SECOND MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING, AND ASSIGNMENT OF LEASES AND RENTS SECURING GUARANTY

Recording requested by:

And when recorded mail to:

▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.

THIS SECOND MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING, AND ASSIGNMENT OF LEASES AND RENTS SECURING GUARANTY (NEW JERSEY) (this “Security Instrument”) is given as of January 24, 2014, by THE GC NET LEASE (▇▇▇▇▇▇) INVESTORS, LLC, a Delaware limited liability company (“Mortgagor”), in favor of THE VARIABLE ANNUITY LIFE INSURANCE COMPANY, a Texas corporation (“VALIC”), and NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., a Pennsylvania corporation (“NUF”), as co-lenders (collectively, “Mortgagee”).

ARTICLE 1

PARTIES, PROPERTY, AND DEFINITIONS

The following terms and references shall have the meanings indicated:

1.1 First Security Instrument: That certain Mortgage, Security Agreement, Fixture Filing, and Assignment of Leases and Rents (New Jersey) dated as of the date hereof, given by Mortgagor to Mortgagee, and recorded on or about the date hereof in the Official Records of Somerset County, New Jersey, as amended, modified, amended and restated, replaced or supplemented from time to time.

1.2 Loan: The loan from Mortgagee to Mortgagor evidenced by the Note.

1.3 Mortgagee: The Mortgagee named in the introductory paragraph of this Security Instrument, whose legal address is c/o AIG Investments, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇^▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, together with any future holder of the Note.

1.4 Mortgagor: The Mortgagor named in the introductory paragraph of this Security Instrument (Secretary of State File No. 5369912), whose legal address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.

1.5 Note: Collectively, (i) Mortgagor’s promissory note of even date herewith, payable to the order of VALIC in the principal face amount of $17,527,200 (the “VALIC Note”), and (ii) Mortgagor’s promissory note of even date herewith, payable to the order of NUF in the principal face amount of $8,632,800 (the “NUF Note”) (and in the aggregate collective amount of $26,160,000), together with all renewals, extensions and modifications of such promissory notes, as the same may be amended, modified, amended and restated, replaced or supplemented from time to time. The NUF Note and the VALIC Note are also sometimes referred collectively herein as the “Notes.” All terms and provisions of the Notes are incorporated by this reference in this Security Instrument.

1.6 Property: All of Mortgagor’s right, title and interest (if any) in the tract or tracts of land described in Exhibit A attached hereto, together with all of Mortgagor’s right, title and interest (if any) in the “Property” as described in the First Security Instrument.

1.7 Secured Obligations: All present and future obligations of Mortgagor to Mortgagee evidenced by or contained in the Secured Guaranty, whether stated in the form of promises, covenants, representations, warranties, conditions, or prohibitions or in any other form.

All other initially capitalized terms that are used herein but that are not otherwise defined in this Security Instrument shall have the meanings given to such terms in the First Security Instrument.

ARTICLE 2
GRANTING CLAUSE

2.1 Grant to Mortgagee. As security for the Secured Obligations, Mortgagor hereby grants, bargains, sells, conveys, mortgages and warrants unto Mortgagee, the entire right, title, interest and estate of Mortgagor in and to the Property, whether now owned or hereafter acquired; TO HAVE AND TO HOLD the same, together with all and singular the rights, hereditaments, and appurtenances in anywise appertaining or belonging thereto, unto Mortgagee and Mortgagee’s successors, substitutes and assigns forever.

2.2 Security Interest to Mortgagee. As additional security for the Secured Obligations, Mortgagor hereby grants to Mortgagee a security interest in the Property, Chattels and Intangible Personalty. To the extent any of the Property, Chattels or Intangible Personalty may be or have been acquired with funds advanced by Mortgagee under the Loan Documents, this security interest is a purchase money security interest. This Security Instrument constitutes a security agreement under the Uniform Commercial Code of the State (the “Code”) with respect to any part of the Property, Chattels and Intangible Personalty that may or might now or hereafter be or be deemed to be personal property, fixtures or property other than real estate (all collectively hereinafter called “Collateral”); all of the terms, provisions, conditions and agreements contained in this Security Instrument pertain and apply to the Collateral as fully and to the same extent as to any other property comprising the Property, and the following provisions of this Section shall not limit the generality or applicability of any other provisions of this Security Instrument but shall be in addition thereto:

(a) The Collateral shall be used by Mortgagor solely for business purposes, and all Collateral (other than the Intangible Personalty) shall be installed upon the real estate comprising part of the Property for Mortgagor’s own use or as the equipment and furnishings furnished by Mortgagor, as landlord, to tenants of the Property;

(b) Subject to Section 5.7 below, the Collateral (other than the Intangible Personalty) shall be kept at the real estate comprising a part of the Property, and shall not be removed therefrom without the consent of Mortgagee (being the Secured Party as that term is used in the Code); and the Collateral (other than the Intangible Personalty) may be affixed to such real estate but shall not be affixed to any other real estate;

(c) No financing statement covering any of the Collateral or any proceeds thereof is on file in any public office; and Mortgagor will, at its cost and expense, upon demand, furnish to Mortgagee such further information and will execute and deliver to Mortgagee such financing statements and other documents in form satisfactory to Mortgagee and will do all such acts and things as Mortgagee may at any time or from time to time reasonably request or as may be necessary or appropriate to establish and maintain a perfected first-priority security interest in the Collateral as security for the Secured Obligations, subject to no adverse liens or encumbrances; and Mortgagee is hereby authorized to execute and/or to file any such financing statements or other documents; and Mortgagor will pay the cost of filing the same or filing or recording such financing statements or other documents and this instrument in all public offices wherever filing or recording is deemed by Mortgagee to be necessary or desirable;

(d) The terms and provisions contained in this Section and in Section 7.6 of this Security Instrument shall, unless the context otherwise requires, have the meanings and be construed as provided in the Code; and

(e) This Security Instrument shall be effective as a financing statement filed as a fixture filing with respect to all fixtures included within the Property and is to be filed for record in the office of the recorder of each county where any part of the Property (including said fixtures) is situated. This Security Instrument shall also be effective as a financing statement covering any other Property and may be filed in any other appropriate filing or recording office. The mailing addresses of Mortgagor and the Mortgagee are set forth in Article 1 of this Security Instrument. A carbon, photographic or other reproduction of this Security Instrument or any financing statement relating to this Security Instrument shall be sufficient as a financing statement. The filing of this Security Instrument in the real estate records of the county where the Property is located shall constitute a fixture filing in accordance with the Code. Information concerning the security interests created hereby may be obtained at the addresses set forth in Article 1 of this Security Instrument. Mortgagor is the “Debtor” and Mortgagee is the “Secured Party” (as those terms are defined and used in the Code) insofar as this Security Instrument constitutes a financing statement.

(f) Notwithstanding anything to the contrary contained in this Security Instrument:

(i) This Security Instrument, and all conveyances, assignments and grants of security interests hereunder are subject and subordinate to the conveyances, assignments and grants of security interests made in the First Security Instrument;

(ii) Mortgagee agrees that this Security Instrument shall constitute a Permitted Exception under the Security Instrument, and shall not trigger any violation of the due on encumbrance provisions of the Security Instrument;

(iii) In the event that Mortgagor complies with any representation, warranty, agreement, undertaking, covenant or indemnity under the First Security Instrument, Mortgagor shall be deemed to have complied with the corresponding or duplicative representation, warranty, agreement, undertaking, covenant or indemnity; and

(iv) In the event that Mortgagee gives any approval, consent or waiver with respect to any provision or matter set forth in or contemplated by the First Security Instrument, Mortgagee shall be deemed to have given such approval, consent or waiver with respect to any corresponding or duplicative provision or matter set forth in or contemplated by this Security Instrument.

ARTICLE 3
MORTGAGOR’S REPRESENTATIONS AND WARRANTIES

3.1 Warranty of Title. Mortgagor represents and warrants to Mortgagee that:

(a) Mortgagor has good, marketable and indefeasible fee simple title to the Property, and such fee simple title is free and clear of all liens, encumbrances, security interests and other claims whatsoever, subject only to the Permitted Exceptions, and the First Security Instrument;

(b) Mortgagor is the sole and absolute owner of the Chattels and the Intangible Personalty, free and clear of all liens, encumbrances, security interests and other claims whatsoever, subject only to the Permitted Exceptions, and the First Security Instrument;

(c) This Security Instrument is a valid and enforceable lien and security interest on the Property, Chattels and Intangible Personalty, subject only to the Permitted Exceptions, and the First Security Instrument; and

(d) Subject to the Permitted Exceptions, Mortgagor, for itself and its successors and assigns, hereby agrees to warrant and forever defend, all and singular all of the Property and property interests granted and conveyed pursuant to this Security Instrument, against every person whomsoever lawfully claiming, or to claim, the same or any part thereof.

The representations, warranties and covenants contained in this Section 3.1 shall survive foreclosure of this Security Instrument, and shall inure to the benefit of and be enforceable by any person who may acquire title to the Property, the Chattels, or the Intangible Personalty pursuant to any such foreclosure.

3.2 Due Authorization. If Mortgagor is other than a natural person, then each individual who executes this document on behalf of Mortgagor represents and warrants to Mortgagee that such execution has been duly authorized by all necessary corporate, partnership, limited liability company or other action on the part of Mortgagor. Mortgagor represents that Mortgagor has obtained all consents and approvals required in connection with the execution, delivery and performance of this Security Instrument.

