithful performance of the duties of Trustee hereunder unless required by Lender. The
procedure provided for in this paragraph for substitution of Trustee shall be in addition to and
not in exclusion of any other provisions for substitution, by law or otherwise.

          SECTION 21.2. TRUSTEE’S FEES. Grantor shall pay all reasonable costs, fees and expenses
incurred by Trustee and Trustee’s agents and counsel in connection with the performance by Trustee
of Trustee’s duties hereunder and all such costs, fees and expenses shall be secured by this
Security Instrument.

          SECTION 21.3. CERTAIN RIGHTS. With the approval of Lender, Trustee shall have the right to
take any and all of the following actions: (i) to select, employ, and advise with counsel (who may
be, but need not be, counsel for Lender) upon any matters arising hereunder, including the
preparation, execution, and interpretation of the Indemnity Guaranty, this Security Instrument or
any other Loan Document, and shall be fully protected in relying as to legal matters on the advice
of counsel, (ii) to execute any of the trusts and powers hereof and to perform any duty hereunder
either directly or through his/her agents or attorneys, (iii) to select and employ, in and about
the execution of his/her duties hereunder, suitable accountants, engineers and other experts,
agents and attorneys-in-fact, either corporate or individual, not regularly in the employ of
Trustee, and (iv) any and all other lawful action as Lender may instruct Trustee to take to protect
or enforce Lender’s rights hereunder. Trustee shall not be personally liable in case of entry by
Trustee, or anyone entering by virtue of the powers herein granted to Trustee, upon the Property
for debts contracted for or liability or damages incurred in the management or operation of the
Property. Trustee shall have the right to rely on any instrument, document, or signature
authorizing or supporting an action taken or proposed to be taken by Trustee hereunder, believed by
Trustee in good faith to be genuine.

          SECTION 21.4. PERFECTION OF APPOINTMENT. Should any deed, conveyance, or instrument of any
nature be required from Grantor by any Trustee or substitute trustee to more fully and certainly
vest in and confirm to the Trustee or substitute trustee such estates rights, powers, and duties,
then, upon request by the Trustee or substitute trustee, any and all such deeds, conveyances and
instruments shall be made, executed, acknowledged, and delivered and shall be caused to be recorded
and/or filed by Grantor.

(REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK)

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     IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Grantor the day and year
first above written.

	 	 	 	 	 	 
	WITNESS/ATTEST:             	 	GRANTOR:

BMR-SHADY GROVE ROAD HQ LLC,

a Maryland limited liability

 	 
	 	 	By: 	BMR-SHADY GROVE HOLDINGS LLC, a 	 
	 	 	 	Delaware limited liability, its Member 	 
	 
	 	 	By: 	BIOMED REALTY L.P., a Maryland 	 
	 	 	 	limited partnership, its Member 	 
	 
	 	 	 	 
	/s/ KMS 	 	By:  	
/s/ R. Kent Griffin
 	 
	Kevin M. Simonsen 	 	 	R. Kent Griffin 	 
	 	 	 	Chief Financial OfficerGPC Biotech AG

                        2006 INCENTIVE STOCK OPTION PLAN

                          EFFECTIVE AS OF MAY 24, 2006

1.       PURPOSES.

         (a)      The purpose of this Plan is to provide a means by which
                  selected Employees and Directors of GPC Biotech Inc. (the
                  "Subsidiary"), a wholly owned subsidiary of GPC Biotech AG,
                  Munich/Germany (the "Company") may be given an opportunity to
                  benefit from increases in value of the stock of the Company
                  through the granting of (i) Incentive Stock Options, and (ii)
                  Nonstatutory Stock Options, all as defined below. The Plan
                  does not provide for the granting of stock appreciation rights
                  or restricted stock.

         (b)      The Company, by means of this Plan, seeks to retain the
                  services of persons who are now Employees or Directors of its
                  Subsidiary, to secure and retain the services of such persons
                  and to provide incentives for such persons to exert maximum
                  efforts for the success of the Company and its Subsidiary.

         (c)      The Company  intends that the Stock Option Grants issued
                  under this Plan shall, in the discretion of the Board of
                  Directors ("Vorstand") and in coordination with the
                  Supervisory Board ("Aufsichtsrat") of the Company be Options
                  granted pursuant to Section 6 hereof, including Incentive
                  Stock Options and Nonstatutory Stock Options. All Options
                  shall be separately designated Incentive Stock Options or
                  Nonstatutory Stock Options at the time of grant, and in such
                  form as required pursuant to Section 6, and a separate
                  certificate or certificates will be issued for each option
                  grant.

