MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING

Exhibit 10.5

Record And Return To:

Kelley Drye & Warren LLP

200 Kimball Drive

Parsippany, New Jersey 07054

Attn: Paul A. Keenan, Esq.

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

AMERICAN FINANCIAL EXCHANGE, L.L.C.,

PLAZA X URBAN RENEWAL ASSOCIATES L.L.C. and

PLAZA X LEASING ASSOCIATES L.L.C.

Mortgagor

to

NEW YORK LIFE INSURANCE COMPANY,

Mortgagee

Dated as of: June 25, 2010

Premises:

Harborside Plaza X

3 Second Street

City of Jersey City, Hudson County, New Jersey

TABLE OF CONTENTS

 

 

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MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (“ Mortgage ”), dated as of June 25, 2010, from AMERICAN FINANCIAL EXCHANGE, L.L.C. (“ AFE ”), PLAZA X URBAN RENEWAL ASSOCIATES L.L.C. (“ Plaza X Urban Renewal ”) and PLAZA X LEASING ASSOCIATES L.L.C. (“ Plaza X Leasing ”; AFE, Plaza X Urban Renewal and Plaza X Leasing are referred to herein individually and collectively, as the context may require, as “ Mortgagor ”), each a New Jersey limited liability company, having an office at c/o Dividend Capital, 518 17th Street, Suite 1700, Denver, Colorado 80202, to NEW YORK LIFE INSURANCE COMPANY (“ Mortgagee ”), a New York mutual insurance company, having an office at 51 Madison Avenue, New York, New York 10010-1603.

Mortgagor has executed and delivered to Mortgagee a Promissory Note (“ Note ”), dated as of June 25, 2010, payable to the order of Mortgagee in the original principal sum of One Hundred Twenty-Five Million and No/100 Dollars ($125,000,000.00), lawful money of the United States of America. The Note is secured by this Mortgage and the terms, covenants and conditions of the Note are hereby incorporated herein and made a part hereof.

In consideration of the sum of Ten Dollars ($10.00) paid and other good and lawful consideration, the receipt and sufficiency of which are hereby acknowledged and in order to secure the Obligations (as hereinafter defined), Mortgagor hereby mortgages, grants, assigns, releases, transfers, pledges and sets over to Mortgagee and grants to Mortgagee a security interest in the following property:

GRANTING CLAUSE ONE

All that tract or parcel of land (“ Land ”) more particularly described in Schedule A hereto, together with (a) the leasehold estate in and to the Land created pursuant to that certain Lease dated as of October 6, 2000, as amended by a certain First Amendment to Ground Lease dated as of September 29, 2003, between AFE, as lessor, and Plaza X Urban Renewal, as lessee (as the same has been or may hereafter be amended from time to time, the “ Ground Lease ”), a memorandum of which Ground Lease was recorded in the Office of the Hudson County Register of Deeds on October 7, 2003 in Book 7147 , Page 318 , and all right, title and interest of AFE and Plaza X Urban Renewal in, to and under said Ground Lease, and (b) the subleasehold estate in and to the Land created pursuant to that certain Lease dated as of October 6, 2000, as amended by a certain First Amendment to Lease dated as of September 29, 2003, between Plaza X Urban Renewal, as landlord, and Plaza X Leasing, as tenant, (as the same has been or may hereafter be amended from time to time, the “ Master Lease ”), a memorandum of which Master Lease was recorded in the Office of the Hudson County Register of Deeds on October 7, 2003 in Book 7147 , Page 326 , and all right, title and interest of Plaza X Urban Renewal and Plaza X Leasing in, to and under said Master Lease.

GRANTING CLAUSE TWO

All buildings, structures and improvements (collectively, “ Improvements ”) now or hereafter located on the Land, including all of Mortgagor’s machinery, apparatus, equipment and fixtures attached to, or used or procured for use in connection with the operation or maintenance of, any Improvement, all of Mortgagor’s refrigerators, shades, awnings, venetian blinds, screens, screen doors, storm doors, storm windows, stoves, ranges, curtain fixtures, partitions, attached floor coverings and fixtures, apparatus, equipment or articles used to supply sprinkler protection and waste removal, laundry equipment, furniture, furnishings, appliances, office equipment, elevators, escalators, tanks, dynamos, motors, generators, switchboards, communication equipment, electrical equipment, television and radio systems, heating, plumbing, lifting and ventilating apparatus, air-cooling and air conditioning apparatus, gas and electric fixtures, fittings and machinery and all of Mortgagor’s other personal property and equipment of every kind and description, excluding trade fixtures and personal property of any Lessee (as hereinafter defined), unless such trade fixtures or personal property become the property of Mortgagor upon expiration or termination of the term of the Lease in question, and all accessions, renewals and replacements thereof and all articles in substitution therefor. Whether or not any of the foregoing are attached to the Land or any of the Improvements in any manner, all such items shall be deemed to be fixtures, part of the real estate and security for the Obligations. The Land and Improvements are herein collectively called “ Premises ”. To the extent any of the Improvements are not deemed real estate under the laws of the State, they shall be deemed personal property and this grant shall include all of Mortgagor’s right, title and interest in, under and to such personal property and all other personal property now or hereafter attached to or located upon the Premises or used or useable in the management, maintenance or operation of the Improvements or the activities conducted on the Premises, including all computer hardware and software, but excluding trade fixtures and personal property of any Lessee, unless such personal property becomes the property of Mortgagor upon expiration or termination of the Lease in question, and all accessions, renewals and replacements thereof and all articles in substitution therefor (collectively, “ Personal Property ”).

GRANTING CLAUSE THREE

All now or hereafter existing easements and rights-of-way and all right, title and interest of Mortgagor, in and to any land lying within the right-of-way of any street, opened or proposed, adjoining the Premises, any and all sidewalks, alleys and strips and gores of land, streets, ways, passages, sewer rights, waters, water courses, water rights and powers, estates, rights, titles, interests, privileges, liberties, tenements, hereditaments, air rights, development rights, covenants, conditions, restrictions, credits and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to, or above or below the Premises, whether now or hereafter existing.

GRANTING CLAUSE FOUR

All intangible rights, interests and properties of Mortgagor relating to the Premises or any part thereof, and necessary or desirable for the continued ownership, use, operation, leasing or management thereof, whether now or hereafter existing, including any trademarks, servicemarks, logos or trade names relating to the Premises or by which the Premises or any part thereof may

 

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be known and any other franchises or other agreements relating to services in connection with the use, occupancy, or maintenance of the Premises, instruments, actions or rights in action and all intangible property and rights relating to the Premises.

GRANTING CLAUSE FIVE

All accounts receivable, insurance policies, contract rights, interests, rights under all oil, gas and mineral leases and agreements and all benefits arising therefrom, and all other claims, both at law and in equity, relating to the Premises, which Mortgagor now has or may hereafter acquire.

