MORTGAGE DEED, SECURITY AGREEMENT, FIXTURE FILING, FINANCING STATEMENT AND ASSIGNMENT OF LEASES AND RENTS

1.8           Event of Default:   As defined in Article 6 .

1.9           Guarantor:   Griffin Land & Nurseries, Inc., a Delaware corporation.

1.10         Guaranty Agreement:   The Guaranty Agreement of even date herewith made by Guarantor for the benefit of Mortgagee.

1.11         Insurance Agreement:   The Agreement Concerning Insurance Requirements of even date herewith executed by Mortgagor for the benefit of Mortgagee.

1.12         Intangible Personalty:   To the extent now owned or hereafter acquired by Mortgagor, the right to use all trademarks and trade names and symbols or logos used in connection therewith, or any modifications or variations thereof, in connection with the operation of the improvements existing or to be constructed on the Property, together with all accounts, deposit accounts, letter of credit rights, investment property, monies in the possession of Mortgagee (including without limitation proceeds from insurance, retainages and deposits for taxes and insurance), Permits, contract rights (including, without limitation, rights to receive insurance proceeds) and general intangibles (whether now owned or hereafter acquired, and including proceeds thereof) relating to or arising from Mortgagor’s ownership, use, operation, leasing, or sale of all or any part of the Property, specifically including but in no way limited to any right which Mortgagor may have or acquire to transfer any development rights from the Property to other real property, and any development rights which may be so transferred.

1.13         Lease Certificate:   The certificate of even date herewith made by Mortgagor to Mortgagee concerning Leases.

1.14         Leases:   Any and all leases, subleases and other agreements under the terms of which any person other than Mortgagor has or acquires any right to occupy or use the Property, or any part thereof.

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

1.16         Loan Documents:   The Note, all of the deeds of trust, mortgages and other instruments and documents securing or executed and delivered in connection with the Note, including this Mortgage; the Insurance Agreement; the Environmental Indemnity Agreement; the Guaranty Agreement; the Lease Certificate; Agreement Concerning Master Lease (as defined in Section 1.1 above); Tenant Improvements and Leasing Commissions Escrow Agreement (as defined in Section 1.25 below) and each other document executed or delivered in connection with the transaction pursuant to which the Note has been executed and delivered.  The term “Loan Documents” also includes all modifications, extensions, renewals, and replacements of each document referred to above.

1.17         Mortgagee:   The Mortgagee named in the introductory paragraph of this Mortgage, whose legal address is c/o AIG Global Investment Corp., 1 SunAmerica Center, 38 ^th  Floor, Century City, Los Angeles, California 90067-6022, together with any future holder of the Note.

1.18         Mortgagor:   The Mortgagor named in the introductory paragraph of this Mortgage (Taxpayer Identification No. 20-2650579; Organizational I.D. No. 0814512), whose legal address is 204 West Newberry Road, Bloomfield, Connecticut 06002-1308, together with any future owner of the Property or any part thereof or interest therein.

1.19         Note:   Mortgagor’s promissory note of even date herewith, payable to the order of Mortgagee in the principal face amount of $12,700,000.00, the last payment under which is due on August 1, 2015, or, if extended by Mortgagee pursuant to its terms, August 1, 2020, unless such due date is accelerated, together with all renewals, extensions and modifications of such promissory note.  All terms and provisions of the Note are incorporated by this reference in this Mortgage.

1.20         Permits:  All permits, licenses, certificates and authorizations necessary for the beneficial development, ownership, use, occupancy, operation and maintenance of the Property.

1.21         Permitted Exceptions:   The matters (excluding matters of survey) set forth in Schedule B-I of the title insurance policy insuring the lien created by this Mortgage, in form and substance satisfactory to, and accepted by, Mortgagee, that Mortgagor has caused to be delivered to Mortgagee in connection with the Loan.

1.22         Property:   The tract or tracts of land described in Exhibit A attached, together with the following:

(a)            All buildings, structures, and improvements now or hereafter located on such tract or tracts, as well as all rights-of-way, easements, and other appurtenances thereto;

(b)            All of Mortgagor’s right, title, and interest in and to any land lying between the boundaries of such tract or tracts and the center line of any adjacent street, road, avenue, or alley, whether opened or proposed;

(c)            All of the rents, income, receipts, revenues, issues and profits of and from such tract or tracts and improvements;