2.       DEFINITIONS.

         (a)      "Affiliate" means any subsidiary corporation of the Company,
                  whether now or hereafter existing, as defined in Section
                  424(f) of the Code, including GPC Biotech, Inc., a Delaware
                  corporation with its offices in Waltham (Massachusetts) and
                  Princeton (New Jersey).

         (b)      "Aktiengesetz" (abbr.: AktG) means the German Stock
                  Corporation Act.

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         (c)      "Aufsichtsrat" means the Supervisory Board of the Company.

         (d)      "Code" means the United States Internal Revenue Code of 1986,
                  as amended.

         (e)      "Company" means GPC Biotech AG, a German  Aktiengesellschaft
                  (stock corporation) with its seat in Planegg/Martinsried
                  (Germany).

         (f)      "Continuous  Status as an Employee or Director" means the
                  employment or relationship as an Employee or a Director is not
                  interrupted or terminated. The Aufsichtsrat, in its sole
                  discretion, may determine whether Continuous Status as an
                  Employee or a Director shall be considered interrupted in the
                  case of: (i) any leave of absence approved by the Vorstand,
                  including sick leave, military leave, or any other personal
                  leave; or (ii) transfers between locations of the Company or
                  between the Company and the Affiliates or their successors.

         (g)      "Director" means a member of the board of directors of an
                  Affiliate of the Company.

         (h)      "Employee" means any person,  employed by the Company or any
                  Affiliate of the Company. Neither service as a Director nor
                  payment of a director's fee by the Company shall be sufficient
                  to constitute "employment" by the Company.

         (i)      "Exchange Act" means the U.S. Securities Exchange Act of 1934,
                  as amended.

         (j)      "Fair Market  Value" means,  as of any date,  the value of the
                  ordinary bearer shares of the Company determined as follows,
                  and in each case in a manner consistent with the Code, the
                  Fair Market Value of an ordinary bearer shall be equivalent to
                  the average price at which the Company's no-par shares are
                  traded at XETRA's final auction on the Frankfurt stock
                  exchange during the last five stock exchange trading days
                  prior to the granting of the Options, at least, however, to
                  the share in the capital stock (pro rata amount) attributed to
                  one share of GPC Biotech AG.

         (k)      "Incentive  Stock  Option"  means an Option  intended to
                  qualify as an incentive stock option within the meaning of
                  Section 422 of the Code and the regulations promulgated
                  thereunder.

         (l)      "Nonstatutory Stock Option" means an Option not intended to
                  qualify as an Incentive Stock Option.

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         (m)      "Option" means a stock option granted pursuant to the Plan.

         (n)      "Optionee" means any Employee or Director who holds an
                  outstanding Option.

         (o)      "Plan" means the 2006 Incentive Stock Option Plan.

         (p)      "Redomociling"  shall  occur  only in the event  that (i) the
                  Company has a class of equity securities registered pursuant
                  to Section 12 of the Exchange Act, and (ii) the Company no
                  longer qualifies as a "foreign private issuer" under
                  applicable US securities laws.

         (q)      "Rule 16b-3"  means  Rule 16b-3 of the Exchange Act or any
                  successor to Rule 16b-3, as in effect when discretion is being
                  exercised with respect to the Plan.

         (r)      "share(s)"  means the Company's  ordinary  bearer shares and,
                  unless the context otherwise requires, its American Depositary
                  Receipts evidencing American Depositary Shares, each
                  representing one ordinary bearer share.

         (s)      "Stock Option Grant" means any Option right granted under the
                  Plan.

         (t)      "Stock  Option Agreement" means a written agreement between
                  the Company and a holder of a Stock Option Grant evidencing
                  the terms and conditions of an individual Stock Option Grant.
                  Each Stock Option Agreement shall be subject to the terms and
                  conditions of the Plan.

         (u)      "Subsidiary" means any affiliated corporation of the Company,
                  whether now or hereafter existing, as defined in Section
                  424(f) of the Code, including GPC Biotech Inc., a Delaware
                  corporation with offices in Waltham (Massachusetts) and
                  Princeton (New Jersey).