GRANTING CLAUSE SIX

All estate, interest, right, title and other claim or demand which Mortgagor now has or may hereafter acquire in any and all awards or payments relating to the taking by eminent domain, or by any proceeding or purchase in lieu thereof, of the whole or any part of the Premises, including all awards resulting from a change of grade of any street and awards for severance damages, together, in all cases, with all interest thereon.

GRANTING CLAUSE SEVEN

All proceeds of, and any unearned premiums on, insurance policies covering all or any part of the Premises, including the right to receive and apply the proceeds of all insurance or judgments related to the Premises, or settlements made in lieu thereof.

GRANTING CLAUSE EIGHT

All estate, interest, right, title and other claim or demand which Mortgagor now has or may hereafter acquire against anyone with respect to any damage to all or any part of the Premises, including damage arising or resulting from any defect in or with respect to the design or construction of all or any part of the Improvements.

GRANTING CLAUSE NINE

All deposits or other security or advance payments, including rental payments, made by or on behalf of Mortgagor to others in connection with the Obligations or the ownership or operation of all or any part of the Premises, including any such deposits or payments made with respect to (a) Impositions (as hereinafter defined), (b) insurance policies, (c) utility service, (d) cleaning, maintenance, repair or similar services, (e) refuse removal or sewer service, (f) rental of equipment, if any, used by or on behalf of Mortgagor, and (g) parking or similar services or rights.

GRANTING CLAUSE TEN

All remainders, reversions or other estates in the Premises or any part thereof.

 

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GRANTING CLAUSE ELEVEN

All right, title and interest of Mortgagor in and to all management contracts, permits, certificates, licenses, approvals, contracts, entitlements and authorizations, however characterized, now or hereafter issued or in any way furnished for the acquisition, construction, development, operation and use of the Land, the Improvements or the Leases, including the Tax Exemption Documents, building permits, environmental certificates, licenses, certificates of operation or occupancy, warranties and guaranties, except, in each case, to the extent that such mortgage, grant, assignment, transfer or pledge is restricted by the terms of such management contract, permit, certificate, license, approval, contract, entitlement or authorization and such restriction is enforceable under applicable law.

GRANTING CLAUSE TWELVE

All right, title and interest of Mortgagor in and to all easements, roads, streets, ways, sidewalks, alleys, passages, sewer rights, other utility rights, encroachment rights, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments, air rights, and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to, or arising under that certain Cross-Reciprocal Easement Agreement among AFE, Plaza VIII & IX Associates, L.L.C. and Cali Harborside (Fee) Associates L.P. dated September 29, 2003 and recorded in the Office of the Hudson County Register of Deeds on October 7, 2003 in Book 7147, Page 157 (the “ Easement Agreement ”) whether now or hereafter existing.

GRANTING CLAUSE THIRTEEN

All proceeds, products, replacements, additions, substitutions, renewals and accessions of any of the foregoing, including personal property acquired with cash proceeds.

TO HAVE AND TO HOLD THE SECURED PROPERTY UNTO MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS. Until the occurrence of and after the timely curing or waiver of an Event of Default, Mortgagee shall permit Mortgagor to possess and enjoy the Secured Property and to enforce the Leases and to receive, retain, use, distribute, collect and enjoy, the Rents therefrom in accordance with the terms of the Loan Instruments. The conditions of these presents is such that if Mortgagor shall pay, or cause to be paid, the Obligations as and when the same shall come due and payable, and shall observe, perform and discharge its obligations under this Mortgage, Mortgagee shall release and reconvey the Secured Property unto and at the expense of Mortgagor.

DEFINITIONS AND INTERPRETATION

As used in this Mortgage, the following terms shall have the meanings specified below:

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

“ Assignment ” shall mean the Assignment of Leases, Rents, Income and Cash Collateral, dated as of the date hereof, from Mortgagor, as assignor, to Mortgagee, as assignee.

 

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“ Cash Management Agreement ” shall mean the Cash Management Agreement, dated as of the date hereof, by and between Mortgagor and Mortgagee.

“ Code ” shall mean the Uniform Commercial Code of the State.

“ Condemnation Proceedings ” shall have the meaning set forth in Section 1.07A .

“ Control ” means, when used with respect to any specific Person, (a) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person whether through ownership of voting securities, beneficial interests, by contract or otherwise, including as an officer or director of such specific Person, or (b) the ownership, directly or indirectly, in the aggregate of more than fifty percent (50%) of the beneficial interest of a Controlled Person. The definition is to be construed to apply equally to variations of the word “Control” including “Controlled,” “Controlling” or “Controlled by.”

“ Debt Coverage Ratio ” shall mean, for any period, a fraction, the numerator of which shall equal the projected net operating income of the Premises for such period (including proceeds from any business interruption or “loss of rents” insurance), and the denominator of which shall equal the aggregate of the principal and interest for such period with respect to (A) the indebtedness due pursuant to the Loan Instruments, and (B) subordinate indebtedness, if any exists. Such calculation shall be as determined by Mortgagee based on the calculation above. This definition alone does not permit any subordinate financing if not otherwise expressly permitted under the Loan Instruments.

“ Easement Agreement ” shall have the meaning set forth in Granting Clause Twelve.

“ Environmental Claim ” shall mean any asserted claim or demand, of any kind or nature, by any Person, for any actual or alleged Environmental Damage, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, ordinance or regulation, common law or otherwise.

“ Environmental Damage ” shall mean any and all claims, judgments, damages (including consequential and punitive damages), losses, penalties, interest, fines, liabilities (including strict liability), obligations, responsibilities, encumbrances, liens, costs and expenses, of whatever kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, including attorneys’, experts’ and consultants’ fees and disbursements, including:

 

(a)

those relating to any investigation, defense or settlement of any claim, suit, administrative proceeding or investigation of any kind or any directive of any Governmental Agency;

 

(b)

those relating to damages for personal injury, or injury to property including natural resources, occurring in, on, under or about the Secured Property, including lost profits and the cost of demolition and rebuilding of any improvements on real property;

 

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(c)

diminution in the value of the Secured Property, and damages for the loss, or restriction on the use or adverse impact on the marketing, of the Secured Property or any part thereof;

 

(d)

loss of the priority of the lien of this Mortgage due to the imposition of a lien against the Secured Property; and

 

(e)

those incurred in connection with the investigation, cleanup, remediation, removal, abatement, containment, closure, restoration, monitoring work or other cure of any violation of an Environmental Requirement required by any Governmental Agency or reasonably necessary to make full economic use of the Secured Property or in connection with any other property, including the performance of any pre-remedial studies and investigations and post remedial monitoring and cure, or any action to prevent a Release or threat of Release or to minimize the further Release of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health or the environment.

