EXHIBIT 4.1

NEW VALLEY CORPORATION
(doing business in New Jersey as New Valley Realty Company)

LOAN AGREEMENT

Dated: December 13, 2002

$40,500,000.00

                  Location of Premises:

Street Address:                100-150 College West Road
Town of:                       Plainsboro
County of:                     Middlesex
State of:                      New Jersey
Block:                         3
Lots:                          1.61 and 1.62

THIS LOAN AGREEMENT (this "Agreement") dated December 13, 2002 is made and entered into by and between NEW VALLEY CORPORATION (doing business in New Jersey as New Valley Realty Company), a Delaware corporation having an address at 100 S.E. Second Street, Miami, Florida 33131 ("Borrower"), each of the lenders that is a signatory hereto under the caption "Lenders" on the signature pages hereof and each Eligible Assignee (as hereinafter defined) that becomes a "Lender" after the date hereof pursuant to Section 12.06 hereof (individually, a "Lender" and, collectively, the "Lenders" and HSBC REALTY CREDIT CORPORATION (USA), as Administrative Agent (in such capacity, together with its successors in such capacity, "Administrative Agent"), having an office on the date hereof at 452 Fifth Avenue, New York, New York 10018.

Borrower is simultaneously herewith purchasing the fee interest in certain premises located as set forth on the cover hereof, known as 100-150 College Road West, Princeton, New Jersey, and the Improvements located thereon (collectively, the "Project"). Borrower has requested that the Lenders make certain loans to Borrower to partially finance the Borrower's purchase of the Project, which loans are to be secured by a mortgage on the Project, and the Lenders are prepared to make such loans subject to and in accordance with the terms and conditions hereof. Accordingly, the parties hereto agree as follows:

SECTION 1. DEFINITIONS.

1.01. Certain Defined Terms. As used herein, the following terms shall have the following meanings (all terms defined in this Section 1.01 or in other provisions of this Agreement iv, the singular to have the same meanings when used in the plural and vice versa):

"ADJUSTED LIBOR RATE" means an interest rate equal to two (2.00%) percent in excess of the LIBOR Rate, as determined by the Administrative Agent, pursuant to, and in accordance with the provisions of this Agreement.

"ADMINISTRATIVE AGENT" is defined in the introduction hereto.

"AFFILIATE" means, (a) with respect to a corporation, any officer or director thereof and any Person that is, directly or indirectly, the legal or beneficial owner of or otherwise controls more than ten percent (10%) of any class of shares or other equity security of such Person, or any Person that directly or indirectly controls or is controlled by or is under common control with such Person and (b) with respect to a partnership or venture, any general partner, general partner of a general partner, partnership with a common general partner or co-venturer thereof, or any sponsor of such partnership, as that term is used in any offering memorandum prepared in respect to any federal or state securities laws or the rules or regulations issued pursuant thereto, or any Person that, directly or indirectly, controls or is controlled by or is under common control with such partnership or venture and, if any general partner or general partner of a general partner or co-venturer is a corporation, any Person that is an Affiliate as defined in clause (a) above of such corporation. "Control" of a Person (including the correlative meanings of "controls", "controlled by" and "under common control with") means effective power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

"APPLICABLE LENDING OFFICE" means, for each Lender, the "Lending Office" of such Lender (or of an Affiliate of such Lender) designated on the signature page hereof or in the applicable Assignment and Assumption Agreement or such other office of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify to Administrative Agent and Borrower as the office by which its Loans are to be made and maintained.

"ASSIGNMENT AND ASSUMPTION AGREEMENT" means an Assignment and Assumption Agreement, substantially in the form of Exhibit A, pursuant to which a Lender assigns and an Eligible Assignee assumes rights and obligations in accordance with Section 12.06 of this Agreement.

"ASSIGNMENT OF LEASES AND RENTS" means the Assignment of Leases and Rents dated the date hereof executed by the Borrower to the Administrative Agent, as the same may be modified or amended from time to time.

"BASIC DOCUMENTS" means, collectively, this Agreement, the Notes, the Mortgage, and the Assignment of Leases and Rents now or hereafter delivered.

"BEST KNOWLEDGE OF BORROWER" means the actual knowledge of the individuals who, in a management or supervisory capacity, are actively involved in the day to day operations of the Project.

"BORROWING" means each borrowing of Loans hereunder.

"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

"CODE" means the Internal Revenue Code of 1986, as amended from time to time.

"COMMITMENT" means, as to each Lender, the obligation of such Lender to make Loans on and subject to the terms and conditions hereof in an aggregate amount equal to the amount set forth opposite the name of such Lender on the signature pages hereof under the caption "Commitment".

"DEFAULT" means an Event of Default or an event that with notice or lapse of time or both would become an Event of Default.

"DOLLARS" and "$" mean lawful money of the United States of America.