         (v)      "Vorstand" means the Management Board of the Company.

3.       ADMINISTRATION.

         (a)      The Plan shall be  administered  by the Vorstand in
                  accordance with the respective resolutions of the Company's
                  stockholders and, where applicable, in coordination with the
                  Aufsichtsrat and internal guidelines of the Company.

         (b)      Notwithstanding  subparagraph  (a) above,  the Vorstand shall
                  have the power subject to and within the limitations of the
                  express provisions of the Plan:

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                                      - 4-

                  (1)       To determine  from time to time which of the persons
                            eligible under the Plan shall be granted Stock
                            Option Grants; when and how each Stock Option Grant
                            shall be granted; whether a Stock Option Grant will
                            be an Incentive Stock Option, a Nonstatutory Stock
                            Option or a combination of the foregoing; the
                            provisions of each Stock Option Grant granted (which
                            need not be identical), including the time or times
                            when a person shall be permitted to receive stock
                            pursuant to a Stock Option Grant, whether a person
                            shall receive ordinary bearer shares or American
                            Despositary Receipts and the number of shares with
                            respect to which a Stock Option Grant shall be
                            granted to each such person.

                  (2)       To construe and interpret the Plan and Stock Option
                            Grants granted under it, and to establish, amend and
                            revoke rules and regulations for its administration.
                            The Vorstand, in the exercise of this power, may
                            correct any defect, omission or inconsistency in the
                            Plan or in any Stock Option Agreement, in a manner
                            and to the extent it shall deem necessary or
                            expedient to make the Plan fully effective. All
                            decisions by the Vorstand shall be made in the
                            Vorstand's sole discretion and shall be final and
                            binding on all persons having or claiming any
                            interest in the Plan or in any Option. No Director
                            or person acting pursuant to the authority delegated
                            by the Vorstand shall be liable for any action or
                            determination relating to or under the Plan made in
                            good faith.

                  (3)       To amend the Plan or a Stock Option Grant as
                            provided in Section 11.

4.       SHARES SUBJECT TO THE PLAN.

         (a)      Subject to the respective  resolutions of the Company's
                  stockholders as well as subject to the provisions of Section
                  10 relating to adjustments upon changes in stock, the maximum
                  number of shares that may be issued pursuant to Stock Option
                  Grants made under the Plan may not exceed 415,000, which is
                  the corresponding number of shares that can be issued
                  according to the existing conditional capital which, has been
                  be created by a resolution of the Company's stockholders
                  according to subparagraph (b). If any Stock Option Grant shall
                  for any reason expire or otherwise terminate, in whole or in
                  part, without having been exercised in full, the stock not
                  acquired under such Stock Option Grant shall revert to and
                  again become available for issuance under the Plan subject,
                  however, in the case of Incentive Stock Options, to any
                  limitation required under the Code.

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                                      - 5-

         (b)      The stock subject to the Plan may be new shares which will be
                  issued by way of capital increase using up conditional capital
                  which has been created by a resolution of the Company's
                  stockholders on May 24, 2006 in order to satisfy the Company's
                  obligations under the Plan. The provisions of the
                  Aktiengesetz, in particular Sections 192 para. 2 cif. 3, 193
                  para. 2 cif. 4, AktG, have to be obeyed. However, an exercised
                  Option subject to the Plan may be satisfied with reacquired
                  shares, bought on the market or otherwise in accordance with
                  Section 71 AktG.

5.       ELIGIBILITY.

         (a)      Incentive Stock Options may be granted only to Employees and
                  shall be subject to and construed consistently with the
                  requirements of Section 422 of the Code. Stock Option Grants
                  other than Incentive Stock Options may be granted only to
                  Employees and Directors. The Company shall have no liability
                  to an Employee, or any other party, if an Option (or any part
                  thereof) that is intended to be an Incentive Stock Option is
                  not an Incentive Stock Option.

         (b)      No Employee shall be eligible for the grant of an Incentive
                  Stock Option if, at the time of grant, such person owns (or is
                  deemed to own pursuant to Section 424(d) of the Code) stock
                  possessing more than ten percent (10%) of the total combined
                  voting power of all classes of stock of the Company or of any
                  of its Affiliates (a "10% Stockholder") unless the exercise
                  price of such Option is at least one hundred ten percent
                  (110%) of the Fair Market Value of such stock at the date of
                  grant and the Option is not exercisable after the expiration
                  of five (5) years from the date of grant.