“ Environmental Requirements ” shall mean any and all Legal Requirements (as hereinafter defined) relating to the protection of the environment, health or safety, including:

 

(a)

all Legal Requirements pertaining to reporting, licensing, permitting, investigation, remediation or removal of, or pertaining to Releases or threatened Releases of, Hazardous Materials, chemical substances, pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, including Releases or threatened Releases into the air, soil, surface water, ground water or land;

 

(b)

all Legal Requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, chemical substances, pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature; and

 

(c)

all Legal Requirements pertaining to industrial hygiene or the protection of the health and safety of employees or the public.

“ Equity Collateral ” shall have the meaning ascribed to the word “Collateral” in the Pledge Agreement.

“ ERISA ” shall have the meaning set forth in Section 2.12 .

“ Event of Default ” shall have the meaning set forth in Section 3.01 .

“ Governmental Agency ” shall mean any government, quasi-governmental or government sponsored enterprise, legislative body, commission, board, regulatory authority, bureau, administrative or other agency, court, arbitrator, grand jury or any other public body or entity or instrumentality, whether domestic, foreign, federal, state, county or municipal.

 

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“ Ground Lease ” shall have the meaning set forth in Granting Clause One.

“ Guarantor ,” shall mean (a) any guarantor of all or any portion of the Obligations, (b) any indemnitor (other than Mortgagor) under the Environmental Indemnity Agreement of even date herewith, executed by such indemnitor and Mortgagor in favor of Mortgagee or any subsequent Environmental Indemnity Agreement or similar agreement in favor of Mortgagee, and (c) any guarantor under the Guaranty or any subsequent Guaranty in favor of Mortgagee.

“ Guaranty ” shall mean the Guaranty of even date herewith, executed by Dividend Capital Total Realty Trust Inc., a Maryland corporation, and Dividend Capital Total Realty Operating Partnership LP, a Delaware limited partnership, in favor of Mortgagee.

“ Hazardous Materials ” shall mean any substance:

 

(a)

the presence of which requires notification, investigation or remediation under any Environmental Requirement;

 

(b)

which is or becomes designated, defined, classified or regulated as “hazardous”, “toxic”, “noxious”, “waste”, “pollutant”, “contaminant” or other similar term, or which requires remediation or is regulated under any present or future Environmental Requirement, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq .), Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq .), Federal Clean Air Act (42 U.S.C. Section 7401 et seq .), Federal Hazardous Materials Transportation Act (49 U.S.C. Section 5101 et seq .), Federal Clean Water Act (33 U.S.C. Section 1251 et seq .), Federal Environmental Pesticide Control Act (7 U.S.C. Section 136 et seq .), Federal Toxic Substances Control Act (15 U.S.C. Section 2601 et seq .), Federal Safe Drinking Water Act (42 U.S.C. Sections 300(f), et seq .), New Jersey Industrial Site Recovery Act, as amended, N.J.S.A. 13:1K-6 et seq., the Spill Compensation and Control Act, as amended, N.J.S.A., 58:10-23.11 et seq., the New Jersey Underground Storage of Hazardous Substances Act, as amended, N.J.S.A. 58:10A-21 et. seq., the Safe Drinking Water Act, as amended, N.J.S.A. 58:12A-1 et. seq., the Toxic Catastrophe Prevention Act N.J.S.A. 13:K-19, et. seq., the Worker and Community Right to Know Act, N.J.S.A. 34:5A-1, et. seq., the Pollution Prevention Act, N.J.S.A. 13:1D-35, et seq., the Air Pollution Control Act, N.J.S.A. 26:2C-1, et seq., the Solid Waste Management Act, N.J.S.A. 13:1E-1, et seq., the Sanitary Landfill Closure and Contingency Fund Act, N.J.S.A. 13:1E-100, et seq., the Solid Waste Utility Control Act, N.J.S.A. 48:13A-1, et seq., the Water Pollution Control Act, N.J.S.A. 58:10A-1, et seq.,

 

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the Flood Hazard Control Act, N.J.S.A. 58:16A-50, et seq., the Freshwater Wetlands Protection Act, N.J.S.A. 13:9B-1, et seq., the Coastal Area Facility Review Act, N.J.S.A. 13:19-1, et seq., the Wetlands Act of 1970, N.J.S.A. 13:9A-1, et seq., the Waterfront and Harbor Facilities Act, N.J.S.A. 12:5-1, et seq., the Noise Control Act, N.J.S.A. 13:1G-1, et seq., and the Pesticide Control Act, N.J.S.A. 13:1F-1, et seq., and any other federal, state, local or foreign law or ordinance which is presently in effect or hereafter enacted relating to environmental matters; any rules and regulations promulgated under any of the foregoing; and any and all amendments to the foregoing;

 

(c)

which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any Governmental Agency;

 

(d)

the presence of which on the Secured Property causes or threatens to cause a nuisance relating to the Secured Property or adjacent properties or poses or threatens to pose a hazard relating to the Secured Property or adjacent properties or to the health or safety of Persons on or about the Secured Property or adjacent properties;

 

(e)

which contains asbestos, gasoline, diesel fuel or other petroleum hydrocarbons, volatile organic compounds, polychlorinated biphenyls (PCBs) or urea formaldehyde foam insulation;

 

(f)

which contains or emits radioactive particles, waves or material, including radon gas; or

 

(g)

which is or constitutes a part of an underground storage tank.

“ Hazardous Material Claims ” shall have the meaning set forth in Section 1.05E(4) .

“ Impositions ” shall have the meaning set forth in Section 1.02A .

“ Improvements ” shall have the meaning set forth in Granting Clause Two.

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

“ Indemnified Claims ” shall have the meaning set forth in Section 1.05E(1) .

“ Independent Director ” shall mean a natural Person who (a) is not at the time of initial appointment, or at any time while serving in such capacity, and is not, and has never been, and will not while serving as Independent Director be: (i) a stockholder, director (with the exception of serving as the Independent Director of Mortgagor), officer, employee, partner, member, manager, attorney or counsel of Mortgagor, equity owners of Mortgagor or any Guarantor or any Affiliate of Mortgagor or any Guarantor; (ii) a customer, supplier or other person who derives any of its purchases or revenues from its activities with Mortgagor or any Guarantor, equity

 

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owners of Mortgagor or Guarantor or any Affiliate of Mortgagor or any Guarantor; (iii) a Person Controlling or under common Control with any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person; or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person and (b) has (i) prior experience as an independent director or independent manager for a corporation, a trust or limited liability company whose charter documents required the unanimous consent of all independent directors or independent managers thereof before such corporation, trust or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three years of employment experience with one or more nationally-recognized companies that provides, inter alia, professional independent directors or independent managers in the ordinary course of their respective business (a “ Professional Independent Director ”) and is an employee of such a company or companies at all times during his or her service as an Independent Director. A natural Person who satisfies the foregoing definition except for being (or having been) the independent director or independent manager of a “special purpose entity” that is an Affiliate of Mortgagor (provided such Affiliate does not or did not own a direct or indirect equity interest in an Mortgagor) shall not be disqualified from serving as an Independent Director, provided that such natural Person satisfies all other criteria set forth above and that the fees such individual earns from serving as independent director or independent manager of affiliates of Mortgagor or in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year. A natural Person who satisfies the foregoing definition other than subparagraph (a)(ii) shall not be disqualified from serving as an Independent Director if such individual is a Professional Independent Director and such individual complies with the requirements of the previous sentence.