3.3 Other Representations and Warranties. Mortgagor represents and warrants to Mortgagee as of the date hereof, as follows:

(a) Mortgagor is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware. Mortgagor is duly authorized to transact business in and is in good standing under the laws of the State of New Jersey. The sole Controlling Persons of Mortgagor are Guarantor, and The GC Member;

(b) The execution, delivery and performance by Mortgagor of this Security Instrument and the Secured Guaranty are within Mortgagor’s power and authority and have been duly authorized by all necessary action;

(c) This Security Instrument is, and the Secured Guaranty will, when delivered hereunder, be valid and binding obligations of Mortgagor enforceable against Mortgagor in accordance with their respective terms, except as limited by equitable principles and bankruptcy, insolvency and similar laws affecting creditors’ rights;

(d) The execution, delivery and performance by Mortgagor of the Secured Guaranty and this Security Instrument will not contravene any contractual or other restriction binding on or affecting Mortgagor or any Controlling Person will not constitute a default under Mortgagor’s operating agreement or other instrument to which Mortgagor is a party or by which Mortgagor may be bound or affected and will not result in or require the creation of any lien, security interest, other charge or encumbrance (other than pursuant hereto) upon or with respect to any of its properties;

(e) The execution, delivery and performance by Mortgagor of the Secured Guaranty and this Security Instrument does not violate or contravene any applicable law;

(f) No authorization, approval, consent or other action by, and no notice to or filing with, any court, governmental authority or regulatory body is required for the due execution, delivery and performance by Mortgagor of any of the Secured Guaranty and this Security Instrument or the effectiveness of any assignment of any of Mortgagor’s rights and interests of any kind to Mortgagee;

(g) No part of the Property, Chattels, or Intangible Personalty is in the hands of a receiver, no application for a receiver is pending with respect to any portion of the Property, Chattels, or Intangible Personalty, and no part of the Property, Chattels, or Intangible Personalty is subject to any foreclosure or similar proceeding;

(h) Neither Mortgagor nor any Controlling Person has made any assignment for the benefit of creditors, nor has Mortgagor or any Controlling Person filed, or had filed against it, any petition in bankruptcy;

(i) There is no pending or, to the best of Mortgagor’s knowledge, threatened, litigation, action, proceeding or investigation, including, without limitation, any condemnation proceeding, against Mortgagor, any Controlling Person or the Property before any court, governmental or quasi-governmental, arbitrator or other authority;

(j) Mortgagor is a “non-foreign person” within the meaning of Sections 1445 and 7701 of the United States Internal Revenue Code of 1986, as amended, and the regulations issued thereunder;

(k) Access to and egress from the Property are available and provided by public streets, or valid easements appurtenant thereto and Mortgagor has no knowledge of any federal, state, county, municipal or other governmental plans to change the highway or road system in the vicinity of the Property or to restrict or change access from any such highway or road to the Property;

(l) All public utility services necessary for the operation of all improvements constituting part of the Property for their intended purposes are available at the boundaries of the land constituting part of the Property, including water supply, storm and sanitary sewer facilities, and natural gas, electric, telephone and cable television facilities;

(m) The Property is located in a zoning district designated “OR” Office Research District by ▇▇▇▇▇▇ Township, New Jersey. Such designation permits the development, use and operation of the Property as it is currently operated as a permitted, and not as a non-conforming use. The Property complies in all respects with all zoning ordinances, regulations, requirements, conditions and restrictions, including but not limited to deed restrictions and restrictive covenants, applicable to the Property;

(n) There are no special or other assessments for public improvements or otherwise now affecting the Property, nor does Mortgagor know of any pending or threatened special assessments affecting the Property or any contemplated improvements affecting the Property that may result in special assessments. There are no tax abatements or exceptions affecting the Property;

(o) Mortgagor and each Controlling Person has filed all tax returns it is required to have filed, and has paid all taxes as shown on such returns or on any assessment received pertaining to the Property;

(p) Mortgagor has not received any written notice from any governmental body having jurisdiction over any part of the Property as to any violation of any applicable law, or any notice from any insurance company or inspection or rating bureau setting forth any requirements as a condition to the continuation of any insurance coverage on or with respect to the Property or the continuation thereof at premium rates existing at present which have not been remedied or satisfied;

(q) Neither Mortgagor nor any Controlling Person is in default, in any manner which would adversely affect its properties, assets, operations or condition (financial or otherwise), in the performance, observance or fulfillment of any of the obligations, covenants or conditions set forth in any agreement or instrument to which it is a party or by which it or any of its properties, assets or revenues are bound;

(r) Except as set forth in the Lease Certificate, there are no occupancy rights (written or oral), Leases or tenancies presently affecting any part of the Property. The Lease Certificate contains a true and correct description of all Leases presently affecting the Property. No written or oral agreements or understandings exist between Mortgagor and the tenants under the Leases described in the Lease Certificate that grant such tenants any rights greater than those described in the Lease Certificate or that are in any way inconsistent with the rights described in the Lease Certificate;

(s) There are no options to purchase, purchase contracts or other similar agreements of any type (written or oral) presently affecting any part of the Property;

(t) There exists no brokerage agreement with respect to the purchase of any part of the Property;

(u) Except as otherwise disclosed to Mortgagee in writing prior to the date hereof, (i) there are no contracts presently affecting the Property (“Contracts”) having a term in excess of one hundred eighty (180) days or not terminable by Mortgagor (without penalty) on thirty (30) days’ notice; (ii) Mortgagor has heretofore delivered to Mortgagee true and correct copies of each of the Contracts together with all amendments thereto; (iii) Mortgagor is not in default of any obligations under any of the Contracts; and (iv) the Contracts represent the complete agreement between Mortgagor and such other parties as to the services to be performed or materials to be provided thereunder and the compensation to be paid for such services or materials, as applicable, and except as otherwise disclosed herein, such other parties possess no unsatisfied claims against Mortgagor. Mortgagor is not in default under any of the Contracts and no event has occurred which, with the passing of time or the giving of notice, or both, would constitute a default under any of the Contracts;

(v) Mortgagor or its tenants have obtained all Permits necessary for the operation, use, ownership, development, occupancy and maintenance of the Property as it is currently being operated. None of the Permits has been suspended or revoked, and all of the Permits are in full force and effect and are fully paid for, and Mortgagor has made or will make application for renewals of any of the Permits prior to the expiration thereof;

(w) All insurance policies held by Mortgagor relating to or affecting the Property are in full force and effect and shall remain in full force and effect until all Secured Obligations are satisfied. Mortgagor has not received any notice of default or notice terminating or threatening to terminate any such insurance policies. Mortgagor has made or will make application for renewals of any of such insurance policies prior to the expiration thereof;

(x) Mortgagor currently complies with ERISA. Neither the making of the Loan nor the exercise by Mortgagee of any of its rights under the Loan Documents constitutes or will constitute a non-exempt, prohibited transaction under ERISA; and

(y) Mortgagor’s exact legal name is correctly set out in the introductory paragraph of this Security Instrument. Mortgagor’s Secretary of State File Number is correctly set forth in the definition of “Mortgagor” set forth in Article 1 hereof. Mortgagor’s location (as such term is used in Section 5.8 hereof) is the State of Delaware.

3.4 Continuing Effect. Mortgagor shall be liable to Mortgagee for any damage suffered by Mortgagee if any of the foregoing representations are inaccurate as of the date hereof, regardless when such inaccuracy may be discovered by, or result in harm to, Mortgagee. Mortgagor further represents and warrants that the foregoing representations and warranties, as well as all other representations and warranties of Mortgagor to Mortgagee relative to the Loan Documents, shall survive termination of this Security Instrument.

ARTICLE 4
MORTGAGOR’S AFFIRMATIVE COVENANTS

4.1 Intentionally Deleted.

4.2 Performance of Secured Obligations. Mortgagor will promptly perform and comply with all other covenants, conditions, and prohibitions required of Mortgagor by the terms of the Secured Guaranty.

4.3 Other Encumbrances. Mortgagor will promptly perform and comply with all covenants, conditions, and prohibitions required of Mortgagor in connection with any other encumbrance affecting the Property, the Chattels, or the Intangible Personalty, or any part thereof, or any interest therein, regardless of whether such other encumbrance is superior or subordinate to the lien hereof.

4.4 Payment of Taxes.

(a) Property Taxes. Mortgagor will (i) pay or cause to be paid, before delinquency, all taxes and assessments, general or special, which may be levied or imposed at any time against Mortgagor’s interest and estate in the Property, the Chattels, or the Intangible Personalty, and (ii) within thirty (30) days after each payment of any such tax or assessment, Mortgagor will deliver to Mortgagee, without notice or demand, an official receipt for such payment if issued by the taxing authority and if not, cancelled checks or other reasonable evidence of payment. At Mortgagee’s option, Mortgagee may retain the services of a firm to monitor the payment of all taxes and assessments relating to the Property, the cost of which shall be borne by Mortgagor.

(b) Intentionally Deleted.

(c) Intangible Taxes. If by reason of any statutory or constitutional amendment or judicial decision adopted or rendered after the date hereof, any tax, assessment, or similar charge is imposed against the Note or against Mortgagee, or against any interest of Mortgagee in any real or personal property encumbered hereby (but excluding any taxes in the nature of income taxes on the overall income or profits of Mortgagee to which Mortgagee may be subject), Mortgagor will pay such tax, assessment, or other charge before delinquency and will pay to Mortgagee any and all costs, expenses, or diminution of income incurred by Mortgagee in connection therewith. In the event Mortgagor is unable to do so, either for economic reasons or because the legal provisions or decisions creating such tax, assessment or charge forbid Mortgagor from doing so, then the Note will, at Mortgagee’s option, become due and payable in full upon ninety (90) days’ notice to Mortgagor, without prepayment premium or penalty.

(d) Right to Contest. Notwithstanding any other provision of this Section 4.4, Mortgagor will not be deemed to be in default solely by reason of Mortgagor’s failure to pay any tax, assessment or similar governmental charge so long as, in Mortgagee’s judgment, each of the following conditions is satisfied:

(i) Mortgagor and/or Verizon Tenant is engaged in and diligently pursuing in good faith administrative or judicial proceedings appropriate to contest the validity or amount of such tax, assessment, or charge; and

(ii) The payment of such tax, assessment, or charge would necessarily and materially prejudice Mortgagor’s and/or Verizon Tenant’s prospects for success in such proceedings; and

(iii) Nonpayment of such tax, assessment, or charge will not result in the loss or forfeiture of any property encumbered hereby or any interest of Mortgagee therein; and

(iv) Mortgagor deposits or causes to be deposited with Mortgagee, as security for such payment which may ultimately be required, a sum equal to the amount of the disputed tax, assessment or charge plus the interest, penalties, advertising charges, and other costs which Mortgagee estimates are likely to become payable if such contest is unsuccessful.

If Mortgagee determines that any one or more of such conditions is not satisfied or is no longer satisfied, Mortgagor will pay the tax, assessment, or charge in question, together with any interest and penalties thereon, within ten (10) days after Mortgagee gives notice of such determination.

4.5 Maintenance of Insurance.

(a) Coverages Required. Mortgagor shall maintain or cause to be maintained, with insurance companies or associations satisfying the requirements of the Insurance Agreement, all insurance required under the terms of the Insurance Agreement, and shall comply with each and every covenant and agreement contained in the Insurance Agreement, the provisions of which are hereby incorporated by this reference.

(b) Intentionally Deleted.