         (c)      Subject to the provisions of Section 10 relating to
                  adjustments upon changes in stock, no person shall be eligible
                  to be granted Options covering more than one hundred thousand
                  (100,000) of the Company's shares in any calendar year. This
                  Section 5(c) shall not apply until the Company is Redomiciled.

6.       OPTION PROVISIONS.

         Each Option shall be evidenced by a written instrument in such form as
         the Vorstand shall determine and shall contain such terms and
         conditions as the Vorstand in co-ordination with the Aufsichtsrat shall
         deem appropriate. The provisions of separate Options need not be
         identical, but each Option shall include (through incorporation of
         provisions hereof by reference in the Option or otherwise) the
         substance of each of the following provisions:

         (a)      Term.  The Options may be offered to the Optionees during the
                  last fifteen working days of each calendar month (acquisition
                  period pursuant to Section 193 Para. 2 No. 4 AktG).

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                                     - 6 -

                  Each Option shall be exercisable at such times and subject to
                  such terms as the Vorstand may specify in the applicable Stock
                  Option Grant, provided, however, that no Option shall be
                  exercisable after the expiration of ten (10) years from the
                  date it was granted.

         (b)      Price.  The Vorstand shall establish the exercise price at
                  the time each Option is granted and shall specify it in the
                  applicable Stock Option Grant, provided however, that, except
                  as provided in Section 5(b), the exercise price of each
                  Incentive Stock Option shall be not less than one hundred
                  percent (100%) of the Fair Market Value.

         (c)      Consideration.  According to applicable German Law, the
                  exercise price of stock acquired pursuant to an Option can
                  only be paid to the Company, at the latest, when the Option is
                  exercised either (i) in cash (EURO), or (ii) by money transfer
                  onto an account of the Company with a (German or
                  international) bank residing in Germany. Any other means of
                  payment or payment in kind is prohibited according to Section
                  199 para. 1, 54 para. 3, 36 para. 2 AktG.

         (d)      Transferability.  An Incentive Stock Option shall not be
                  transferable except by will or by the laws of descent and
                  distribution, and shall be exercisable during the lifetime of
                  the person to whom the Option is granted only by such person.
                  Notwithstanding the foregoing, the person to whom an Incentive
                  Stock Option Agreement is granted may, by delivering written
                  notice to the Company, in a form satisfactory to the Company,
                  designate a third party who, in the event of the death of the
                  Optionee, shall thereafter be entitled to exercise the Option.

         (e)      Vesting.  The total number of shares of stock subject to an
                  Option may, but need not, be allotted in periodic installments
                  (which may, but need not, be equal). The Stock Option
                  Agreement may provide that from time to time during each of
                  such installment periods, the Option, notwithstanding Section
                  6(i), may become exercisable ("vest") with respect to some or
                  all of the shares allotted to that period, and may be
                  exercised with respect to some or all of the shares allotted
                  to such period and/or any prior period as to which the Option
                  became vested but was not fully exercised. The Option may be
                  subject to such other terms and conditions on the time or
                  times when it may be exercised (which may be based on
                  performance or other criteria according to the then applicable
                  resolution of the Company's stockholders) as the Vorstand in
                  co-ordination with the Aufsichtsrat may deem appropriate.

         (f)      Termination of Employment or Relationship as a Director.  In
                  the event an Optionee's Continuous Status as an Employee or
                  Director terminates (other than upon the Optionee's death or
                  disability, as defined below), the Optionee may exercise his
                  or her Option to the extent that the Optionee was entitled to
                  exercise it according