"ELIGIBLE ASSIGNEE" means any commercial bank, savings bank or financial institution having total assets in excess of $20,000,000,000 or any other commercial bank, savings bank, financial institution or other Person designated as an Eligible Assignee by Administrative Agent.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with the regulations promulgated and rulings issued thereunder.

"ERISA AFFILIATE" means any corporation or trade or business that is a member of any group of organizations (i) described in Section 414(b) or (c) of the Code of which Borrower is a member and (ii) solely for purposes of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of which Borrower is a member.

"EVENT OF DEFAULT" is defined in Section 9 hereof.

"GOVERNMENTAL AUTHORITY" means any arbitrator, court, governmental department, commission, board, bureau, agency or instrumentality, whether local, state, federal or foreign having jurisdiction.

"INTEREST DETERMINATION DATE" shall mean a LIBOR Business Day that is two (2) LIBOR Business Days prior to the commencement of the applicable LIBOR Interest Period.

"LENDER" is defined in the first paragraph of this Agreement.

"LIBOR BUSINESS DAY" means any day on which commercial banks are generally open for business as contemplated by this Agreement in New York City and London, England and, as to any payments or notices in respect of a LIBOR Loan, on which dealings in Dollar deposits are carried out in the London interbank market.

"LIBOR INTEREST PERIOD" means each period commencing on a LIBOR Business Day and ending on the numerically corresponding day in the first, second, third or sixth calendar month thereafter, as Borrower may select pursuant to written or telephonic notification to the Administrative Agent in accordance with the terms of Section 3.03 of this Agreement. If a LIBOR Interest Period would otherwise end on a date that is not a LIBOR Business Day, such LIBOR Interest Period shall instead end on the next LIBOR Business Day as determined by the Administrative Agent in accordance with the then current banking practice in New York or London; provided, that (i) if such next LIBOR Business Day falls in the next calendar month, such LIBOR interest Period shall end on the preceding LIBOR Business Day, and (ii) if such LIBOR Interest Period begins on a day for which there is no numerically corresponding day m the calendar month at the end of such LIBOR Interest Period, such LIBOR interest Period shall end on the last LIBOR Business Day of such calendar month. In any event, the selection of a LIBOR Interest Period that would mature after (i) the Maturity Date, or (ii) a date on which the Borrower is required, or has notified the Administrative Agent of its intention, to pay all or any portion of the outstanding principal balance of the Loans, shall not be permitted hereunder (provided, however, that the monthly Amortization Payments provided for in this Agreement shall not be deemed to preclude the selection of a LIBOR Interest Period that would mature after the date of such monthly payments).

"LIBOR LOAN" means, at any time, a Loan bearing interest at the Adjusted LIBOR Rate.

"LIBOR RATE" means, for any LIBOR Interest Period, the rate determined by the Administrative Agent to be equal to the quotient obtained by dividing (i) the rate per annum at which deposits for U.S. Dollars in an amount approximately equal to the then aggregate outstanding principal balance of the Loans are being offered to U.S. banks by one or more prime banks in the London interbank market for such LIBOR Interest Period as determined by Administrative Agent, in its discretion, based upon reference to the "British Bankers" Association Interest Settlement Rates" for deposits in Dollars on any information vending service as may be from time to time be nominated by the British Bankers' Association for the purpose of displaying such rate (currently displayed on the Reuters Service at screen "LIBOR", the Bloomberg Service at page "BBAM 1" and the Telerate Service at page "3750") at or about 11:00 a.m. London time (or as soon thereafter as practicable) on the date that is two (2) LIBOR Business Days prior to the first day of such interest Period by (ii) 1 minus the Reserve Requirement for such interest Period, and rounding the quotient upward to the nearest 1/16 of 1%. In the event that such rate is unavailable, the LIBOR Rate shall be determined on such basis as Administrative Agent shall reasonably select, following consultation with the Lenders. Administrative Agent's determination of such rate shall be conclusive and binding on Borrower absent manifest error.

"LIEN" means, with respect to any Property, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such Property. For purposes of this Agreement and the other Basic Documents, a Person shall be deemed to own subject to a Lien any Property that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such Property.

"LOAN" means a loan made by a Lender to Borrower pursuant to
Section 2.01(a)

"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the Project or the ownership or operation thereof, (b) the ability of Borrower to perform its payment obligations hereunder or under any of the other Basic Documents or its obligations under the Mortgage with respect to maintenance of insurance or maintenance of the Project, (c) the validity or enforceability of any of the Basic Documents, or (d) the rights and remedies of Administrative Agent and the Lenders under any of the Basic Documents.

"MATURITY DATE" means the fourth anniversary of the date of this Agreement; provided, that if such day is not a Business Day, the Maturity Date shall be the immediately preceding Business Day.

"MORTGAGE" means the mortgage and security agreement dated the date hereof from Borrower, as mortgagor, to Administrative Agent, as mortgagee, as the same may be modified or amended from time to time.