(d)            To the extent now owned or hereafter acquired by Mortgagor, all (i) water and water rights (whether decreed or undecreed, tributary, nontributary or not nontributary, surface or underground, or appropriated or unappropriated); (ii) ditches and ditch rights; (iii) spring and spring rights; (iv) reservoir and reservoir rights; and (v) shares of stock in water, ditch and canal companies and all other evidence of such rights, and which are appurtenant to or which have been used in connection with such tract or tracts or improvements;

(e)            Any minerals, crops, timber, trees, shrubs, flowers, and landscaping features now or hereafter located on, under or above such tract or tracts;

(f)             Subject to the rights of any utility or public service provider, all machinery, apparatus, equipment, fittings, fixtures (whether actually or constructively attached, and including all trade, domestic, and ornamental fixtures) now or hereafter located in, upon, or

under such tract or tracts or improvements and used or usable in connection with any present or future operation thereof, including but not limited to all heating, air-conditioning, freezing, lighting, laundry, incinerating and power equipment; engines; pipes; pumps; tanks; motors; conduits; switchboards; plumbing, lifting, cleaning, fire prevention, fire extinguishing, refrigerating, ventilating, cooking, and communications apparatus; boilers, water heaters, ranges, furnaces, and burners; appliances; vacuum cleaning systems; elevators; escalators; shades; awnings; screens; storm doors and windows; stoves; refrigerators; attached cabinets; partitions; ducts and compressors; rugs and carpets; draperies; and all additions thereto and replacements therefor, except any such items owned by tenants under Leases or leased by such tenants from any entity other than Mortgagor;

(g)            Any development rights associated with such tract or tracts, whether previously or subsequently transferred to such tract or tracts from other real property or now or hereafter susceptible of transfer from such tract or tracts to other real property;

(h)            Subject to the rights of tenants under Leases, any awards and payments, including interest thereon, resulting from the exercise of any right of eminent domain or any other public or private taking of, injury to, or decrease in the value of, any of such property; and

(i)             Any other and greater rights and interests of every nature in such tract or tracts and in the possession or use thereof and income therefrom, to the extent now owned or subsequently acquired by Mortgagor.

1.23         Secured Obligations:   The principal sum of $12,700,000.00 and all other present and future obligations of Mortgagor to Mortgagee evidenced by or contained in the Note, the Environmental Indemnity Agreement, this Mortgage and all other Loan Documents, whether stated in the form of promises, covenants, representations, warranties, conditions, or prohibitions or in any other form.  If the maturity of the Note secured by this Mortgage is accelerated, the Secured Obligations shall include an amount equal to any prepayment premium which would be payable under the terms of the Note as if the Note were prepaid in full on the date of the acceleration.  If under the terms of the Note no voluntary prepayment would be permissible on the date of such acceleration, then the prepayment fee or premium to be included in the Secured Obligations shall be equal to one hundred fifty percent (150%) of the highest prepayment fee or premium set forth in the Note, calculated as of the date of such acceleration, as if prepayment were permitted on such date.

1.24         State:   The State in which the Property is located.

1.25         Tenant Improvements and Leasing Commissions Escrow Agreement:   The Tenant Improvements and Leasing Commissions Escrow Agreement of even date herewith by and between Mortgagor, Mortgagee, and the “Escrow Agent” named therein.

Article 2
GRANTING CLAUSE

2.1           Grant to Mortgagee.   As security for the Secured Obligations, Mortgagor hereby gives, grants, bargains, sells, conveys, mortgages, assigns, confirms 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, to its and their own proper use and behoof.

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 the 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 Mortgage constitutes a Security Agreement under the Uniform Commercial Code of the state in which the Property is located (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 Mortgage 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 Mortgage 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 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 Mortgage shall, unless the context otherwise requires, have the meanings and be construed as provided in the Code; and

(e)            This Mortgage constitutes a financing statement under the Code with respect to the Collateral.  As such, this Mortgage covers all items of the Collateral that are or are to become fixtures.  The filing of this Mortgage in the real estate records of Windsor, Connecticut, 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 Mortgage.  Mortgagor is the “Debtor” and Mortgagee is the “Secured Party” (as those terms are defined and used in the Code) insofar as this Mortgage constitutes a financing statement.