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                                      - 7-

                  to Sections 6(e) and 6(i) at the date of termination but only
                  within such period of time ending on the earlier of (i) the
                  date three (3) months after the termination of the Optionee's
                  Continuous Status as an Employee or Director (or such longer
                  or shorter period as specified in the Stock Option Agreement)
                  or (ii) the expiration of the term of the Option as set forth
                  in the Stock Option Agreement. However, notwithstanding the
                  foregoing, should the date of termination be prior to that of
                  the expiration of the two-year waiting period mentioned in
                  Section 6(i), the Optionee may exercise his or her Option at
                  the date of expiration of such waiting period but only within
                  three (3) months after the expiration of the two-year waiting
                  period; provided, however, that, unless otherwise provided in
                  the Code or the Treasury regulations thereunder, any such
                  Option which was intended to be an Incentive Stock Option
                  which is exercised at any time after three (3) months of the
                  termination of the Optionee's Continuous Status as an Employee
                  shall no longer qualify as an Incentive Stock Option, but
                  shall be treated as, and have the consequences of, a
                  Nonstatutory Stock Option. If the Optionee does not exercise
                  his or her Option within the time required, the Option shall
                  terminate, and the shares covered by such Option shall revert
                  to and again become available for issuance under the Plan
                  subject, however, in the case of Incentive Stock Options to
                  any limitation required under the Code.

         (g)      Disability of Optionee.  In the event an Optionee's Continuous
                  Status as an Employee or Director terminates as a result of
                  the Optionee's disability (within the meaning of Section
                  22(e)(3) of the Code), the Optionee may exercise his or her
                  Option to the extent that the Optionee was entitled to
                  exercise it according to Sections 6(e) and 6(i) at the date of
                  termination, but only within such period of time ending on the
                  earlier of (i) the date three (3) months following such
                  termination (or such longer or shorter period as specified in
                  the Stock Option Agreement ) or (ii) the expiration of the
                  term of the Option as set forth in the Stock Option Agreement;
                  provided, however, should the date of termination be prior to
                  that of the expiration of the two-year waiting period
                  mentioned in Section 6(i), the Optionee may exercise his or
                  her Option at the date of expiration of such waiting period
                  but only within three (3) months after the expiration of the
                  two-year waiting period; provided further, however, that,
                  unless otherwise provided in the Code or the Treasury
                  regulations thereunder, any such Option which was intended to
                  be an Incentive Stock Option which is exercised at any time
                  after one year of the termination of the Optionee's Continuous
                  Status as an Employee shall no longer qualify as an Incentive
                  Stock Option but shall be treated as, and have the
                  consequences of, a Nonstatutory Stock Option. If, at the date
                  of termination, the Optionee is not entitled to exercise his
                  or her entire Option, the shares covered by the unexercisable
                  portion of the Option shall revert to and again become
                  available for issuance under the Plan subject, however, in the
                  case of Incentive Stock Options to any limitations under the
                  Code. If, after termination, the Optionee does not exercise
                  his or her Option within the time

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                                     - 8 -

                  specified herein, the Option shall terminate, and the shares
                  covered by such Option shall revert to and again become
                  available for issuance under the Plan subject, however, in the
                  case of Incentive Stock Options to any limitations under the
                  Code.

         (h)      Death of Optionee.  In the event of the death of an Optionee
                  during, or within a period specified in the Option after the
                  termination of, the Optionee's Continuous Status as an
                  Employee or Director, the Option may be exercised to the
                  extent the Optionee was entitled to exercise it according to
                  Sections 6(e) and 6(i)at the date of death by the Optionee's
                  estate, by a person who acquired the right to exercise the
                  Option by bequest or inheritance or by a person designated to
                  exercise the Option upon the Optionee's death pursuant to
                  Section 6(d), but only within the period ending on the earlier
                  of (i) the date six (6) months following the date of death (or
                  such longer or shorter period as specified in the Stock Option
                  Agreement) or (ii) the expiration of the term of such Option
                  as set forth in the Stock Option Agreement. However, should
                  the date of termination be prior to that of the expiration of
                  the two-year waiting period mentioned in Section 6(i), the
                  Optionee may exercise his or her Option at the date of
                  expiration of such waiting period but only within the later of
                  six (6) months after the expiration of the two-year waiting
                  period; provided further, however, that, unless otherwise
                  provided in the Code or the Treasury regulations thereunder,
                  any such Option which was intended to be an Incentive Stock
                  Option which is exercised at any time after one year of the
                  termination of the Optionee's Continuous Status as an Employee
                  shall no longer qualify as an Incentive Stock Option but shall
                  be treated as, and have the consequences of, a Nonstatutory
                  Stock Option. If, at the time of death, the Optionee was not
                  entitled to exercise his or her entire Option, the shares
                  covered by the unexercisable portion of the Option shall
                  revert to and again become available for issuance under the
                  Plan subject, however, in the case of Incentive Stock Options
                  to any limitations under the Code. If, after death, the Option
                  is not exercised within the time specified herein, the Option
                  shall terminate, and the shares covered by such Option shall
                  revert to and again become available for issuance under the
                  Plan subject, however, in the case of Incentive Stock Options
                  to any limitations under the Code.