“ Land ” shall have the meaning set forth in Granting Clause One.

“ Lease ” and “ Leases ” shall have the respective meanings set forth in Section 1.08A .

“ Lease Guaranty Payment ” shall mean any payment, fee or penalty paid by any guarantor of any Lease, whether by reason of a default or pursuant to the terms of any guaranty under such Lease or otherwise.

“ Lease Termination Fee ” shall mean any payment, fee or penalty paid by a tenant in connection with the cancellation or termination of such tenant’s Lease, whether by reason of such tenant’s default or pursuant to the terms of such Lease or otherwise.

“ Legal Requirements ” shall mean all present or future laws, statutes, permits, approvals, plans, authorizations, guidelines, franchises, ordinances, restrictions, orders, rules, codes, regulations, judgments, decrees, injunctions or requirements of all Governmental Agencies or any officers thereof, including any Board of Fire Underwriters.

“ Lessee ” shall have the meaning set forth in Section 1.08A .

 

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“ Loan ” shall mean the mortgage loan evidenced by the Note and secured by this Mortgage.

“ Loan Instruments ” shall mean the Note, this Mortgage, the Assignment, the Pledge Agreement, the Cash Management Agreement, the Guaranty, the Side Letter and each other instrument now or hereafter given to evidence, secure, indemnify, guaranty or otherwise assure or provide for the payment or performance of the Obligations or otherwise executed by Mortgagor in connection with the Loan.

“ Make-Whole Amount ” shall have the meaning set forth in the Note.

“ Master Lease ” shall have the meaning set forth in Granting Clause One.

“ Material Agreement ” shall mean each of the Ground Lease, the Master Lease, the Schwab Lease and the Tax Exemption Documents.

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

“ Mortgagee’s Architect ” shall mean a licensed architect or registered engineer approved by Mortgagee.

“ Non-Recourse Exceptions ” shall have the meaning set forth in Section 5.18 .

“ Note ” shall have the meaning set forth in the second introductory paragraph of this Mortgage.

“ Obligations ” shall mean and include all indebtedness, obligations, covenants, agreements and liabilities of Mortgagor to Mortgagee, including all obligations to pay interest, the Make-Whole Amount and all charges and advances, whether direct or indirect, existing, future, contingent or otherwise, due or to become due, pursuant to or arising out of or in connection with the Note, this Mortgage, the Assignment or any other Loan Instrument, all modifications, extensions and renewals of any of the foregoing and all expenses and costs of collection or enforcement, including attorneys’ fees and disbursements incurred by Mortgagee in the collection or enforcement of any of the Loan Instruments or in the exercise of any rights or remedies pursuant to the Loan Instruments or applicable law.

“ Partial Foreclosure ” shall have the meaning set forth in Section 4.01B .

“ Person ” shall mean a corporation, a limited or general partnership, a limited liability company or partnership, a joint stock company, a joint venture, a trust, an unincorporated association, a Governmental Agency, an individual or any other entity similar to any of the foregoing.

“ Personal Property ” shall have the meaning set forth in Granting Clause Two.

“ Phase I ” shall mean that certain Environmental Assessment, dated May 25, 2010, prepared by EMG.

 

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“ Pledge Agreement ” shall mean the Pledge and Security Agreement, dated as of the date hereof, from the Pledgors, collectively as pledgor, to Mortgagee, as lender.

“ Pledgors ” shall mean TRT Harborside LLC, a Delaware limited liability company, and Plaza X Realty L.L.C., a New Jersey limited liability company.

“ Premises ” shall have the meaning set forth in Granting Clause Two.

“ Proceeds ” shall have the meaning set forth in Section 1.03F(2) .

“ Purchase Option ” shall have the meaning set forth in Section 1.11D .

“ Rents ” shall mean all rents, issues, profits, cash collateral, royalties, income and other benefits derived from the Secured Property or any part thereof (including benefits accruing from all present or future leases and agreements, including oil, gas and mineral leases and agreements).

“ Release ” shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the environment.

“ Schwab Lease ” shall mean that certain Amended and Restated Lease dated December 29, 2000 between Plaza X Leasing, as landlord, and Charles Schwab & Co., Inc., as tenant, as the same has been or may hereafter be amended from time to time.

“ Secured Property ” shall mean the Premises, the Personal Property and all other rights and interests described in the Granting Clauses of this Mortgage.

“ Side Letter ” shall mean the letter, dated as of the date hereof, from Mortgagee to Mortgagee relating to extensions of the Loan, Transfers and other matters.

“ State ” shall mean the State, Commonwealth or territory in which the Secured Property is located.

“ Tax Exemption Documents ” shall mean, collectively (a) that certain Contribution Agreement dated as of November 15, 2000 between AFE and the City of Jersey City, (b) that certain Project Employment & Contracting Agreement dated as of November 15, 2000 between Plaza X Urban Renewal and the City of Jersey City, (c) that certain Financial Agreement dated as of November 15, 2000, between Plaza X Urban Renewal and the City of Jersey City, (d) that certain Addendum to Financial Agreement effective as of November 15, 2000 between Plaza X Urban Renewal and the City of Jersey City, (e) that certain Amendment to Financial Agreement dated September 23, 2003 between Plaza X Urban Renewal and the City of Jersey City, (f) the Settlement Agreement and Release about to be entered into between Plaza X Urban Renewal and the City of Jersey City and (f) any other documents now or hereafter entered into by any Mortgagor in connection with a tax exemption pursuant to the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq., as any of the foregoing have been or may hereafter be amended from time to time.

“ Transfer ” shall have the meaning set forth in Section 1.11B .

 

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As used in this Mortgage (a) words such as “herein”, “hereof”, “hereto”, “hereunder” and “hereby” or similar terms refer to this Mortgage as a whole and not to any specific Section or provision hereof; (b) wherever the singular or plural number or the masculine, feminine or neuter gender is used, it shall include each other number or gender; and (c) the word “including” shall mean “including, without limitation,” and the word “includes” shall mean “includes, without limitation.”