(d) Application of Hazard Insurance Proceeds. Mortgagor shall promptly notify Mortgagee of any damage or casualty to all or any portion of the Property or Chattels. Mortgagee may participate in all negotiations and appear and participate in all judicial arbitration proceedings concerning any insurance proceeds which may be payable as a result of such casualty or damage, and may, in Mortgagee’s sole discretion, compromise or settle, in the name of Mortgagee, Mortgagor, or both any claim for any such insurance proceeds. Any such insurance proceeds shall be paid to Mortgagee and shall be applied first to reimburse Mortgagee for all costs and expenses, including attorneys’ fees, incurred by Mortgagee in connection with the collection of such insurance proceeds. The balance of any insurance proceeds received by Mortgagee with respect to an insured casualty may (subject to the terms of any Approved Lease or subordination, non-disturbance and attornment agreement), in Mortgagee’s sole discretion, either (i) be retained and applied by Mortgagee toward payment of the Secured Obligations, or (ii) be paid over, in whole or in part and subject to such conditions as Mortgagee may impose, to Mortgagor to pay for repairs or replacements necessitated by the casualty; provided, however, that if all of the Secured Obligations have been performed or are discharged by the application of less than all of such insurance proceeds, then any remaining proceeds will be paid over to Mortgagor. Notwithstanding the preceding sentence, if (A) no Default or Event of Default shall exist hereunder, and (B) the proceeds received by Mortgagee (together with any other funds delivered by Mortgagor to Mortgagee for such purpose) shall be sufficient, in Mortgagee’s reasonable judgment, to pay for any restoration necessitated by the casualty, and (C) the cost of such restoration shall not exceed $500,000.00, and (D) such restoration can be completed, in Mortgagee’s judgment, at least ninety (90) days prior to the maturity date of the Note, then Mortgagee shall apply such proceeds as provided in clause (ii) of the preceding sentence. Mortgagee will have no obligation to see to the proper application of any insurance proceeds paid over to Mortgagor, nor will any such proceeds received by Mortgagee bear interest or be subject to any other charge for the benefit of Mortgagor. Mortgagee may, prior to the application of insurance proceeds, commingle them with Mortgagee’s own funds and otherwise act with regard to such proceeds as Mortgagee may determine in Mortgagee’s sole discretion. Notwithstanding anything to the contrary set forth in this Security Instrument, Mortgagee agrees that for so long as the Verizon Lease is in full force and effect, the disposition of insurance proceeds for damage or casualty to all or any portion of the Property and restoration of the Property relating thereto shall be governed by the terms and conditions set forth in the Verizon Lease to the extent that such Verizon Lease conflicts with the provisions of this Security Instrument.

(e) Successor’s Rights. Any person who acquires title to the Property or the Chattels upon foreclosure hereunder will succeed to all of Mortgagor’s rights under all policies of insurance maintained pursuant to this Section.

4.6 Maintenance and Repair of Property and Chattels. Mortgagor will at all times maintain or cause the maintenance of the Property and the Chattels in good condition and repair, will diligently prosecute or cause the prosecution of the completion of any building or other improvement which is at any time in the process of construction on the Property, and will (subject to the terms of the Leases) promptly repair, restore, replace, or rebuild, or cause the repair, restoration, replacement or rebuilding of, any part of the Property or the Chattels which may be affected by any casualty or any public or private taking or injury to the Property or the Chattels. All costs and expenses arising out of the foregoing shall be paid by Mortgagor (or Mortgagor shall cause the same to be so paid) whether or not the proceeds of any insurance or eminent domain shall be sufficient therefor. Mortgagor will comply with, or cause the compliance with (or obtain a legally enforceable variance therefrom), all statutes, ordinances, and other governmental or quasi‑governmental requirements and private covenants relating to the ownership, construction, use, or operation of the Property, including but not limited to any environmental or ecological requirements; provided, that so long as Mortgagor is not otherwise in default hereunder, Mortgagor may, upon providing Mortgagee with security reasonably satisfactory to Mortgagee, proceed diligently and in good faith to contest the validity or applicability of any such statute, ordinance, or requirement. Subject to the rights of tenants under the Leases, Mortgagee and any person authorized by Mortgagee may enter and inspect the Property at all reasonable times, and may inspect the Chattels, wherever

located, at all reasonable times. Notwithstanding anything to the contrary set forth in this Security Instrument or any other Loan Document, Mortgagee agrees that for so long as the Verizon Lease is in full force and effect, to the extent Verizon Tenant is obligated to perform certain Property-related operation and maintenance obligations that Mortgagor is obligated to perform pursuant to the Loan Documents, then Mortgagor shall perform or cause Verizon Tenant to perform such obligations; provided, however, that the forgoing is not intended to limit Mortgagor’s liability to Mortgagee for any breach of or default under the Loan Documents if such obligations are not performed.

4.7 Leases. Mortgagor shall timely pay and perform each of its obligations under or in connection with the Leases, and shall otherwise pay such sums and take such action as shall be necessary or required in order to maintain each of the Leases in full force and effect in accordance with its terms. Mortgagor shall immediately furnish to Mortgagee copies of any notices given to Mortgagor by the lessee under any Lease, alleging the default by Mortgagor in the timely payment or performance of its obligations under such Lease and any subsequent communication related thereto. Mortgagor shall also promptly furnish to Mortgagee copies of any notices given to Mortgagor by the lessee under any Lease, extending the term of any Lease, requiring or demanding the expenditure of any sum by Mortgagor (or demanding the taking of any action by Mortgagor), or relating to any other material obligation of Mortgagor under such Lease and any subsequent communication related thereto. Mortgagor agrees that during the existence of any Event of Default, Mortgagee may advance any sum or take any action which Mortgagee believes is necessary or required to maintain the Leases in full force and effect, and all such sums advanced by Mortgagee, together with all costs and expenses incurred by Mortgagee in connection with action taken by Mortgagee pursuant to this Section, shall be due and payable by Mortgagor to Mortgagee upon demand, shall bear interest until paid at the Default Rate (as defined in the Note), and shall be secured by this Security Instrument.

4.8 Eminent Domain; Private Damage. If all or any part of the Property is taken or damaged by eminent domain or any other public or private action, Mortgagor will notify Mortgagee promptly of the time and place of all meetings, hearings, trials, and other proceedings relating to such action. Mortgagee may participate in all negotiations and appear and participate in all judicial or arbitration proceedings concerning any award or payment which may be due as a result of such taking or damage, and may, in Mortgagee’s reasonable discretion, compromise or settle, in the names of both Mortgagor and Mortgagee, any claim for any such award or payment. Any such award or payment is to be paid to Mortgagee and will be applied first to reimburse Mortgagee for all costs and expenses, including attorneys’ fees, incurred by Mortgagee in connection with the ascertainment and collection of such award or payment. The balance, if any, of such award or payment may, in Mortgagee’s sole discretion, either (a) be retained by Mortgagee and applied toward the Secured Obligations, or (b) be paid over, in whole or in part and subject to such conditions as Mortgagee may impose, to Mortgagor for the purpose of restoring, repairing, or rebuilding any part of the Property affected by the taking or damage. Notwithstanding the preceding sentence, if (i) no Default or Event of Default shall have occurred and be continuing hereunder, and (ii) the proceeds received by Mortgagee (together with any other funds delivered by Mortgagor to Mortgagee for such purpose) shall be sufficient, in Mortgagee’s reasonable judgment, to pay for any restoration necessitated by the taking or damage, and (iii) the cost of such restoration shall not exceed $500,000.00, and (iv) such restoration can be completed, in Mortgagee’s judgment, at least ninety (90) days prior to the maturity date of the Note, and (v) the remaining Property shall constitute, in Mortgagee’s sole judgment, adequate security for the Secured Obligations, then Mortgagee shall apply such proceeds as provided in clause (b) of the preceding sentence. Mortgagor’s duty to pay the Note in accordance with its terms and to perform the other Secured Obligations will not be suspended by the pendency or discharged by the conclusion of any proceedings for the collection of any such award or payment, and any reduction in the Secured Obligations resulting from Mortgagee’s application of any such award or payment will take effect only when Mortgagee receives such award or payment. If this Security Instrument has been foreclosed prior to Mortgagee’s receipt of such award or payment, Mortgagee may nonetheless retain such award or payment to the extent required to reimburse Mortgagee for all costs and expenses, including attorneys’ fees, incurred in connection therewith, and to discharge any deficiency remaining with respect to the Secured Obligations. Notwithstanding anything to the contrary set forth in this Security Instrument, Mortgagee agrees that for so long as the Verizon Lease is in full force and effect, the disposition of awards or payments resulting from any condemnation or eminent domain taking of all or any portion of the Property and restoration of the Property relating thereto shall be governed by the terms and conditions set forth in the Verizon Lease to the extent that such Verizon Lease conflicts with the provisions of this Security Instrument.

4.9 Mechanics’ Liens. Mortgagor will keep (or cause others to keep) the Property free and clear of all liens and claims of liens by contractors, subcontractors, mechanics, laborers, materialmen, and other such persons, and will cause any recorded statement of any such lien to be released of record within forty-five (45) days after the recording thereof. Notwithstanding the preceding sentence, however, Mortgagor will not be deemed to be in default under this Section if and so long as Mortgagor or any tenant under a Lease (a) contests in good faith the validity or amount of any asserted lien and diligently prosecutes or defends an action appropriate to obtain a binding determination of the disputed matter, and (b) provides Mortgagee with such security as Mortgagee may require to protect Mortgagee against all loss, damage, and expense, including attorneys’ fees, which Mortgagee might incur if the asserted lien is determined to be valid.

4.10 Defense of Actions. Mortgagor will defend, at Mortgagor’s expense, any action, proceeding or claim which affects any property encumbered hereby or any interest of Mortgagee in such property or in the Secured Obligations, and will indemnify and hold Mortgagee harmless for, from, and all losses, damages, claims, liabilities, obligations, judgments, liens, demands, actions, suits, all loss, damage, cost, or expense, including attorneys’ fees, which Mortgagee may incur in connection therewith.

4.11 Expenses of Enforcement. Mortgagor will pay all costs and expenses, including attorneys’ fees, which Mortgagee may incur in connection with any effort or action (whether or not litigation or foreclosure is involved) to enforce or defend Mortgagee’s rights and remedies under the Secured Guaranty, including but not limited to all attorneys’ fees, appraisal fees, consultants’ fees, and other expenses incurred by Mortgagee in securing title to or possession of, and realizing upon, any security for the Secured Obligations. All such costs and expenses (together with interest thereon at the Default Rate from the date incurred) shall constitute part of the Secured Obligations, and may be included in the computation of the amount owed to Mortgagee for purposes of foreclosing or otherwise enforcing this Security Instrument.

4.12 Financial Reports. Mortgagor will comply with the reporting requirements set forth in the Secured Guaranty.

4.13 Priority of Leases. To the extent Mortgagor has the right, under the terms of any Lease, to make such Lease subordinate to the lien hereof, Mortgagor will, at Mortgagee’s request and Mortgagor’s expense, take such action as may be required to effect such subordination. Conversely, Mortgagor will, at Mortgagee’s request and Mortgagor’s expense, take such action as may be necessary to subordinate the lien hereof to any future Lease designated by Mortgagee.