         (i)      Exercise.  Before any Option subject to the Plan may be
                  exercised according to Section 193 para. 2 cif. 4 AktG a
                  mandatory minimum waiting period of two years, counted as of
                  the date of the Stock Option Grant, has to be observed. No
                  shares shall be issued before the aforementioned waiting
                  period has expired.

                  The stock options may only be exercised if the Closing Price
                  develops better than a reference index (performance goal
                  pursuant to Section 193 Para. 2 No. 4 of the German Stock
                  Corporation Act).

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                  Closing Price is the price of one GPCB Share in the XETRA
                  closing auction on the Frankfurt Stock Exchange.

                  Reference index shall be the stock index TecDax of the
                  Frankfurt Stock Exchange (the "Price Index").

                  The Price Index as well as the Closing Price on the date on
                  which the stock options are issued shall serve as the starting
                  point for the performance measurement. The stock options may
                  only be exercised if the Closing Price has developed better
                  than the Price Index. The relevant comparison date for this
                  shall be the date four weeks prior to the exercise of the
                  stock options.

                  Options may be exercised by submitting a written notice of
                  exercise to the Company signed by the proper person or by any
                  other form of notice approved by the Vorstand together with
                  payment in full as specified in Section 6(c) for the number of
                  shares for which the Option is exercised.

                  Options may not be exercised from the date on which the
                  Company submits an offer to its shareholders for the
                  subscription of new shares or convertible bonds with
                  conversion or option rights by written notice to all
                  shareholders or through an announcement in the publications
                  named in the Company's Articles of Association or in a
                  mandatory stock exchange publication of the Frankfurt Stock
                  Exchange until the end of the last day of the subscription
                  period.

                  Furthermore, the Options may, each time, only be exercised
                  within a period of six weeks after publication of the
                  quarterly reports or annual financial statements (exercise
                  period pursuant to Sect. 193 Para. 2 No. 4 AktG). As a matter
                  of principle, exercise of the Options shall be excluded from
                  December 24 to December 31 of each calendar year.

         (j)      Public Offering.  Each Optionee, for as long as any
                  shareholder of the Company who had previously been an
                  Optionee, may be restricted from selling shares in connection
                  with any public offering of shares by the Company, subject to
                  the same restrictions should he exercise his Options during
                  the period within which such former Optionee is so restricted.

         (k)      Vorstand Discretion.  Except as otherwise  provided in the
                  Plan, each Stock Option Grant may be made alone or in relation
                  to any other Stock Option Grant. The terms of each Stock
                  Option Grant need not be identical, and the Vorstand need not
                  treat Optionees uniformly.

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7.       COVENANTS OF THE COMPANY.

         The Company shall seek to obtain from each regulatory commission or
         agency having jurisdiction over the Plan such authority as may be
         required to issue and sell shares of stock upon exercise of the Stock
         Option Grant; provided, however, that this undertaking shall not
         require the Company to register under the Securities Act of 1933, as
         amended (the "Securities Act") either the Plan, any Stock Option Grant
         or any stock issued or issuable pursuant to any such Stock Option
         Grant. If, after reasonable efforts, the Company is unable to obtain
         from any such regulatory commission or agency the authority which
         counsel for the Company deems necessary for the lawful issuance and
         sale of stock under the Plan, the Company shall be relieved from any
         liability for failure to issue and sell stock upon exercise of such
         Stock Option Grants unless and until such authority is obtained.

8.       USE OF PROCEEDS FROM STOCK.

         Proceeds from the sale of stock pursuant to Stock Option Grants shall
         constitute capital reserves of the Company.

9.       MISCELLANEOUS.

         (a)      The Vorstand in coordination with the Aufsichtsrat shall have
                  the power to accelerate the time at which a Stock Option Grant
                  may first be exercised or the time during which a Stock Option
                  Grant or any part thereof will vest pursuant to Section 6(e),
                  notwithstanding the provisions in the Stock Option Grant
                  stating the time at which it may first be exercised or the
                  time during which it will vest.