ARTICLE 1

COVENANTS AND AGREEMENTS

Mortgagor hereby covenants and agrees as follows:

1.01 Payment, Performance and Security . Mortgagor shall pay when due the amount of, and otherwise timely perform, all Obligations. This Mortgage shall secure all Obligations.

1.02 Payment of Taxes, Assessments, etc .

1.02A. Impositions . Mortgagor shall pay when due and payable, before any fine, penalty, interest or cost for the nonpayment thereof may be added thereto, and without any right of offset or credit against any interest or other amounts payable to Mortgagee pursuant to this Mortgage or on the Note, all taxes, assessments, water and sewer rents, rates and charges, transit taxes, charges for public utilities, excises, levies, vault taxes or charges, license and permit fees and other governmental charges, general and special, ordinary and extraordinary, unforeseen and foreseen, of any kind and nature whatsoever (including penalties, interest costs and charges accrued or accumulated thereon), which at any time may be assessed, levied, confirmed, imposed upon, or become due and payable out of or in respect to, or become a lien on, the Secured Property or any part thereof, or any appurtenance thereto, including amounts payable by Mortgagor under the Tax Exemption Documents (all of the foregoing collectively, “ Impositions ” and individually, an “ Imposition ”).

1.02B. Installments . Notwithstanding anything to the contrary contained in Section 1.02A , if by law any Imposition, at the option of the taxpayer, may be paid in installments, and provided interest shall not accrue on the unpaid balance of such Impositions, Mortgagor may exercise the option to pay the same in installments and, in such event, shall pay such installments as the same become due and before any fine, penalty, interest or cost may be added thereto.

1.02C. Receipts . Mortgagor, upon request of Mortgagee, will furnish to Mortgagee within ten (10) days before the date when any Imposition would become delinquent, official receipts of the appropriate taxing authority, or other evidence reasonably satisfactory to Mortgagee, evidencing the payment thereof.

1.02D. Evidence of Payment . The bill, certificate or advice of nonpayment, issued by the appropriate official (designated by law either to make or issue the same or to receive payment of any Imposition) of the nonpayment of an Imposition shall be prima facie evidence that such Imposition is due and unpaid at the time of the making or issuance of such certificate, advice or bill. Mortgagor shall pay Mortgagee, on demand, all charges, costs and

 

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expenses of every kind including each tax service search fee or charge incurred by Mortgagee at any time or times during the term of this Mortgage in connection with obtaining evidence satisfactory to Mortgagee that the payment of all Impositions is current and that there is no Imposition due and owing or which has become or given rise to a lien on the Secured Property or any part thereof or any appurtenance thereto.

1.02E. Payment by Mortgagee . If Mortgagor shall fail to pay any Imposition in accordance with the provisions of this Section 1.02 , Mortgagee, at its option and at such time as it may elect, may pay such Imposition, but shall be under no obligation to do so. Mortgagor will repay to Mortgagee, on demand, any amount so paid by Mortgagee, with interest thereon at the Increased Rate from the date of such payment by Mortgagee to the date of repayment by Mortgagor. This Mortgage shall secure each such amount and such interest.

1.02F. Change in Law . In the event of the passage after the date of this Mortgage of any law deducting the Obligations from the value of the Secured Property or any part thereof for the purpose of taxation or resulting in any lien thereon, or changing in any way the laws now in force for the taxation of this Mortgage or the Obligations for state or local purposes, or the manner of the operation of any such taxes so as to affect the interest of Mortgagee, then, and in such event, Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the Loan or the Obligations wholly or partially usurious under any of the terms or provisions of the Note, this Mortgage or otherwise, Mortgagee may, at its option, declare all Obligations secured by this Mortgage, with interest thereon, to be immediately due and payable, or Mortgagee may, at its option, pay that amount or portion of such taxes as renders the Loan or the Obligations unlawful or usurious, in which event Mortgagor shall concurrently therewith pay the remaining lawful and non-usurious portion or balance of such taxes. Mortgagor waives any right it may have to a credit against interest due on the debt secured by this Mortgage for taxes paid.

1.02G. Joint Assessment . Mortgagor shall not suffer, permit or initiate the joint assessment of the Premises and the Personal Property, or any other procedure whereby personal property taxes and real property taxes shall be assessed, levied or charged to the Secured Property as a single lien.

1.02H. Permitted Contests . Notwithstanding anything herein to the contrary, if, and for so long as, Mortgagor is not in default pursuant to any of the Loan Instruments, Mortgagor shall have the right to contest the amount or the validity, in whole or in part, of any Imposition, by appropriate proceedings diligently conducted in good faith and without cost or expense to Mortgagee. Subject to the provisions of Section 1.02I and provided Mortgagor is in compliance with the provisions of the next sentence, Mortgagor may postpone or defer payment of such Imposition if Mortgagor, on or before the due date thereof, shall do one of the following: (1) deposit or cause to be deposited with Mortgagee a surety bond issued by a surety company of recognized responsibility acceptable to Mortgagee, guaranteeing and securing the payment in full of such Imposition, pending the determination of such contest, (2) deposit or cause to be deposited with Mortgagee an amount equal to one hundred percent (100%) of such Imposition or any balance thereof remaining unpaid, and from time to time, but not more frequently than quarterly, deposit amounts in order to keep on deposit at all such times an amount equal to one

 

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hundred percent (100%) of the Imposition remaining unpaid, or (3) furnish or cause to be furnished to Mortgagee other security reasonably satisfactory to Mortgagee. If such deposit is made or such security furnished and Mortgagor continues in good faith to contest the validity of such Imposition by appropriate legal proceedings which shall operate to prevent the collection of such Imposition so contested, the imposition of interest, fines or other penalties with respect to such Imposition and the sale of the Secured Property or any part thereof to satisfy such Imposition, Mortgagor shall have no obligation to pay such Imposition until such time as it has been finally determined to be a valid, due and payable Imposition. Upon termination of any such proceeding, or at any earlier time that Mortgagor shall have been adjudicated liable for the payment of such Imposition, Mortgagor shall pay in full the amount of such Imposition or part thereof as shall have been finally determined in such proceeding, together with all liabilities in connection therewith. If Mortgagor shall fail to pay in full the amount that has been finally determined, Mortgagee shall have the full power and authority to apply or require the application of any amounts that may have been deposited pursuant to this Section 1.02H to payment of any unpaid Imposition. However, Mortgagee shall not have any liability for application of, or failure to apply, any amount so deposited, except for Mortgagee’s intentional and willful failure to apply a deposited amount after Mortgagor shall have notified Mortgagee of such final decision and Mortgagor or the Person making such deposit shall have requested in writing the application of such amount to the payment of the particular Imposition with respect to which it was deposited. Mortgagee shall repay to Mortgagor, or as directed by Mortgagor, the remainder of any such deposit after payment in full of the related Imposition, unless Mortgagor shall be in default pursuant to any of the Loan Instruments. If a default then exists, Mortgagee may, in its discretion, apply all or any part of such remainder to the curing of such default. After the curing of all such defaults (and the payment in full of all then due and payable Impositions), Mortgagee shall pay the remainder of such surplus, if any, to Mortgagor. Mortgagor may contest matters under the Tax Exemption Documents by appropriate proceedings diligently conducted in good faith and without cost or expense to Mortgagee, provided that if such matter involves any disputed payment obligation of Mortgagor under the Tax Exemption Documents, Mortgagor shall deposit the disputed amount with Mortgagee in accordance with the provisions of this Section 1.02H .