4.14 Inventories; Assembly of Chattels. Mortgagor will, from time to time at the request of Mortgagee, supply Mortgagee with a current inventory of the Chattels and the Intangible Personalty, in such detail as Mortgagee may require. Upon the occurrence of any Event of Default hereunder, Mortgagor will at Mortgagee’s request assemble the Chattels and make them available to Mortgagee at any place designated by Mortgagee which is reasonably convenient to both parties.

4.15 Compliance with Laws, Etc. Mortgagor shall comply in all material respects or cause compliance in all material respects with (or obtain a legally enforceable variance therefrom) all applicable laws, rules, regulations and orders, such compliance to include, without limitation, maintaining all Permits and paying before the same become delinquent all taxes, assessments and governmental charges imposed upon Mortgagor or the Property.

4.16 Records and Books of Account. Mortgagor shall keep accurate and complete records and books of account, in which complete entries will be made in accordance with generally accepted accounting principles consistently applied, reflecting all financial transactions relating to the Property, including, but not limited to, records adequate to correctly reflect all items required in order to determine all Gross Receipts (as such term is used in the Cash Collateral Agreement).

4.17 Inspection Rights. At any reasonable time, and from time to time, Mortgagor shall permit Mortgagee, or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and subject to the rights of tenants under the Leases, visit the Property and to discuss with Mortgagor the affairs, finances and accounts of Mortgagor.

4.18 Change of Mortgagor’s Address or State of Organization. Mortgagor shall promptly notify Mortgagee if changes are made in Mortgagor’s address from that set forth in Section 9.10 hereof, or if Mortgagor shall either change its “location” (as such term is used in Section 5.8 hereof), its state of organization or if Mortgagor shall organize in any state other than the State of Delaware.

4.19 Further Assurances; Estoppel Certificates. Mortgagor will execute and deliver to Mortgagee upon demand, and pay the costs of preparation and recording thereof, any further documents which Mortgagee may request to confirm or perfect the liens and security interests created or intended to be created hereby, or to confirm or perfect any evidence of the Secured Obligations. Mortgagor will also, within twenty (20) days after any request by Mortgagee, deliver to Mortgagee a signed and acknowledged statement certifying to Mortgagee, or to any proposed transferee of the Secured Obligations, (a) the balance of principal, interest, and other sums then outstanding under the Note, and (b) whether Mortgagor claims to have any offsets or defenses with respect to the Secured Obligations and, if so, the nature of such offsets or defenses.

4.20 Costs of Closing. Mortgagor shall on demand pay directly or reimburse Mortgagee for any costs or expenses pertaining to the closing of the Loan, including, but not limited to, fees of counsel for Mortgagee, costs and expenses for which invoices were not available at the closing of the Loan, or costs and expenses which are incurred by Mortgagee after such closing, including, without limitation, costs or expenses incurred to obtain originals or copies of recorded or filed Loan Documents and UCC financing statements. All such costs and expenses (together with interest thereon at the Default Rate from the date incurred by Mortgagee) shall constitute a part of the Secured Obligations, and may be included in the computation of the amount owed to Mortgagee for purposes of foreclosing or otherwise enforcing this Security Instrument.

4.21 Fund for Electronic Transfer. All monthly payments of principal and interest on the Note, and impound deposits under this Security Instrument, shall be made by Mortgagor by electronic funds transfer from a bank account established and maintained by Mortgagor for such purpose. Mortgagor shall establish and maintain such an account until the Note is fully paid and shall direct the depository of such account in writing to so transmit such payments on or before the respective due dates to the account of Mortgagee as shall be designated by Mortgagee in writing.

4.22 Use. Mortgagor shall use the Property solely for office, commercial and/or incidental or ancillary uses, and for such other uses that are permitted under Leases approved by Mortgagee in writing, and for no other use or purpose.

4.23 Management. The Property shall be managed by ▇▇▇▇▇▇▇ Capital Essential Asset Property Management, LLC, a Delaware limited liability company (“Property Manager”) under a management agreement previously delivered to, and approved, by Mortgagee (the “Management Agreement”) and sub-managed by ▇▇▇▇▇ Lang LaSalle Americas, Inc., a Maryland corporation (“Sub-Manager”) under a sub-management agreement previously delivered to and approved by Mortgagee (the “Sub-Management Agreement”). Mortgagor shall not permit any amendment to or modification of the Management Agreement or the Sub-Management Agreement, or management of the Property by any person or entity other than Property Manager or Sub-Manager, without the prior written consent of Mortgagee.

4.24 Intentionally Deleted.

4.25 General Indemnity. Mortgagor agrees that while Mortgagee has no liability to any person in tort or otherwise as lender and that Mortgagee is not an owner or operator of the Property, Mortgagor shall, at its sole expense, protect, defend, release, indemnify and hold harmless the Indemnified Parties (defined below) for, from, and against any Losses (defined below) imposed on, incurred by, or asserted against the Indemnified Parties, directly or indirectly, arising out of or in connection with the Property, Loan, or Loan Documents; provided, however, that the foregoing shall not apply (a) to any Losses caused by the gross negligence or willful misconduct of the Indemnified Parties or (b) provided no Event of Default then exists, to any disputes among the Indemnified Parties not caused in whole or in part by a breach of Mortgagor’s obligations under the Loan Documents. The term “Losses” shall mean any claims, suits, liabilities (including strict liabilities), actions, proceedings, obligations, debts, damages, losses (including, without limitation, unrealized loss of value of the Property caused in whole or in part by a breach of any of Mortgagor’s obligations under the Loan Documents, or arising by reason of any third-party claim asserted against any of the Indemnified Parties, but not due to the gross negligence or willful misconduct of such Indemnified Party), demands costs, expenses, fines, penalties, charges, fees, judgments, awards, and amounts paid in settlement of whatever kind including attorneys’ fees and all other costs of defense. The term “Indemnified Parties” shall mean (a) Mortgagee, (b) any prior owner or holder of the Note, (c) any existing or prior servicer of the Loan, (d) the officers, directors, shareholders, partners, members, employees and trustees of any of the foregoing, and (e) the heirs, legal representatives, successors and assigns of each of the foregoing. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH RESPECT TO LOSSES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH (AND/OR ANY OTHER) INDEMNIFIED PARTY OR ANY STRICT LIABILITY BUT NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY.

4.26 Duty to Defend, Costs and Expenses. Upon request, whether Mortgagor’s obligation to indemnify Mortgagee arises under Section 4.25 above or elsewhere in the Loan Documents, Mortgagor shall defend the Indemnified Parties (in Mortgagor’s or the Indemnified Parties’ names) by attorneys and other professionals approved by the Indemnified Parties provided, however, if and to the extent Mortgagor has no right to approve such counsel, counsel appointed by Borrower’s insurance carrier shall be deemed acceptable to Indemnified Parties.. Notwithstanding the foregoing, the Indemnified Parties may, in their sole discretion, engage their own attorneys and professionals to defend or assist them and, at their option, their attorneys shall control the resolution of any claims or proceedings. Upon demand, Mortgagor shall pay or, in the sole discretion of the Indemnified Parties, reimburse the Indemnified Parties for all Losses imposed on, incurred by, or asserted against the Indemnified Parties by reason of any items set forth in Section 4.25 above and/or the enforcement or preservation of the Indemnified Parties’ rights under the Loan Documents. Any amount payable to the Indemnified Parties under this Section shall (a) be deemed a demand obligation, (b) be part of the Secured Obligations, (c) bear interest from the date of demand at the Default Rate until paid if not paid on demand, and (d) be secured by this Security Instrument.

ARTICLE 5
MORTGAGOR’S NEGATIVE COVENANTS

5.1 Waste and Alterations. Mortgagor will not commit or permit any (a) physical waste with respect to the Property or the Chattels, and (b) Mortgagor shall not cause or permit any part of the Property, including but not limited to any building, structure, parking lot, driveway, landscape scheme, timber, or other ground improvement, to be removed, demolished, or materially altered without the prior written consent of Mortgagee, subject in each instance to the terms of the Leases.

5.2 Zoning and Private Covenants. Mortgagor will not initiate, join in, or consent to any change in any zoning ordinance or classification, any change in the “zone lot” or “zone lots” (or similar zoning unit or units) presently comprising the Property, any transfer of development rights, any change in any private restrictive covenant, or any change in any other public or private restriction limiting or defining the uses which may be made of the Property or any part thereof, without the prior written consent of Mortgagee. If under applicable zoning provisions the use of all or any part of the Property is or becomes a nonconforming use, Mortgagor will not cause such use to be discontinued or abandoned without the prior written consent of Mortgagee, and Mortgagor will use commercially reasonable efforts to prevent the tenant under any Lease from discontinuing or abandoning such use.

5.3 Interference with Leases.

(a) Mortgagor will neither do, nor neglect to do, anything which may cause or permit the termination of any Lease of all or any part of the Property, or cause or permit the withholding or abatement of any rent payable under any such Lease.

(b) Without Mortgagee’s prior written consent, which may be granted or withheld in Mortgagee’s sole discretion, Mortgagor shall not enter into or modify (including without limitation modifications relating to the financial covenants or any financial reporting requirements) any Lease of all or any part of the Property. Any lease, lease modification, lease amendment or lease termination (“Lease Transaction”) for which Mortgagee’s consent is required under the Loan Documents shall be deemed approved by Mortgagee if (i) prior to finalizing negotiations for such Lease Transaction, Mortgagor has submitted to Mortgagee an approval request package (“Approval Package”) with respect to such Lease Transaction containing a letter requesting Mortgagee’s approval (and containing a signature line on which Mortgagee may evidence its approval of such Lease Transaction) and notifying Mortgagee, in bold enlarged type, that Mortgagee’s approval will be deemed given if it fails to respond within ten (10) Business Days after its receipt of such Approval Package, and Mortgagee thereafter fails to respond within ten (10) Business Days after its receipt of such Approval Package; provided, however, that Mortgagor shall supply Mortgagee with any other information reasonably requested by Mortgagee with respect to such proposed Lease Transaction within five (5) Business Days after Mortgagee’s receipt of the Approval Package, in which event Mortgagee’s approval shall be deemed given if Mortgagee has not disapproved or approved the Approval Package within ten (10) Business Days after the last to arrive of the proposed Approval Package and any additional information so requested by Mortgagee. Each Approval Package shall contain a description of all of the principal terms of the proposed Lease Transaction, a description of the tenant and its controlling constituents and (with respect to new leases or modifications/amendments) Mortgagor’s reasonably detailed analysis of the tenant’s creditworthiness (with respect to new leases or modifications/amendments), and a copy of any and all term sheets or letters of intent executed in connection with such Lease Transaction, together with the proposed forms of definitive documentation. Mortgagor shall deliver to Mortgagee copies of all Leases or modifications promptly upon execution and delivery thereof.