         (b)      Neither an Employee or Director nor any person to whom a Stock
                  Option Grant is transferred under Section 6(d) shall be deemed
                  to be the holder of, or to have any of the rights of a holder
                  with respect to, any shares subject to such Stock Option Grant
                  unless and until such person has satisfied all requirements
                  for exercise of the Stock Option Grant pursuant to its terms.

         (c)      Nothing in the Plan or any instrument executed or Stock Option
                  Grant granted pursuant thereto shall confer upon any Employee
                  or Director any right to continue in the employment of the
                  Company or any Affiliate (or to continue acting as a Director)
                  or shall affect the right of the Company or any Affiliate to
                  terminate the employment of any such person with or without
                  cause.

         (d)      For so long as the Code provides, to the extent that the
                  aggregate Fair Market Value (determined at the time of grant)
                  of stock with respect to which Incentive Stock Options are
                  exercisable for the first time by any Option holder during any
                  calendar

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                                     - 11 -

                  year under all stock plans of the Company and its Affiliates
                  exceeds one hundred thousand dollars ($100,000), the Options
                  or portions thereof which exceed such limit (according to the
                  order in which they were granted) shall be treated as
                  Nonstatutory Stock Options.

         (e)      The Company may require any person to whom an Option is
                  granted, or any person to whom an Option is transferred
                  pursuant to Section 6(d), as a condition of exercising or
                  acquiring stock under any Stock Option Grant,(i) to give
                  written assurances satisfactory to the Company as to such
                  person's knowledge and experience in financial and business
                  matters and/or to employ a purchaser representative reasonably
                  satisfactory to the Company who is knowledgeable and
                  experienced in financial and business matters, and that he or
                  she is capable of evaluating, alone or together with the
                  purchaser representative, the merits and risks of exercising
                  the Stock Option Grant; and (ii) to give written assurances
                  satisfactory to the Company stating that such person is
                  acquiring the stock subject to the Stock Option Grant for such
                  person's own account and not with any present intention of
                  selling or otherwise distributing the stock. The foregoing
                  requirements, and any assurances given pursuant to such
                  requirements, shall be inoperative if (i) the issuance of the
                  shares upon the exercise or acquisition of stock under the
                  Stock Option Grant has been registered under a then currently
                  effective registration statement under the Securities Act, or
                  (ii) as to any particular requirement, a determination is made
                  by counsel for the Company that such requirement need not be
                  met in the circumstances under the then applicable securities
                  laws. The Company may, upon advice of counsel to the Company,
                  place legends on stock certificates issued under the Plan as
                  such counsel deems necessary or appropriate in order to comply
                  with applicable securities laws, including, but not limited
                  to, legends restricting the transfer of the stock.

         (f)      To the extent provided by the terms of a Stock Option
                  Agreement, the person to whom an Option is granted must
                  satisfy any federal, state or local tax withholding obligation
                  relating to the exercise or acquisition of stock under the
                  Plan by any of the following means or by a combination of such
                  means: (i) tendering a cash payment; (ii) authorizing the
                  Company or Subsidiary to withhold shares from the shares
                  otherwise issuable to the participant as a result of the
                  exercise or acquisition of stock under the Plan; or (iii)
                  delivering to the Company or Subsidiary owned and unencumbered
                  shares of the Company. Payment of such withholding obligation
                  shall be made no later than the date of the event creating the
                  tax liability.

10.      ADJUSTMENTS UPON CHANGES IN STOCK.

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                                     - 12 -

         (a)      In the event of a merger of the Company with and into another
                  entity where the Company is not the surviving entity
                  (Verschmelzung durch Aufnahme), a change in the legal form of
                  the Company (Umwandlung), a change in the notional nominal
                  value of the shares of stock in the Company and similar
                  measures leading to the cancellation or conversion of the
                  shares of stock underlying the Options, each outstanding
                  Option shall be substituted by the right to purchase at the
                  exercise price a specific number of shares of stock or other
                  interests in the Company or its successor entity (calculated
                  on the basis of the Fair Market Value at the time of any such
                  change) substituting the shares of stock in the Company. The
                  remaining provisions of this Plan shall remain unaffected.