1.02I. No Lease Default . Notwithstanding anything to the contrary contained herein, if contesting the validity or amount of any Imposition shall cause a breach of any of the terms, conditions or covenants required to be performed by Mortgagor as lessor under any Lease, Mortgagor shall not have the right to contest the same as provided in Section 1.02H , and Mortgagor shall pay such Imposition pursuant to Section 1.02A .

1.03 Insurance .

1.03A. All Risk Coverage . Mortgagor, at its sole cost and expense, shall keep the Improvements and the Personal Property insured against loss or damage by fire and against loss or damage by other risks now covered by “All Risk” insurance, in form and substance satisfactory to Mortgagee, and in an amount equal to at least one hundred percent (100%) of the full replacement cost of the Improvements and the Personal Property, including improvement work performed for tenants, without deduction for depreciation and with such other deductibles, if any, as are satisfactory to Mortgagee, in its discretion. Such insurance shall include an endorsement for demolition and increased cost of construction and an agreed amount

 

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endorsement for the estimated replacement cost. Mortgagor’s “All Risk” insurance policy shall not exclude from coverage any loss arising from the perils of terrorist acts or, in the alternative, Mortgagor shall maintain a separate insurance policy covering terrorist acts and, in either case, the coverage for damage caused by terrorist acts shall be on a 100% replacement cost basis with a deductible acceptable to Mortgagee (such insurance coverage shall be referred to herein as “ Terrorism Insurance ”). Mortgagor’s Terrorism Insurance coverage may be part of a blanket insurance policy provided that the blanket coverage (i) is acceptable to Mortgagee, in its discretion, (ii) contains an endorsement to the policy showing Mortgagee as a certificate holder and additional insured and (iii) contains a specific allocation of value and deductible related to the coverage on the property to be encumbered by the Mortgage and provides that such value and deductible may not be affected by any claims or other matters related to the other properties covered by the blanket policy.

1.03B. Additional Coverage . Mortgagor, at its sole cost and expense, shall at all times also maintain:

(1) Commercial general liability insurance against claims for bodily injury, personal injury or property damage, occurring in, on, under or about the Secured Property or in, on, under or about the adjoining streets, sidewalks and passageways; such insurance to be in amounts and in form and substance satisfactory to Mortgagee;

(2) Rent and/or business income insurance in an amount not less than one year’s aggregate rentals, including minimum rentals, escalation charges, percentage rents (based on sales projections acceptable to Mortgagee) and other additional rentals, and any other amounts payable by tenants and other occupants at the Secured Property pursuant to Leases or otherwise, which amount shall be increased from time to time upon the leasing of space at the Secured Property or upon each increase in such aggregate rentals;

(3) If the Improvements are located in a flood hazard area, flood insurance on the Improvements in an amount equal to the lesser of full replacement cost thereof or the maximum amount of insurance obtainable;

(4) Insurance, in such amounts as Mortgagee shall from time to time require, against loss or damage from leakage or explosion of steam boilers, air conditioning equipment, pressure vessels or similar apparatus, now or hereafter installed in or on the Secured Property; and

(5) Such other insurance and any replacements, substitutions or additions thereto as shall at any time be required by Mortgagee against other insurable hazards, including earthquake, war risk, terrorism, nuclear reaction or radioactive contamination, each in such amount as Mortgagee shall determine.

1.03C. Separate Insurance . Mortgagor shall not carry separate insurance, concurrent in kind or form and contributing in the event of loss with any insurance required hereunder. Mortgagor may, however, effect for its own account any insurance not required pursuant to the provisions of this Mortgage, but any such insurance effected by Mortgagor on the Secured Property, whether or not required pursuant to this Section 1.03 , shall be for the mutual benefit of Mortgagor and Mortgagee, as their respective interests may appear, and shall be subject to all other provisions of this Section 1.03 .

 

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1.03D. Insurers; Policies . All insurance provided for in this Section 1.03 shall be effected under valid and enforceable policies issued by financially responsible insurers, rated by A.M. Best as “A” or better and as having a class size of at least “X(10)” and authorized to do business in the State, with deductibles acceptable to Mortgagee and otherwise in form and substance acceptable to Mortgagee. An original (or certified) copy of all such policies shall be deposited with and held by Mortgagee and shall contain the standard non-contributory mortgagee clause in favor of Mortgagee and a waiver of subrogation endorsement, all in form and content satisfactory to Mortgagee. All such policies shall contain a provision that such policies will not be cancelled or materially amended (including any reduction in the scope or limits of coverage), without at least thirty (30) days’ prior written notice to Mortgagee. Not less than thirty (30) days prior to the expiration dates of the expiring policies theretofore furnished pursuant to this Section 1.03 , (so long as Mortgagor has been invoiced for such insurance premiums, but in any case to avoid lapse of such policies, originals (or certified copies)) of the policies bearing notations evidencing the full payment of the annual premium or accompanied by other evidence satisfactory to Mortgagee of such payment shall be delivered by Mortgagor to Mortgagee.

1.03E. Mortgagee’s Right to Secure Coverage . If Mortgagor fails to furnish to Mortgagee and keep in force the original policies of insurance required by this Section 1.03 , Mortgagee, at its option, may procure such insurance, which procurement, at Mortgagee’s further option, may be by the purchase of insurance policies or by the addition of the Secured Property to Mortgagee’s blanket policy. In the event that Mortgagee has exercised either of such options, promptly upon demand by Mortgagee, Mortgagor (i) will reimburse Mortgagee for all premiums on the policies purchased by Mortgagee or (ii) in the event Mortgagee has added the Secured Property to its blanket policy, will pay to Mortgagee an amount equal to the estimated cost of the insurance coverage which Mortgagee has added to its blanket policy had such coverage been obtained under a separate policy and not under a blanket policy, in either case, with interest thereon at the Increased Rate from the date Mortgagee pays such premiums to the date Mortgagor repays such premiums to Mortgagee in full. Until they are so repaid, this Mortgage shall secure the amount of such premiums and interest.