(c) Except with the prior written consent of Mortgagee, which may be granted or withheld in Mortgagee’s sole discretion, Mortgagor will not (i) collect rent from all or any part of the Property for more than one month in advance, (ii) assign the rents from the Property or any part thereof, or (iii) consent to the cancellation or surrender of all or any part of any Lease, except that Mortgagor may in good faith terminate any Lease for nonpayment of rent or other material breach by the tenant.

(d) Without limiting the generality of the foregoing, whether or not Mortgagee’s consent to the cancellation or surrender of any Lease is required hereunder, (i) Mortgagor shall notify Mortgagee in writing of any cancellation penalties or other consideration as and when received by Mortgagor in connection with such cancellation or surrender (the “Termination Fees”), which written notice must be delivered to Mortgagee within five (5) days of the payment by the applicable tenant of any such Termination Fees to Mortgagor, and (ii) at Mortgagee’s sole option, Mortgagee shall be entitled to (A) require that Mortgagor enter into the TI/LC Reserve (as defined in the Vacancy Risk Agreement) with Mortgagee and deposit such Termination Fees into the TI/LC Reserve, and (B) impose such restrictions and conditions on the timing and amount of disbursements of the Termination Fees from such reserve as Mortgagee may require in its reasonable discretion, including, without limitation, the conditions described in Section 6 of the TI/LC Reserve Agreement.

(e) Subject to Mortgagee’s approval of each Lease, in any circumstance where, pursuant to the terms of the Lease, Mortgagor’s consent to any action under such Lease shall not be unreasonably withheld or delayed, and such action requires the consent of Mortgagee, Mortgagee’s consent to such action shall likewise not be unreasonably withheld or delayed. In addition, Mortgagee’s consent to such action shall be subject to the deemed approval provisions described in Section 5.3(b) above.

5.4 Transfer or Further Encumbrance of Property. Except as permitted in Section 5.4 of the First Security Instrument (which provisions of Section 5.4 of the First Security Instrument are incorporated herein by reference as if set forth herein in full, and shall survive any foreclosure, reconveyance or release of the First Security Instrument as continuing provisions of this Security Instrument), without Mortgagee’s prior written consent, which consent may be granted or withheld in Mortgagee’s sole and absolute discretion, Mortgagor shall not (i) sell, assign, convey, transfer or otherwise dispose of any direct or indirect legal, beneficial or equitable interest in all or any part of the Property, (ii) permit or suffer any owner, directly or indirectly, of any beneficial interest in the Property or Mortgagor to transfer such interest, whether by transfer of partnership, membership, stock or other beneficial interest in any entity or otherwise, or (iii) mortgage, pledge, hypothecate or otherwise encumber or permit to be encumbered or grant or permit to be granted a security interest in all or any part of, or a direct or indirect interest in, the Property or Mortgagor or any beneficial or equitable interest in either the Property or Mortgagor. The provisions of this Section shall not prohibit transfers of title or interest under any will or testament or applicable law of descent. Consent to one such transfer or encumbrance by Mortgagee shall not be deemed a waiver to require such consent to further or future transfers or encumbrances, provided that Mortgagee’s consent to any such transfer or encumbrance under the First Security Instrument shall be deemed its consent to the same under this Security Instrument.

5.5 Further Encumbrance of Chattels. Mortgagor will neither create nor permit any lien, security interest or encumbrance against the Chattels or Intangible Personalty or any part thereof or interest therein, other than the liens and security interests created by the First Security Instrument and the Loan Documents, without the prior written consent of Mortgagee, which may be withheld for any reason.

5.6 Assessments Against Property. Mortgagor will not, without the prior written approval of Mortgagee, which may be withheld for any reason, here after consent to or allow the creation of any so called special districts, special improvement districts, benefit assessment districts or similar districts, or any other body or entity of any type, or allow to occur any other event, that would or might result in the imposition of any additional taxes, assessments or other monetary obligations or burdens on the Property (other than increases in ad valorem real estate taxes from time to time imposed by applicable taxing authorities), and this provision shall serve as RECORD

NOTICE to any such district or districts or any governmental entity under whose authority such district or districts exist or are being formed that, should Mortgagor or any other person or entity include all or any portion of the Property in such district or districts, whether formed or in the process of formation, without first obtaining Mortgagee’s express written consent, the rights of Mortgagee in the Property pursuant to this Security Instrument or following any foreclosure of this Security Instrument, and the rights of any person or entity to whom Mortgagee might transfer the Property following a foreclosure of this Security Instrument, shall be senior and superior to any taxes, charges, fees, assessments or other impositions of any kind or nature whatsoever, or liens (whether statutory, contractual or otherwise) levied or imposed, or to be levied or imposed, upon the Property or any portion thereof as a result of inclusion of the Property in such district or districts.

5.7 Transfer or Removal of Chattels. Mortgagor will not sell, transfer or remove from the Property all or any part of the Chattels, unless the items sold, transferred, or removed, are obsolete or are simultaneously replaced with similar items of equal or greater value.

5.8 Change of Name, Organizational I.D. No. or Location. Mortgagor will not change its name or the name under which it does business (or adopt or begin doing business under any other name or assumed or trade name), change its organizational identification number, or change its location, without first notifying Mortgagee of its intention to do so and delivering to Mortgagee such organizational documents of Mortgagor and executed modifications or supplements to this Security Instrument (and to any financing statement which may be filed in connection herewith) as Mortgagee may require. For purposes of the foregoing, Mortgagor’s “location” shall mean (a) if Mortgagor is a registered organization, Mortgagor’s state of registration, (b) if Mortgagor is an individual, the state of Mortgagor’s principal residence, or (c) if Mortgagor is neither a registered organization nor an individual, the state in which Mortgagor’s place of business (or, if Mortgagor has more than one place of business, the Mortgagor’s chief executive office) is located.

5.9 Improper Use of Property or Chattels. Mortgagor will not use the Property or the Chattels for any purpose or in any manner which violates any applicable law, ordinance, or other governmental requirement, the requirements or conditions of any insurance policy, or any private covenant.

5.10 ERISA. Mortgagor shall not engage in any transaction which would cause the Note (or the exercise by Mortgagee of any of its rights under the Loan Documents) to be a non-exempt, prohibited transaction under ERISA (including for this purpose the parallel provisions of Section 4975 of the Internal Revenue Code of 1986, as amended), or otherwise result in Mortgagee being deemed in violation of any applicable provisions of ERISA. Mortgagor shall indemnify, protect, defend, and hold Mortgagee harmless for, from and against any and all losses, liabilities, damages, claims, demands, judgments, costs, and expenses (including, without limitation attorneys’ fees and costs incurred in the investigation, defense, and settlement of claims and in obtaining any individual ERISA exemption or state administrative exception that may be required, in Mortgagee’s sole and absolute discretion) that Mortgagee may incur, directly or indirectly, as the result of the breach by Mortgagor of any warranty or representation set forth in Section 3.3(x) hereof or the breach by Mortgagor of any covenant contained in this Section. This indemnity shall survive any termination, satisfaction or foreclosure of this Security Instrument.

5.11 Intentionally Deleted.

5.12 REA and Other Major Approvals. Without Mortgagee’s prior written consent, which may be granted or withheld in Mortgagee’s reasonable discretion, Mortgagor shall not enter into or modify any reciprocal easement agreement, declaration, covenant, condition or restriction, ground lease, operating agreement, or any document recorded against the Property.

5.13 Intentionally Deleted.

ARTICLE 6

EVENTS OF DEFAULT

Each of the following events will constitute an event of default (an “Event of Default”) under this Security Instrument and under each of the other Loan Documents:

6.1 Failure to Make Payment. Mortgagor’s failure to make any payment when due under the terms of the Secured Guaranty or this Security Instrument.

6.2 Due on Sale or Encumbrance. The occurrence of any violation of any covenant contained in Section 5.4, 5.5 or 5.7 hereof.

6.3 Other Obligations. The failure of Mortgagor to properly perform any obligation contained herein or in the Secured Guaranty (other than the obligation to make payments under the Secured Guaranty or this Security Instrument) and the continuance of such failure for a period of thirty (30) days following written notice thereof from Mortgagee to Mortgagor; provided, however, that if such failure is not curable within such thirty (30) day period, then, so long as Mortgagor commences to cure such failure within such thirty (30) day period and is continually and diligently attempting to cure to completion, such failure shall not be an Event of Default unless such failure remains uncured for one hundred twenty (120) days after such written notice to Mortgagor.

6.4 Levy Against Property. The levy against any of the Property, Chattels or Intangible Personalty, of any execution, attachment, sequestration or other writ.

6.5 Liquidation. The liquidation, termination or dissolution of Mortgagor or any Controlling Person, at any time that Mortgager is the borrower under the Loan.

6.6 Appointment of Receiver. The appointment of a trustee or receiver for the assets, or any part thereof, of Mortgagor, or any Controlling Person, or the appointment of a trustee or receiver for any real or personal property, or the like, or any part thereof, representing the security for the Secured Obligations.

6.7 Assignments. The making by Mortgagor or any Controlling Person of a transfer in fraud of creditors or an assignment for the benefit of creditors.

6.8 Order for Relief. The entry in bankruptcy of an order for relief for or against Mortgagor or any Controlling Person.

6.9 Bankruptcy. The filing of any petition (or answer admitting the material allegations of any petition), or other pleading, seeking entry of an order for relief for or against Mortgagor or any Controlling Person as a debtor or bankrupt or seeking an adjustment of any of such parties’ debts, or any other relief under any state or federal bankruptcy, reorganization, debtor’s relief or insolvency laws now or hereafter existing, including, without limitation, a petition or answer seeking reorganization or admitting the material allegations of a petition filed against any such party in any bankruptcy or reorganization proceeding, or the act of any of such parties in instituting or voluntarily being or becoming a party to any other judicial proceedings intended to effect a discharge of the debts of any such parties, in whole or in part, or a postponement of the maturity or the collection thereof, or a suspension of any of the rights or powers of a trustee or of any of the rights or powers granted to Mortgagee herein, or in any other document executed in connection herewith.

6.10 Misrepresentation. If any representation or warranty made by Mortgagor or any Controlling Person, or in any of the other Loan Documents or any other instrument or document modifying, renewing, extending, evidencing, securing or pertaining to the Note is false or intentionally misleading in any material respect.

6.11 Judgments. The failure of (a) Mortgagor or GC Member to pay any money judgment in excess of $10,000.00, or (b) any Controlling Person to pay any money judgment in excess of $200,000.00 in either case against any such party before the expiration of thirty (30) days after such judgment becomes final and no longer appealable.

6.12 Admissions Regarding Debts. The admission of Mortgagor or any Controlling Person in writing, other than to Mortgagor, of any such party’s inability to pay such party’s debts as they become due.