THE CONDITION OF THIS DEED IS SUCH THAT Mortgagor is indebted to Mortgagee in the principal sum of TWELVE MILLION SEVEN HUNDRED THOUSAND DOLLARS and NO/100THS DOLLARS, as evidenced by the Note and is indebted for the other Secured Obligations, and Mortgagor further covenants and agrees as follows:

ARTICLE 3
MORTGAGOR’S REPRESENTATIONS AND WARRANTIES

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

(a)            Mortgagor has good and marketable 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;

(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;

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

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

The representations, warranties and covenants contained in this Section shall survive foreclosure of this Mortgage, 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 Mortgage;

3.3           Other Representations and Warranties.   Mortgagor represents and warrants to Mortgagee as follows:

(a)            Mortgagor is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Connecticut.  The sole Controlling Person of Mortgagor is Guarantor.  Guarantor is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware;

(b)            The execution, delivery and performance by Mortgagor of the Loan Documents are within Mortgagor’s power and authority and have been duly authorized by all necessary action;

(c)            This Mortgage is, and each other Loan Document to which Mortgagor or Guarantor is a party will, when delivered hereunder, be valid and binding obligations of Mortgagor and Guarantor enforceable against Mortgagor and Guarantor 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 and Guarantor of the Loan Documents will not contravene any contractual or other restriction binding on or affecting Mortgagor or any Controlling Person 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 and Guarantor of the Loan Documents does not 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 and Guarantor of any of the Loan Documents 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 or the Property before any court, governmental or quasi-governmental, arbitrator or other authority, and no such action against any Controlling Person which could have a material adverse effect on its financial condition;

(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, 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 which would adversely affect the Property, access to the Property or the operation of the Property as it is currently being used;

(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 and telephone facilities;

(m)           The Property is located in a zoning district designated I-1 (Industrial Zone), by the Town of Windsor, Connecticut.  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.  Mortgagor’s use of the Property and the uses of the Property permitted to tenants under Leases comply 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 notice from any governmental body having jurisdiction over 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 (other than subleases) presently affecting any part of the Property.  To Mortgagor’s knowledge, there are no subleases presently affecting any part of the Property.  The Lease Certificate contains a true and correct description of all Leases presently affecting the Property (other than subleases).  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 purchase options, 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 any part of the Property, except as otherwise disclosed to Mortgagee in writing;

(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 has obtained all Permits required to be obtained by Mortgagor for the operation, use, ownership, development, occupancy and maintenance of the Property as an industrial distribution center, 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, 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 Mortgagor shall keep the property fully insured as required hereunder 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 and secured by this Mortgage 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 Mortgage.  Mortgagor’s organizational identification 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 Connecticut.

(z)             To the best of Mortgagor’s knowledge, (i) no part of the Property has, at any time during the period of three (3) years immediately preceding the date hereof, been included in the “property description” of any real estate contiguous with the Property (within the meaning of §22a–452a(c) of the Connecticut General Statutes), (ii) no part of the Property is or has been an “establishment” or a “service station” under §22a–134 – et seq. – of the Connecticut General Statutes, and (iii) except as disclosed on the Environmental Assessment (as defined in the Environmental Indemnity Agreement), no part of the Property contains or has ever contained any underground storage tanks or facilities (as such terms are defined in §22a–449(d) – and §22a-449(d)–101 of the Regulations of the State of Connecticut.

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 of 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 Mortgage.

ARTICLE 4
MORTGAGOR’S AFFIRMATIVE COVENANTS

4.1           Payment of Note.   Mortgagor will pay all principal, interest, and other sums payable under the Note, on the date when such payments are due, without notice or demand.

4.2           Performance of Other Obligations.   Mortgagor will promptly and strictly perform and comply with all other covenants, conditions, and prohibitions required of Mortgagor by the terms of the Loan Documents.

4.3           Other Encumbrances.   Mortgagor will promptly and strictly 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 .  Unless Mortgagor is depositing money into escrow pursuant to Section 4.4(b) , Mortgagor will (i) pay, 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 ten (10) 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.  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 such services shall be borne by Mortgagor unless Mortgagor is making deposits pursuant to Section 4.4(b) .

(b)            Deposit for Taxes .  On or before the date hereof, Mortgagor shall deposit with Mortgagee an amount equal to 1/12th of the amount which Mortgagee estimates will be required to make the next annual payment of taxes, assessments, and similar governmental charges referred to in this Section, multiplied by the number of whole or partial months that have elapsed since the date one month prior to the most recent due date for such taxes, assessments and similar governmental charges.  Thereafter, with each monthly payment under the Note, Mortgagor shall deposit with Mortgagee an amount equal to 1/12th of the amount which Mortgagee estimates will be required to pay the next annual payment of taxes, assessments, and similar governmental charges referred to in this Section.  The purpose of these provisions is to provide Mortgagee with sufficient funds on hand to pay all such taxes, assessments, and other governmental charges thirty (30) days before the date on which they become past due.  If the Mortgagee, in its sole discretion, determines that the funds escrowed hereunder are, or will be, insufficient, Mortgagor shall upon demand pay such additional sums as Mortgagee shall determine necessary and shall pay any increased monthly charges requested by Mortgagee.  Provided no Default or Event of Default exists hereunder, Mortgagee will apply the amounts so deposited to the payment of such taxes, assessments, and other charges when due, but in no event will Mortgagee be liable for any interest on any amount so deposited, and any amount so deposited may be held and commingled with Mortgagee’s own funds.