1.03F. Damage or Destruction . Upon the occurrence of any damage or casualty to the Secured Property or any part thereof, the following shall apply:

(1) Mortgagor shall give Mortgagee written notice of such damage or casualty as soon as possible, but not later than ten (10) days after the date such damage or casualty occurs.

(2) All proceeds of insurance (“ Proceeds ”) paid or to be paid pursuant to any of the policies maintained pursuant to this Mortgage shall be payable to Mortgagee. Mortgagor hereby authorizes and directs any affected insurer to make payment of the Proceeds directly to Mortgagee. Mortgagee may commingle, with other monies in Mortgagee’s possession, all Proceeds received by Mortgagee. All such Proceeds shall constitute additional security for the Obligations and Mortgagor shall not be entitled to the payment of interest thereon. So long as no Event of Default then exists, Mortgagor may settle, adjust or compromise all claims for loss, damage or destruction pursuant to any policy or policies of insurance provided that such claim does not exceed $1,000,000.00.

 

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(3) Mortgagee shall have the option, in its discretion, and without regard to the adequacy of its security hereunder, of applying all or part of the Proceeds to (a) the Obligations, whether or not then due, in such order as Mortgagee shall determine in accordance with applicable law, (b) the repair or restoration of the Secured Property, (c) reimburse Mortgagee for its actual costs and expenses in connection with the recovery of the Proceeds, if any, or (d) any combination of the foregoing.

(4) Nothing herein contained shall be deemed to excuse Mortgagor from repairing or maintaining the Secured Property as provided in Section 1.05 or restoring all damage or destruction to the Secured Property, regardless of whether there are Proceeds available or whether the Proceeds are sufficient in amount, and the application or release by Mortgagee of any Proceeds shall not cure or waive any Event of Default or notice of default pursuant to this Mortgage or invalidate any act done pursuant to such notice.

1.03G. Transfer of Interest in Policies . In the event of the foreclosure of this Mortgage or other transfer of title or assignment of the Secured Property in payment and performance, in whole or in part, of the Obligations, all right, title and interest of Mortgagor in and to all policies of insurance required by this Section 1.03 shall inure to the benefit of, and pass to the purchaser or grantee of the Secured Property. If, prior to Mortgagee’s receipt of the Proceeds, the Secured Property shall have been sold through the foreclosure of this Mortgage or other similar proceeding, Mortgagee shall have the right to receive the Proceeds to the extent that any portion of the Obligations are still unpaid after application of the proceeds of the foreclosure sale or similar proceeding, together with interest thereon at the Increased Rate, plus attorney’s fees and other costs and disbursements incurred by Mortgagee in connection with the collection of the Proceeds and in establishing the amount of and collecting the deficiency. Mortgagor hereby assigns, transfers and sets over to Mortgagee all of the Mortgagor’s right, title and interest in and to said sum. The balance, if any, shall be paid to Mortgagor, or as otherwise required by law.

1.03H. Mortgagor’s Use of Proceeds .

(1) Notwithstanding any provision herein to the contrary, but subject to the provisions of Section 1.03H(4) , in the event of any destruction to the Secured Property by fire or other casualty as to which the estimated cost of repair or restoration exceeds $1,000,000, the Proceeds shall be made available to Mortgagor for repair and restoration, after deducting therefrom and payment to Mortgagee of an amount equal to Mortgagee’s costs in connection with collection, review and disbursement of the Proceeds of such damage or casualty, provided that:

(a) The Proceeds are deposited with Mortgagee;

(b) No Event of Default shall have occurred and be continuing under the terms of any of the Loan Instruments;

(c) The insurer does not deny liability to any named insured;

 

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(d) Mortgagee is furnished with, and has approved (i) a complete, final set of plans and specifications for the work to be performed in connection with the repair or restoration, (ii) an estimate of the cost of repair and restoration, and (iii) a certificate of Mortgagee’s Architect as to such costs;

(e) The value, quality and condition of the Secured Property so repaired or restored shall be at least equal to that of the Secured Property prior to such damage or casualty;

(f) Mortgagor furnishes Mortgagee with evidence reasonably satisfactory to Mortgagee that all Improvements so repaired or restored and their use shall fully comply with all applicable (i) easements, covenants, conditions, restrictions or other private agreements or instruments of record affecting the Secured Property and (ii) Legal Requirements;

(g) If the estimated cost of such repair or restoration exceeds the Proceeds available, Mortgagor shall (i) furnish a bond of completion or provide other evidence satisfactory to Mortgagee of Mortgagor’s ability to pay such excess costs, or (ii) deposit with Mortgagee additional funds equal to such excess;

(h) Mortgagee shall have received written notice of damage or casualty from Mortgagor within ten (10) days after the date of such damage or casualty, which notice shall state the date of such damage or casualty, and shall contain a request to Mortgagee to make the Proceeds available to Mortgagor;

(i) Mortgagee shall have received a report or proof of claim from the insurer describing the damage or casualty and the insurer’s payment therefor;

(j) During and after the repair and restoration period, the aggregate monthly net income pursuant to rent or business income insurance and/or pursuant to all Leases remaining in full force and effect shall be in an amount sufficient to pay the monthly installments of principal and interest required to be paid on the Obligations, as well as all payments for taxes and insurance required pursuant to Section 1.04 , as estimated by Mortgagee; and

(k) the Debt Coverage Ratio is not less than 1.50.

(2) Mortgagee shall disburse the Proceeds during the course of repair or restoration upon (a) the certification of Mortgagee’s Architect as to the cost of the work done, (b) the conformity, as determined by Mortgagee, of the work to plans and specifications approved by Mortgagee, and (c) receipt of evidence of a title insurance company acceptable to Mortgagee that there are no liens arising out of the repair or restoration or otherwise. Notwithstanding the above, a portion of the Proceeds may be released prior to the commencement of repair or restoration to pay for items approved by Mortgagee in its discretion. Subject to satisfaction of the foregoing conditions, Mortgagee shall make such disbursements within ten (10) business days after a written request by Mortgagor. No payment made prior to the final completion of work shall exceed ninety percent (90%) of the value of the work performed from time to time, and at all times the undisbursed balance of the Proceeds remaining with Mortgagee must be at least sufficient to pay for the cost of completion of the work (as

 

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estimated by Mortgagee in its discretion), free and clear of liens. Mortgagee shall make final payment after receipt of a certification of Mortgagee’s Architect confirming the completion of the work in accordance with plans and specifications approved by Mortgagee.