6.13 Assertion of Priority. The assertion of any claim of priority over this Security Instrument, by title, lien, or otherwise, unless Mortgagor within forty-five (45) days after such assertion either causes the assertion to be withdrawn or provides Mortgagee with such security as Mortgagee may require to protect Mortgagee against all loss, damage, or expense, including attorneys’ fees, which Mortgagee may incur in the event such assertion is upheld.

6.14 Intentionally Deleted.

6.15 Other Liens. The occurrence of any default by Mortgagor, after the lapse of any applicable grace or cure period, or the occurrence of any event or circumstance defined as an Event of Default, under any other consensual lien encumbering the Property, or any part thereof or interest therein, or any document or instrument evidencing obligations secured thereby.

6.16 Other Indebtedness. The occurrence of any default by Mortgagor, after the lapse of any applicable grace or cure period, or the occurrence of any event or circumstance defined as an Event of Default, under any other indebtedness incurred or owing by Mortgagor, or any document or instrument evidencing any obligation to pay such indebtedness.

6.17 Intentionally Deleted.

6.18 Other Loan Documents. Any “Event of Default” (as defined in the Other Loan Documents) under any of the Other Loan Documents shall constitute an Event of Default hereunder and under the other Loan Documents. Any “Event of Default” (as defined in the Other Loan Guaranty Documents) under any of the Other Loan Guaranty Documents shall constitute an Event of Default hereunder and under the Loan Documents. Notwithstanding anything to the contrary contained herein, any “Event of Default” as defined in the First Security Instrument or any of the Loan Documents shall constitute an immediate Event of Default hereunder. Mortgagor and Mortgagee hereby acknowledge and agree that (i) the owners of Mortgagor own a direct or indirect interest in the Other Borrowers; (ii) that the foregoing provisions have been made in consideration of, among other things, Mortgagee’s agreement to modify the Loan to Mortgagor under such terms and conditions as agreed by the parties; and (iii) that this Section 6.18 has been agreed to for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged.

ARTICLE 7
MORTGAGEE’S REMEDIES

Immediately upon or any time after the occurrence of any Event of Default hereunder, Mortgagee may exercise any remedy available at law or in equity, including but not limited to those listed below and those listed in the other Loan Documents, in such sequence or combination as Mortgagee may determine in Mortgagee’s sole discretion:

7.1 Performance of Defaulted Obligations. Mortgagee may make any payment or perform any other obligation under the Loan Documents or under Leases which Mortgagor has failed to make or perform, and Mortgagor hereby irrevocably appoints Mortgagee as the true and lawful attorney-in-fact for Mortgagor to make any such payment and perform any such obligation in the name of Mortgagor. All payments made and expenses (including attorneys’ fees and expenses) incurred by Mortgagee in this connection, together with interest thereon at the Default Rate from the date paid or incurred until repaid, will be part of the Secured Obligations and will be immediately due and payable by Mortgagor to Mortgagee. In lieu of advancing Mortgagee’s own funds for such purposes, Mortgagee may use any funds of Mortgagor which may be in Mortgagee’s possession, including but not limited to insurance or condemnation proceeds and amounts deposited for taxes, insurance premiums, or other purposes.

7.2 Specific Performance and Injunctive Relief. Notwithstanding the availability of legal remedies, Mortgagee will be entitled to obtain specific performance, mandatory or prohibitory injunctive relief, or other equitable relief requiring Mortgagor to cure or refrain from repeating any Default.

7.3 Acceleration of Secured Obligations. Mortgagee may, without notice or demand, declare all of the Secured Obligations immediately due and payable in full.

7.4 Suit for Monetary Relief. With or without accelerating the maturity of the Secured Obligations, Mortgagee may ▇▇▇ from time to time for any payment due under the Secured Guaranty, or for money damages resulting from Mortgagor’s default under the Secured Guaranty or this Security Instrument.

7.5 Possession of Property. To the extent permitted by law, Mortgagee may enter and take possession of the Property without seeking or obtaining the appointment of a receiver, may employ a managing agent for the Property, and may lease or rent all or any part of the Property, either in Mortgagee’s name or in the name of Mortgagor, and may collect the rents, issues, and profits of the Property. Any revenues collected by Mortgagee under this Section will be applied first toward payment of all expenses (including attorneys’ fees) incurred by Mortgagee, together with interest thereon at the Default Rate from the date incurred until repaid, and the balance, if any, will be applied against the Secured Obligations in such order and manner as Mortgagee may elect in its sole discretion.

7.6 Enforcement of Security Interests. Mortgagee may exercise all rights of a secured party under the Code with respect to the Chattels and the Intangible Personalty, including but not limited to taking possession of, holding, and selling the Chattels and enforcing or otherwise realizing upon any accounts and general intangibles. Any requirement for reasonable notice of the time and place of any public sale, or of the time after which any private sale or other disposition is to be made, will be satisfied by Mortgagee’s giving of such notice to Mortgagor at least five days prior to the time of any public sale or the time after which any private sale or other intended disposition is to be made.

7.7 Foreclosure Against Property.

(a) Mortgagee may, with or without entry, institute proceedings, judicial or otherwise, for the complete foreclosure of this Security Instrument under any applicable provision of applicable 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, any partial foreclosure to be subject to the continuing lien and security interest of this Security Instrument for the balance of the Secured Obligations not then due, unimpaired and without loss of priority.

(b) Mortgagee may sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Mortgagor therein and rights of redemption thereof, pursuant to power of sale, judicial decree 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. Under the power of sale hereby granted, Mortgagee shall have the discretionary right to cause some or all of the Property, including any Collateral, to be sold or otherwise disposed of in any combination and in any manner permitted by applicable law.

(c) All fees, costs and expenses of any kind incurred by Mortgagee in connection with foreclosure of this Security Instrument, including, without limitation, the costs of any appraisals of the Property obtained by Mortgagee, the cost of any title reports or abstracts, all costs of any receivership for the Property advanced by Mortgagee, and all attorneys’ and consultants’ fees and expenses incurred by Mortgagee, shall constitute a part of the Secured Obligations and may be included as part of the amount owing from Mortgagor to Mortgagee at any foreclosure sale.

(d) The proceeds of any sale under this Section shall be applied first to the fees and expenses of the officer conducting the sale, and then to the reduction or discharge of the Secured Obligations in such order and manner as Mortgagee

may elect in its sole discretion; any surplus remaining shall be paid over to Mortgagor or to such other person or persons as may be lawfully entitled to such surplus.

(e) A sale of less than the whole of the Property or any defective or irregular sale made hereunder shall not exhaust the power of sale provided for herein; and subsequent sales may be made hereunder until all obligations secured hereby have been satisfied, or the entire Property sold, without defect or irregularity.

7.8 Appointment of Receiver. To the extent permitted by law, Mortgagee shall be entitled, as a matter of absolute right and without regard to the value of any security for the Secured Obligations or the solvency of any person liable therefor, to the appointment of a receiver for the Property upon ex-parte application to any court of competent jurisdiction. Mortgagor waives any right to any hearing or notice of hearing prior to the appointment of a receiver. Such receiver and its agents shall be empowered, but shall not be obligated to (a) take possession of the Property and any businesses conducted by Mortgagor or any other person thereon and any business assets used in connection therewith, (b) exclude Mortgagor and Mortgagor’s agents, servants, and employees from the Property, (c) collect the rents, issues, profits, and income therefrom, (d) complete any construction which may be in progress, (e) do such maintenance and make such repairs and alterations as the receiver deems necessary, (f) use all stores of materials, supplies, and maintenance equipment on the Property and replace such items at the expense of the receivership estate, (g) pay all taxes and assessments against the Property and the Chattels, all premiums for insurance thereon, all utility and other operating expenses, and all sums due under any prior or subsequent encumbrance, and (h) generally do anything which Mortgagor could legally do if Mortgagor were in possession of the Property. All expenses incurred by the receiver or its agents shall constitute a part of the Secured Obligations. Any revenues collected by the receiver shall be applied first to the expenses of the receivership, including attorneys’ fees incurred by the receiver and by Mortgagee, together with interest thereon at the Default Rate from the date incurred until repaid, and the balance shall be applied toward the Secured Obligations in such order or manner as Mortgagee may in its sole discretion elect or in such other manner as the court may direct. Unless sooner terminated with the express consent of Mortgagee, any such receivership will continue until the Secured Obligations have been discharged in full, or until title to the Property has passed after foreclosure sale and all applicable periods of redemption have expired.

7.9 Right to Make Repairs, Improvements. Should any part of the Property come into the possession of Mortgagee, whether before or after an Event of Default, Mortgagee may, but shall not be obligated to, use, operate, and/or make repairs, alterations, additions and improvements to the Property for the purpose of preserving it or its value. Mortgagor covenants to promptly reimburse and pay to Mortgagee, at the place where the Note is payable, or at such other place as may be designated by Mortgagee in writing, the amount of all reasonable expenses (including the cost of any insurance, taxes, or other charges) incurred by Mortgagee in connection with its custody, preservation, use or operation of the Property, together with interest thereon from the date incurred by Mortgagee at the Default Rate, and all such expenses, costs, taxes, interest, and other charges shall be a part of the Secured Obligations. It is agreed, however, that the risk of accidental loss or damage to the Property is undertaken by Mortgagor and Mortgagee shall have no liability whatsoever for decline in value of the Property, for failure to obtain or maintain insurance, or for failure to determine whether any insurance ever in force is adequate as to amount or as to the risks insured.

7.10 Intentionally Deleted.

7.11 Prima Facie Evidence. Mortgagor agrees that, in any assignments, deeds, bills of sale, notices of sale, or postings, given by Mortgagee, any and all statements of fact or other recitals therein made as to the identity of Mortgagee, or as to the occurrence or existence of any Event of Default, or as to the acceleration of the maturity of the Secured Obligations, or as to the request to sell, posting of notice of sale, notice of sale, time, place, terms and manner of sale and receipt, distribution and application of the money realized therefrom, and without being limited by the foregoing, as to any other act or thing having been duly done by Mortgagee, shall be taken by all courts of law and equity as prima facie evidence that such statements or recitals state facts and are without further question to be so accepted, and Mortgagor does hereby ratify and confirm any and all acts that Mortgagee may lawfully do by virtue hereof.