(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, Mortgagee, or any interest of Mortgagee in any real or personal property encumbered hereby, Mortgagor will pay such tax, assessment, or other charge before delinquency and will indemnify Mortgagee against all loss, expense, or diminution of income 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 thirty (30) days’ notice to Mortgagor.

(d)            Right to Contest .  Notwithstanding any other provision of this Section, 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 reasonable judgment, each of the following conditions is satisfied:

(i)       Mortgagor 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)      Mortgagor’s payment of such tax, assessment, or charge would necessarily and materially prejudice Mortgagor’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 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 Mortgagor’s 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 financially sound and reputable insurance companies or associations satisfactory to Mortgagee, 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.

(b)            Renewal Policies.  Not less than five (5) days prior to the expiration date of each insurance policy required pursuant to the Insurance Agreement, Mortgagor will deliver to Mortgagee an appropriate renewal binder or policy (or a certified copy thereof), together with evidence satisfactory to Mortgagee that the applicable premium has been prepaid, which evidence may follow up to ten (10) days after such payment has been made.

(c)            Deposit for Premiums.  Upon written demand made by Mortgagee following the occurrence of any Event of Default, Mortgagor shall deposit with Mortgagee an amount equal to 1/12th of the amount which Mortgagee estimates will be required to make the next annual payments of the premiums for the policies of insurance referred to in this Section, multiplied by the number of whole and partial months which have elapsed since the date one month prior to the most recent policy anniversary date for each such policy.  Thereafter, with each monthly payment under the Note, Mortgagor will deposit an amount equal to 1/12th of the amount which Mortgagee estimates will be required to pay the next required annual premium for each insurance policy referred to in this Section.  The purpose of these provisions is to provide Mortgagee with sufficient funds on hand to pay all such premiums thirty (30) days before the date on which they become past due.  If the Mortgagee, in its sole discretion, determines that the funds escrowed hereunder are, or will be, insufficient, Mortgagor shall upon demand pay such additional sums as Mortgagee shall determine necessary and shall pay any increased monthly charges requested by Mortgagee.  Provided no Default or Event of Default exists hereunder, Mortgagee will apply the amounts so deposited to the payment of such insurance premiums when due, but in no event will Mortgagee be liable for any interest on any amounts so deposited, and the money so received may be held and commingled with Mortgagee’s own funds.

(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 reasonable discretion following any Event of Default, compromise or settle, in the name of Mortgagee, Mortgagor, or both any claim for any such insurance proceeds.  Any such insurance proceeds in excess of $500,000.00 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, 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 commercially reasonable construction related advancement 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) either Mortgagor is obligated under the terms of any Lease to restore or repair the Property or the annual income from Leases that will survive restoration provide a forward-looking Debt Service Coverage Ratio (as defined in the Agreement Concerning Master Lease) of at least 1.05 upon completion of restoration, and Mortgagor demonstrates to Mortgagee’s reasonable satisfaction that it will be able to attain a forward-looking Debt Service Coverage Ration of at least 1.20 times the annual debt service from Leases within six months after completion of restoration, 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.

(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 the Property and the Chattels in good condition and repair, will diligently prosecute the completion of any building or other improvement which is at any time in the process of construction on the Property, and will promptly repair, restore, replace, or rebuild 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 whether or not the proceeds of any insurance or eminent domain shall be sufficient therefor.  Mortgagor will comply with 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.  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.

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 agrees that Mortgagee, in its sole discretion, 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 Mortgage.

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 following any Event of Default, compromise or settle, in the names of both Mortgagor and Mortgagee, any claim for any such award or payment.  Any such award or payment in excess of $500,000.00 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 commercially reasonable construction related advancement 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) either Mortgagor is obligated under the terms of any Lease to restore or repair the Property or the annual income from Leases that will survive restoration provide a forward-looking Debt Service Coverage Ratio (as defined in the Agreement Concerning Master Lease) of at least 1.05 upon completion of restoration, and Mortgagor demonstrates to Mortgagee’s reasonable satisfaction that it will be able to attain a forward-looking Debt Service Coverage

Ration of at least 1.20 times the annual debt service from Leases within six months after completion of restoration, 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 constitut