(3) At its option, Mortgagee shall (a) return to Mortgagor the balance of the Proceeds after full disbursement in accordance with Sections 1.03H(1) and (2) , or (b) apply such balance to the Obligations, whether or not then due, in such order as Mortgagee shall determine.

(4) In all cases in which any destruction of the Secured Property by fire or other casualty occurs during the last twelve (12) months prior to the Maturity Date, or in Mortgagee’s judgment, Mortgagor is not proceeding with the repair or restoration in a manner that would entitle Mortgagor to have the Proceeds disbursed to it, or for any other reason Mortgagee determines in its judgment that Mortgagor shall not be entitled to the Proceeds pursuant to the terms of this Mortgage, Mortgagee shall have the options set forth in Section 1.03F(3) .

1.04 Escrow Payments . To further secure the Obligations as to payment of the Impositions (as set forth in Section 1.02 ) and premiums for insurance (as set forth in Section 1.03 ), Mortgagor will pay to Mortgagee, or its designee, on the due date of each monthly installment of principal and/or interest pursuant to the Note, a sum equal to the Impositions and insurance premiums next due on the Secured Property, all as estimated by Mortgagee, less all sums already paid with respect to the Impositions and insurance premiums for such period, divided by the number of months to elapse before one month prior to the date when such Impositions and insurance premiums shall become due and payable. Mortgagee or its designee shall hold all payments without any obligation for the payment of interest thereon to Mortgagor and free of all liens or claims on the part of creditors of Mortgagor and as a part of the Secured Property. Mortgagee or its designee shall use such payments to pay current Impositions and insurance premiums, as the same accrue and are payable. Such payments shall not be, nor be deemed to be, trust funds, but may be commingled with the general funds of Mortgagee, or its designee. If at any time and for any reason Mortgagee determines that such payments are insufficient to pay the Impositions and insurance premiums in full as they become payable, Mortgagor will pay to Mortgagee or its designee, within ten (10) days after demand therefor, such additional sum or sums as may be required in order for Mortgagee or its designee to so pay such Impositions and insurance premiums in full. Mortgagor shall furnish Mortgagee with the bills therefor within sufficient time to enable Mortgagee or its designee to pay the Impositions and insurance premiums before any penalty attaches and before any policy lapses. Upon any Event of Default in the provisions of any Loan Instrument, Mortgagee may, at its discretion and without regard to the adequacy of its security hereunder, apply any unused portion of such payments to the payment of the Obligations in such manner as it may elect. Transfer of legal title to the Secured Property shall automatically transfer to the new owner any then remaining rights of Mortgagor in all sums held by Mortgagee pursuant to this Section 1.04 .

1.05 Care and Use of the Premises .

1.05A. Maintenance and Repairs . Mortgagor, at its sole cost and expense, shall (1) take good care of the Secured Property and the sidewalks adjoining the Secured Property and

 

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keep the same in good order and condition, (2) make all necessary repairs thereto, interior and exterior, structural and nonstructural, ordinary and extraordinary, foreseen and unforeseen, (3) not commit or suffer to be committed any waste of the Secured Property, and (4) not do or suffer to be done anything which will increase the risk of fire or other hazard to the Secured Property or any part thereof.

1.05B. Standard of Repairs . The necessity for and adequacy of repairs to the Secured Property pursuant to Section 1.05A shall be measured by the standard which is appropriate for a first class office building and related facilities of similar construction and type located in the Hudson County, New Jersey area. Further, Mortgagor shall make all repairs necessary to avoid any structural damage to the Improvements and to keep the Secured Property in a proper condition for its intended use. When used in this Section 1.05 , the terms “repair” and “repairs” shall include all necessary renewals and replacements. Mortgagor shall make all repairs with new, first-class materials and in a good, substantial and workerlike manner which shall be equal or better in quality and class to the original work.

1.05C. Removal of Equipment . Mortgagor shall have the right, at any time and from time to time, to remove and dispose of equipment which may have become obsolete or unfit for use or which is no longer useful in the operation of the Secured Property. Mortgagor will promptly replace all equipment so disposed of or removed with other equipment of a value and serviceability equal to or greater than the original value and serviceability of the equipment so removed or disposed of, free of all liens, claims or other encumbrances. If by reason of technological or other developments in the operation and maintenance of buildings of the general character of the Improvements, no replacement of the building equipment so removed or disposed of is necessary or desirable in the proper operation or maintenance of the Improvements, Mortgagor shall not be required to replace same. The security interest of this Mortgage shall cover all such replacement equipment.

1.05D. Compliance With Laws and Insurance . Mortgagor shall promptly comply with any and all applicable Legal Requirements including maintaining the Secured Property in compliance with all Legal Requirements. Mortgagor shall not bring or keep any article upon the Secured Property or cause or permit any condition to exist thereon which would be prohibited by or could invalidate any insurance coverage maintained, or required hereunder to be maintained, by Mortgagor on or with respect to any part of the Secured Property. Mortgagor shall do all other acts, which from the character or use of the Secured Property may be necessary to protect the Secured Property. Upon request of Mortgagee, Mortgagor shall furnish to Mortgagee a copy of any license, permit or approval required by any Governmental Agency with respect to the Secured Property and/or the operations conducted thereon.

1.05E. Hazardous Materials .

(1) Mortgagor hereby unconditionally and irrevocably agrees to indemnify, reimburse, defend, exonerate, pay and hold harmless Mortgagee, and its directors, officers, policyholders, shareholders, employees, successors (including any successor to Mortgagee’s interest in the chain of title), assigns, agents, attorneys, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees and invitees, from and against any and all of the following (referred to collectively as the “ Indemnified Claims ”): all Environmental

 

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Damages and Environmental Claims that may be actually incurred by, imposed upon, or asserted against, any Person indemnified hereunder, arising out of, related to, or in connection with:

(a) the presence of Hazardous Materials in, on, under or about or the Release or threatened Release of any Hazardous Materials to or from (i) the Secured Property or (ii) any other property legally or beneficially owned (or any interest or estate which is owned) by Mortgagor, regardless of whether or not the presence of such Hazardous Materials arose prior to the present ownership or operation of the property in question or as a result of the acts or omissions of Mortgagor or any other Person,

(b) the violation or alleged violation of any Environmental Requirement affecting or applicable to the Secured Property or any activities thereon, regardless of whether or not the violation of such Environmental Requirement arose prior to the present ownership or operation of the property in question or as a result of the acts or omissions of Mortgagor or any other Person,

(c) the breach of any warranty or covenant or the inaccuracy of any representation contained in the Loan Instruments pertaining to Hazardous Materials or other environmental matters, including the covenants contained in Sections 1.05E(2), (3), (4) and (5)  and the representations and warranties contained in Sections 1.05E(4) and 2.03C and D ,

(d) the