ARTICLE 8
ASSIGNMENT OF LEASES AND RENTS

8.1 Assignment of Leases and Rents. Mortgagor hereby unconditionally and absolutely and presently grants, transfers and assigns unto Mortgagee all rents, royalties, issues, profits and income (“Rents”) now or hereafter due or payable for the occupancy or use of the Property, and all Leases, whether written or oral, with all security therefor, including all guaranties thereof, now or hereafter affecting the Property; on the condition that Mortgagee hereby grants to Mortgagor, however, a license to collect and retain such Rents prior to the occurrence of any Event of Default hereunder. Such license shall be revocable by Mortgagee without notice to Mortgagor at any time after the occurrence of an Event of Default. Mortgagor represents that the Rents and the Leases have not been heretofore sold, assigned, transferred or set over by any instrument now in force and will not at any time during the life of this assignment be sold, assigned, transferred or set over by Mortgagor or by any person or persons whomsoever; and Mortgagor has good right to sell, assign, transfer and set over the same and to grant to and confer upon Mortgagee the rights, interest, powers and authorities herein granted and conferred. Failure of Mortgagee at any time or from time to time to enforce the assignment of Rents and Leases under this Section shall not in any manner prevent its subsequent enforcement, and Mortgagee is not obligated to collect anything hereunder, but is accountable only for sums actually collected.

8.2 Further Assignments. Mortgagor shall give Mortgagee at any time upon demand any further or additional forms of assignment of transfer of such Rents, Leases and security as may be reasonably requested by Mortgagee, and shall deliver to Mortgagee executed copies of all such Leases and security.

8.3 Application of Rents. Mortgagee shall be entitled to deduct and retain a just and reasonable compensation from monies received hereunder for its services or that of its agents in collecting such monies. Any monies received by Mortgagee hereunder may be applied when received from time to time in payment of any taxes, assessments or other liens affecting the Property regardless of the delinquency, such application to be in such order as Mortgagee may determine. The acceptance of this Security Instrument by Mortgagee or the exercise of any rights by it hereunder shall not be, or be construed to be, an affirmation by it of any Lease nor an assumption of any liability under any Lease.

8.4 Collection of Rents. Upon or at any time after an Event of Default shall have occurred and be continuing, Mortgagee may declare all sums secured hereby immediately due and payable, and may, at its option, without notice, and whether or not the Secured Obligations shall have been declared due and payable, either in person or by agent, with or without bringing any action or proceeding, or by a receiver to be appointed by a court, (i) enter upon, take possession of, manage and operate the Property, or any part thereof (including without limitation making necessary repairs, alterations and improvements to the Property); (ii) make, cancel, enforce or modify Leases; (iii) obtain and evict tenants; (iv) fix or modify Rents; (v) do any acts which Mortgagee deems reasonably proper to protect the security thereof; and (vi) either with or without taking possession of the Property, in its own name ▇▇▇ for or otherwise collect and receive such Rents, including those past due and unpaid. In connection with the foregoing, Mortgagee shall be entitled and empowered to employ attorneys, and management, rental and other agents in and about the Property and to effect the matters which Mortgagee is empowered to do, and in the event Mortgagee shall itself effect such matters, Mortgagee shall be entitled to charge and receive reasonable management, rental and other fees therefor as may be customary in the area in which the Property is located; and the reasonable fees, charges, costs and expenses of Mortgagee or such persons shall be additional Secured Obligations. Mortgagee may apply all funds collected as aforesaid, less costs and expenses of operation and collection, including reasonable attorneys’ and agents’ fees, charges, costs and expenses, as aforesaid, upon any Secured Obligations, and in such order as Mortgagee may determine. The entering upon and taking possession of the Property, the collection of such Rents and the application thereof as aforesaid shall not cure or waive any default or waive, modify or affect notice of default under the Note or this Security Instrument or invalidate any act done pursuant to such notice.

8.5 Authority of Mortgagee. Any tenants or occupants of any part of the Property are hereby authorized to recognize the claims of Mortgagee hereunder without investigating the reason for any action taken by Mortgagee, or the validity or the amount of indebtedness owing to Mortgagee, or the existence of any default in the Note or this Security Instrument, or under or by reason of this assignment of Rents and Leases, or the application to be made by Mortgagee of any amounts to be paid to Mortgagee. The sole signature of Mortgagee shall be sufficient for the exercise of any rights under this assignment and the sole receipt of Mortgagee for any sums received shall be a full discharge and release therefor to any such tenant or occupant of the Property. Checks for all or any part of the rentals collected under this assignment of Rents and Leases shall be drawn to the exclusive order of Mortgagee.

8.6 Indemnification of Mortgagee. Nothing herein contained shall be deemed to obligate Mortgagee to perform or discharge any obligation, duty or liability of any lessor under any Lease of the Property, and Mortgagor shall and does hereby indemnify and hold Mortgagee harmless from any and all liability, loss or damage which Mortgagee may or might incur under any Lease of the Property or by reason of this assignment; and any and all such liability, loss or damage incurred by Mortgagee, together with the costs and expenses, including reasonable attorneys’ fees, incurred by Mortgagee in defense of any claims or demands therefor (whether successful or not), shall be additional Secured Obligations, and Mortgagor shall reimburse Mortgagee therefor on demand.

ARTICLE 9
MISCELLANEOUS PROVISIONS

9.1 Time of the Essence. Time is of the essence with respect to all of Mortgagor’s obligations under the Secured Guaranty and this Security Instrument.

9.2 Joint and Several Obligations. If Mortgagor is more than one person or entity, then (a) all persons or entities comprising Mortgagor are jointly and severally liable for all of the Secured Obligations; (b) all representations, warranties, and covenants made by Mortgagor shall be deemed representations, warranties, and covenants of each of the persons or entities comprising Mortgagor; (c) any breach, Default or Event of Default by any persons or entities comprising Mortgagor hereunder shall be deemed to be a breach, Default or Event of Default of Mortgagor; (d) any reference herein contained to the knowledge or awareness of Mortgagor shall mean the knowledge or awareness of any of the persons or entities comprising Mortgagor; and (e) any event creating personal liability of any of the persons or entities comprising Mortgagor shall create personal liability for all such persons or entities.

9.3 Waiver of Homestead and Other Exemptions. To the extent permitted by law, Mortgagor hereby waives all rights to any homestead or other exemption to which Mortgagor would otherwise be entitled under any present or future constitutional, statutory, or other provision of applicable state or federal law. Mortgagor hereby waives any right it may have to require Mortgagee to marshal all or any portion of the security for the Secured Obligations.

9.4 Non-Recourse; Exceptions to Non-Recourse. The recourse of Mortgagee with respect to the Secured Obligations and Mortgagor’s obligations under this Security Instrument shall be solely to the Property, Chattels and Intangible Personalty.

9.5 Rights and Remedies Cumulative. Mortgagee’s rights and remedies under each of the Secured Guaranty and this Security Instrument are cumulative of the right and remedies available to Mortgagee under each of the other such documents and those otherwise available to Mortgagee at law or in equity. No act of Mortgagee shall be construed as an election to proceed under any particular provision of any such document to the exclusion of any other provision in the same or any other such document, or as an election of remedies to the exclusion of any other remedy which may then or thereafter be available to Mortgagee.

9.6 No Implied Waivers. Mortgagee shall not be deemed to have waived any provision of any document unless such waiver is in writing and is signed by Mortgagee. Without limiting the generality of the preceding sentence, neither Mortgagee’s acceptance of any payment with knowledge of a Default by Mortgagor, nor any failure by Mortgagee to exercise any remedy following a Default by Mortgagor shall be deemed a waiver of such Default, and no waiver by Mortgagee of any particular Default on the part of Mortgagor shall be deemed a waiver of any other Default or of any similar Default in the future.

9.7 No Third-Party Rights. No person shall be a third-party beneficiary of any provision of the Secured Guaranty or this Security Instrument. All provisions of the Secured Guaranty or this Security Instrument favoring Mortgagee are intended solely for the benefit of Mortgagee, and no third party shall be entitled to assume or expect that Mortgagee will waive or consent to modification of any such provision in Mortgagee’s sole discretion.

9.8 Preservation of Liability and Priority. Without affecting the liability of Mortgagor or of any other person (except a person expressly released in writing) for payment and performance of all of the Secured Obligations, and without affecting the rights of Mortgagee with respect to any security not expressly released in writing, and without impairing in any way the priority of this Security Instrument over the interests of any person acquired or first evidenced by recording subsequent to the recording hereof, Mortgagee may, either before or after the maturity of the Note, and without notice or consent: (a) release any person liable for payment or performance of all or any part of the Secured Obligations; (b) make any agreement altering the terms of payment or performance of all or any of the Secured Obligations; (c) exercise or refrain from exercising, or waive, any right or remedy which Mortgagee may have under the Secured Guaranty or this Security Instrument; (d) accept additional security of any kind for any of the Secured Obligations; or (e) release or otherwise deal with any real or personal property securing the Secured Obligations. Any person acquiring or recording evidence of any interest of any nature in the Property, the Chattels, or the Intangible Personalty shall be deemed, by acquiring such interest or recording any evidence thereof, to have agreed and consented to any or all such actions by Mortgagee.

9.9 Intentionally Deleted.

9.10 Notices. Any notice required or permitted to be given by Mortgagor or Mortgagee under this Security Instrument shall be in writing and will be deemed given (a) upon personal delivery, (b) on the first Business Day after receipted delivery to a courier service which guarantees next-business-day delivery, or (c) on the third Business Day after mailing, by registered or certified United States mail, postage prepaid, in any case to the appropriate party at its address set forth below:

If to Mortgagor:

The GC Net Lease (▇▇▇▇▇▇) Investors, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇

▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇

with a copy to:

▇▇▇▇▇▇▇ Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.

If to Mortgagee:

The Variable Annuity Life Insurance Company

National Union Fire Insurance Company of Pittsburgh, PA.
c/o AIG Investments

▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇

▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attn: Director-Mortgage Lending and Real Estate

with a copy to:

▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇^▇▇ ▇▇▇▇▇▇, ▇▇^▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.

Either party may change such party’s address for notices or copies of notices by giving notice to the other party in accordance with this Section.

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST MORTGAGER OR MORTGAGEE ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT MORTGAGEE’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND MORTGAGER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND MORTGAGER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. MORTGAGER DOES HEREBY DESIGNATE AND APPOINT:

C T Corporation System
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO MORTGAGER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON MORTGAGER, IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. MORTGAGER (I) SHALL GIVE PROMPT NOTICE TO MORTGAGEE OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR OR REFUSES TO CONSENT TO SUCH DESIGNATION AS AUTHORIZED AGENT FOR MORTGAGER PURSUANT TO A WRITTEN CONSENT IN FORM AND SUBSTANCE SATISFACTORY TO MORTGAGEE.

9.11 Defeasance. Upon payment and performance in full of all of the Secured Obligations, Mortgagee will execute and deliver to Mortgagor such documents as may be required to reconvey this Security Instrument of record.

9.12 Illegality. If any provision of this Security Instrument is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Security Instrument, the legality, validity, and enforceability of the remaining provisions of this Security Instrument shall not be affected thereby, and in lieu of each such illegal, invalid or unenforceable provision there shall be added automatically as a part of this Security Instrument a provision as similar in terms to such illegal, invalid, or unenforceable provision as may be possible and be legal, valid, and enforceable. If the rights and liens created by this Security Instrument shall be invalid or unenforceable as to any part of the Secured Obligations, then the unsecured portion of the Secured Obligations shall be completely paid prior to the payment of the remaining and secured portion of the Secured Obligations, and all payments made on the Secured Obligations shall be considered to have been paid on and applied first to the complete payment of the unsecured portion of the Secured Obligations.