         (b)      In the event of a capital decrease by means of amalgamating
                  the ordinary shares in the Company (Kapitalherabsetzung durch
                  Zusammenlegung, ss. 222(4) AktG) or by means of cancellation
                  (Einziehung) of ordinary shares (ss. 237 AktG), the
                  subscription ratio (as specified in the applicable Stock
                  Option Grant) shall be adjusted by multiplying it with the
                  coefficient resulting from the division of the number of
                  shares of stock after such capital decrease by the number of
                  shares of stock prior to such capital decrease. Fractional
                  shares of stock resulting from any such capital decrease will
                  not be delivered upon exercise of the Options.

         (c)      In case of a capital increase out of retained  earnings by the
                  Company, any existing conditional capital will be increased
                  according to Section 218 AktG in the same ratio as the
                  Company's share capital, instead of a deduction of the
                  exercise price. The right of an Option holder to purchase
                  stock of the Company, at the point in time of exercise, will
                  increase in the same ratio as the Company's share capital
                  increase.

11.      AMENDMENT OF THE PLAN AND STOCK OPTION GRANTS.

         (a)      The Vorstand in coordination with the Aufsichtsrat at any
                  time, and from time to time, may amend the Plan and/or some or
                  all outstanding Stock Option Grants granted under the Plan.
                  However, except as provided in Section 10 relating to
                  adjustments upon changes in stock, no amendment shall be
                  effective unless approved by the stockholders of the Company
                  to the extent stockholder approval is necessary for the Plan
                  to satisfy the requirements of the Aktiengesetz as well as of
                  Section 422 of the Code, or any security laws or any Nasdaq or
                  securities exchange listing requirements.

         (b)      The Vorstand in coordination with the Aufsichtsrat may in its
                  discretion submit any other amendment to the Plan for
                  stockholder approval, including, but not limited to,
                  amendments to the Plan intended to satisfy the requirements of
                  the Aktiengesetz and/or Section 162(m) of the Code and the
                  regulations promulgated thereunder

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                                     - 13 -

                  regarding the exclusion of performance-based compensation from
                  the limit on corporate deductibility of compensation paid to
                  certain executive officers.

         (c)      It is expressly contemplated that the Vorstand in coordination
                  with the Aufsichtsrat may amend the Plan in any respect the
                  Vorstand deems necessary or advisable to provide eligible
                  Employees or Directors with the maximum benefits provided or
                  to be provided under the provisions of the Code and the
                  regulations promulgated thereunder relating to Incentive Stock
                  Options and/or to bring the Plan and/or Incentive Stock
                  Options granted under it into compliance therewith.

         (d)      Rights and obligations under any Option granted before
                  amendment of the Plan shall not be impaired by any Plan
                  amendment unless the Company requests the consent of the
                  person to whom the Stock Option Grant was granted and such
                  person consents in writing.

         (e)      The Vorstand in coordination with the Aufsichtsrat at any
                  time, and from time to time, may amend the terms of any one or
                  more Stock Option Grant; provided, however, that the rights
                  and obligations under any Stock Option Grant shall not be
                  impaired by any such amendment unless (i) the Company requests
                  the consent of the person to whom the Stock Option Grant was
                  granted and (ii) such person consents in writing.

12.      TERMINATION OR SUSPENSION OF THE PLAN.

         (a)      The Vorstand in coordination with the Aufsichtsrat may suspend
                  or terminate the Plan at any time. Unless sooner terminated,
                  the Plan shall terminate on the last business day of May 31,
                  2010. No Options may be granted under the Plan while the Plan
                  is suspended or after it is terminated but any outstanding
                  option may be exercised ten (10) years from the grant date.

         (b)      Rights and obligations under any Option granted while the Plan
                  is in effect shall not be impaired by suspension or
                  termination of the Plan, except with the consent of the person
                  to whom the Stock Option Grant was granted.

13.      EFFECTIVE DATE OF PLAN.

         The Plan is effective as of the approval of the shareholders on June 8,
         2005; provided, however, that, following a Redomociling, no Stock
         Option Grant granted to an Optionee designated by the Vorstand as
         subject to Section 162(m) of the Code shall become exercisable, vested
         or realizable, as applicable to such Stock Option Grant, unless and
         until the Plan has been approved by the Company's stockholders to the
         extent stockholder

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                                     - 14 -

         approval is required by Section 162(m) in the manner required under
         Section 162(m) (including the vote required under Section 162(m)).

Martinsried/Planegg, May 24, 2006

                                                      GPC Biotech AG
                                                       Der Vorstand

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