9.13 Intentionally Deleted.

9.14 Obligations Binding Upon Mortgagor’s Successors. This Security Instrument is binding upon Mortgagor and Mortgagor’s successors and assigns, and shall inure to the benefit of Mortgagee, and its successors and assigns, and the provisions hereof shall likewise be covenants running with the land. The duties, covenants, conditions obligations, and warranties of Mortgagor in this Security Instrument shall be joint and several obligations of Mortgagor and Mortgagor’s successor and assigns.

9.15 Construction. All pronouns and any variations of pronouns herein shall be deemed to refer to the masculine, feminine, or neuter, singular or plural, as the identity of the parties may require. Whenever the terms herein are singular, the same shall be deemed to mean the plural, as the identity of the parties or the context requires.

9.16 Attorneys’ Fees. If Mortgagee refers this Security Instrument or the Secured Guaranty to any attorney for collection or seeks legal advice following the occurrence of an Event of Default by or with respect to Mortgagor that has not been waived by

Mortgagee expressly in writing, or if Mortgagee is the prevailing party in any action instituted on this Security Instrument or the Secured Guaranty, or if any other judicial or non-judicial proceeding is instituted by Mortgagee or any other person (provided that with respect to any judicial or non-judicial action instituted by any other person, either (A) such person shall consist of Mortgagor or any affiliate thereof, or (B) such proceeding shall include Mortgagor or any affiliate thereof as a party thereto, and the facts alleged, on the basis of which any cause of action or claim shall be asserted in such proceeding, involve the action(s) or omission(s) on the part of Mortgagor or any affiliate thereof under this Security Instrument or other Loan Document), and an attorney is employed by Mortgagee to appear in any such action or proceeding, or in any action that materially affects Mortgagee’s interest in this Security Instrument or the Property, or to seek appointment of a receiver to reclaim, seek relief from a judicial or statutory stay, sequester, protect, preserve or enforce Mortgagee’s interest in this Security Instrument or any other security for the Note (including, but not limited to, proceedings under federal bankruptcy law, in eminent domain, under the probate code, on appeal (provided that for Mortgagee to recover appeal costs from Mortgagor hereunder, Mortgagee shall have to be judicially determined to be a prevailing party in such appeal), in arbitration, or in connection with any municipal, state or federal tax lien), then Mortgagor and every endorser hereof and every person who assumes the obligations secured by this Security Instrument or the Secured Guaranty jointly and severally promise(s) to pay reasonable attorneys’ fees for services performed by Mortgagee’s attorneys, and all costs and expenses (including, without limitation, expert witness reasonable fees, costs of exhibit preparation, document reproduction, postage, telecommunication expenses and courier charges), incurred incident to such employment. If such fees are not paid within ten (10) Business Days after demand therefor by Mortgagee, all such costs and expenses shall bear interest at the Default Rate and the repayment thereof shall also be secured by every instrument securing the indebtedness evidenced hereby.

9.17 Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, MORTGAGEE AND MORTGAGOR KNOWINGLY, IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE, TO THE FULLEST EXTENT NOT PROHIBITED BY LAW, ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS SECURITY INSTRUMENT, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SECURITY INSTRUMENT OR ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY LOAN DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MORTGAGEE AND MORTGAGOR TO ENTER INTO THE LOAN.

9.18 Governing Laws. The substantive, procedural and internal laws of the State of New Jersey shall govern the validity, construction, enforcement, and interpretation of this Security Instrument, without regard to the conflicts of laws principles of such State.

9.19 Inconsistency. In the event of any inconsistency between the terms of the Loan Documents and the terms of that certain Mortgage Loan Application between Mortgagor and Mortgagee, as amended, the terms of the Loan Documents shall govern and control in all respects.

9.20 Economic Sanctions, Anti-Money Laundering, Etc. Mortgagor represents, warrants and covenants to Mortgagee that:

(a) None of the Borrower, the Guarantor nor any OFAC Controlling Persons is or shall become: (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons (an “OFAC Listed Person”) published by the Office of Foreign Assets Control, United States Department of the Treasury (“OFAC”), or (ii) an agent, department, or instrumentality of, or otherwise beneficially owned by, controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign country or regime that is the target of any sanctions programs administered and/or enforced by OFAC, or (iii) blocked by or a target of United States economic sanctions.

(b) Neither the Borrower, the Guarantor nor any OFAC Controlling Person: (i) has been found in violation of, charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under the Currency and Foreign Transactions Reporting Act of 1970 (otherwise known as the Bank Secrecy Act), the USA PATRIOT Act or any other United States law or regulation governing such activities (collectively, “Anti-Money Laundering Laws”) or any U.S. economic sanctions violations, or (ii) to Borrower’s actual knowledge after making due inquiry, is under investigation by any Governmental Authority for possible violation of Anti-Money Laundering Laws or any U.S. economic sanctions violations, or (iii) has been assessed civil penalties under any Anti-Money Laundering Laws or any U.S. economic sanctions, or (iv) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws.

(c) None of the Mortgagor, Guarantor, the OFAC Controlling Persons, nor the officers and directors of any of them: (i) are owned or controlled by the government or a national of Cuba, Iran, Sudan, Burma (Myanmar), North Korea or Syria, (ii) are located in Cuba, Iran, Sudan, Burma (Myanmar), North Korea or Syria, or (iii) does business in or with Cuba, Iran, Sudan, North Korea, Burma (Myanmar) or Syria.

(d) Mortgagor shall promptly deliver to Mortgagee any certification or other evidence reasonably requested from time to time by Mortgagee confirming Borrower’s compliance with this Section. The representations, warranties and covenants set forth in this Section shall be deemed repeated and reaffirmed by Mortgagor as of each date that Mortgagor makes a payment

to Mortgagee under the Note, this Security Instrument and the other Loan Documents or receives any payment from Mortgagee. Mortgagor shall promptly notify Mortgagee in writing should Mortgagor become aware of any change in the information set forth in these representations, warranties and covenants.

For the purposes of the foregoing Section:

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract or otherwise.

“OFAC Controlling Person” means any person or entity that controls either the Mortgagor or the Guarantor, and all holders of 25% or more of the partnership, voting stock, membership or other ownership interest of the Mortgagor or Guarantor (as applicable), and/or any of the foregoing Controlling Persons.

“Governmental Authority” means (a) the government of (i) the United States of America or any state or other political subdivision thereof, or (ii) any other jurisdiction in which the Borrower, Guarantor or Controlling Person (as applicable) conducts all or any part of its business, or which asserts jurisdiction over any properties of any of the foregoing, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

9.21 Co-Lending.

(a) Notwithstanding that the Secured Guaranty guarantees the obligations of the borrower under each of the Other Loans, each of which Other Loans is evidenced by 2 separate promissory notes, Mortgagee agrees that the “Holder” (as defined in such promissory notes) of each such separate promissory notes for each Other Loan shall pursue the same remedies simultaneously under such promissory notes with respect to such Other Loan and under the Secured Guaranty and the Other Loan Documents relating to such Other Loan as if such Other Loan were evidenced by only one promissory note.

(b) Mortgager and Guarantor shall be entitled to rely, shall be obligated to rely, and shall be fully protected in relying upon any written resolution, notice, consent, approval, waiver, certificate, affidavit, letter, telegram, facsimile, telex, e-mail, statement or other document (each a “Communication”) believed by it to be genuine and correct and solely to the extent that such Communication is signed, sent or made by both VALIC and NUF in connection with the Loan. Any Communication not signed or sent by or on behalf of both VALIC and NUF shall not be valid.

ARTICLE 10
STATE-SPECIFIC PROVISIONS

10.1 Consistency. In the event of any conflict between the provisions of this Article 10 and any other provisions of this Mortgage or any other Loan Document, the provisions of this Article 10 shall control.

10.2 Maximum Principal Amount. The maximum principal amount secured by this Mortgage in the State of New Jersey upon recordation or upon any contingency that may be secured hereby at any time hereafter is $110,640,000.00, plus all advances made pursuant to any provisions of the Mortgage; provided that in no event shall any Mortgagee be obligated to advance in excess of the stated principal amount of the Note evidencing the indebtedness secured hereby.

10.3 Modification and Priority. This Mortgage is subject to “modification” as such term is defined in P.L. 1985 c.353 (N.J.S.A. 46:9-8.1 et seq.) and shall be subject to the priority provisions thereof.

10.4 Conflict of Laws. Mortgagee shall be entitled to all rights and remedies that a mortgagee would have under New Jersey law or in equity during the continuance of an Event of Default in addition to all rights and remedies it may have hereunder. Where any provision of this Mortgage is inconsistent with any provision of New Jersey law regulating the creation, perfection or enforcement of a lien or security interest in real or personal property, the provisions of such New Jersey law, as amended from time to time, shall take precedence over the provisions of this Mortgage, but shall not invalidate or render unenforceable any other provisions of this Mortgage that can be construed in a manner consistent with New Jersey law. Should applicable New Jersey law confer any rights or impose any duties inconsistent with or in addition to any of the provisions of this Mortgage, the affected provisions of this Mortgage shall be considered amended to conform to such applicable law, but all other provisions hereof shall remain in full force and effect without modification.

10.5 No Credit for Taxes Paid. Mortgagor waives any right it may have to a credit against interest due under the Loan secured by this Mortgage pursuant to N.J.S.A. 54:4-33.

10.6 True And Correct Copy. Mortgagor acknowledges that Mortgagor has received, without charge, a true and correct copy of this Mortgage.

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[SIGNATURE PAGE TO SECOND MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING, FINANCING STATEMENT AND ASSIGNMENT OF LEASES AND RENTS SECURING GUARANTY (NEW JERSEY)]

IN WITNESS WHEREOF, Mortgagor has executed and delivered this Security Instrument as of the date first mentioned above.

THE GC NET LEASE (▇▇▇▇▇▇) INVESTORS, LLC,

a Delaware limited liability company

By: The GC Net Lease (▇▇▇▇▇▇) Member, LLC,

a Delaware limited liability company,

its Sole Member

By: ▇▇▇▇▇▇▇ Capital Essential Asset Operating Partnership, L.P.,

a Delaware limited partnership,

its Sole Member

By: ▇▇▇▇▇▇▇ Capital Essential Asset REIT, Inc.,

a Maryland corporation,

its General Partner

by: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇

▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive Officer

SECOND MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING, AND ASSIGNMENT OF LEASES AND RENTS SECURING GUARANTY

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