"MORTGAGED PROPERTY" is defined in the Mortgage.

"NOTE" and "NOTES" are defined in Section 2.07 hereof.

"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

"PERMITS" means, as of any date, all certificates, permits, licenses and other governmental approvals, including, without limitation, building permits and certificates of occupancy, necessary or required under applicable law as of such date in connection with the ownership, development, use, sale, occupancy and operation of the Project.

"PERSON" means any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust, mutual fund, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof).

"PLAN" means an employee benefit or other plan established or maintained by Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA, other than a Multiemployer Plan.

"PREMISES" means the real property described on Schedule A to the Mortgage and located as indicated on the cover hereof, upon all or part of which the Improvements (as such term is defined in the Mortgage) are located.

"PRIME BASED RATE" means the fluctuating interest rate equal to one quarter of one (0.25%) percent in excess of the Prime Rate.

"PRIME RATE" means, for any day, the rate of interest for such day from time to time announced by HSBC Bank USA at its office at 452 Fifth Avenue, New York, New York, as its prime rate (being a base rate for calculating interest on certain loans), each change in any interest rate hereunder based on the Prime Rate to take effect at the time of such change in the Prime Rate. The Borrower acknowledges that the Prime Rate may not necessarily represent the lowest rate charged by HSBC Bank USA to its customers. The Borrower acknowledges that neither Administrative Agent nor HSBC Bank USA is required to notify Borrower of any changes in the Prime Rate.

"PRIME RATE LOAN" means, at any time, a Loan bearing interest at the Prime Based

"PROJECT" is defined in the Recitals hereto.

"PROPERTY" means all property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and any right or interest therein.

"REGISTER" is defined in Section 12.06(c) hereof.

"REGULATORY CHANGE" means any change after the date of this Agreement in Federal, state or foreign law or regulations (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System) applying to a class of banks, including any of the Lenders, or the adoption or making after such date of any interpretation, directive or request applying to a class of banks, including any of the Lenders, of or under any Federal, state or foreign law or regulations (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any court or governmental or monetary authority charged with the interpretation or administration thereof.

"REQUIRED LENDERS" means Lenders having at least 66-2/3% of the aggregate unpaid principal amount of the Loans.

"RESERVE REQUIREMENT" means, for any LIBOR Interest Period, the rate at which reserves (including, without limitation, any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D of the Board of Governors of the Federal Reserve System by member banks of the Federal Reserve System in New York City with deposits exceeding one billion Dollars against "Eurocurrency liabilities" (as such term is used in said Regulation D). Without limiting the effect of the foregoing, the Reserve Requirement shall include any other reserves required to be maintained by such member banks by reason of any Regulatory Change with respect to (i) any category of liabilities that includes deposits by reference to which the LIBOR Rate is to be determined as provided in the definition of "LIBOR Rate" in this Section 1.01, or (ii) any category of extensions of credit or other assets that includes the Loans.

"SECURITY DOCUMENTS" means, collectively, the Mortgage, the Assignment of Leases and Rents, and all Uniform Commercial Code financing statements filed with respect to the security interests in personal property and fixtures created pursuant to the Mortgage.

In addition, capitalized terms not otherwise defined herein shall have the means ascribed thereto in the Mortgage.

SECTION 2. THE COMMITMENT, LOANS AND NOTES.

2.01. THE LOANS.

(a) Each Lender severally agrees, on and subject to the terms and conditions of this Agreement, to make term loans to Borrower (each, a "Loan" and, collectively, the "Loans") in one disbursement to be made on the date hereof, in the principal amount of the Commitment(s) of such Lender and, as to all Lenders, in an aggregate principal amount of FORTY MILLION FIVE HUNDRED THOUSAND ($40,500,000.00) DOLLARS.

(b) The proceeds of the Loans shall be applied by Borrower to purchase the Project and neither Administrative Agent nor any Lender shall have any responsibility as to the use of any such proceeds. Borrower covenants and agrees that in no event shall proceeds of the Loan, or any part thereof, be used, directly or indirectly, for any other purpose, for any illegal purpose or for the purpose, whether immediate, incidental or ultimate, of buying or carrying "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, or in connection with any hostile acquisition or for any illegal purpose.

(c) The Loans will be made upon satisfaction of the conditions precedent set forth in Section 6.01 hereof.

(d) Each Borrowing shall be made from the Lenders on a pro rata basis in proportion to the amounts of their respective Commitments. No Lender shall have any obligation to advance any amount hereunder in excess of the amount of its Commitment.

2.02. INTENTIONALLY OMITTED.

2.03. SEVERAL OBLIGATIONS; CERTAIN REMEDIES INDEPENDENT. Each of the respective amounts payable to each Lender by Borrower at any time hereunder and under the Notes shall be a separate and independent debt and it shall not be necessary for any other Lender or Administrative Agent to consent to, or be joined as an additional party in, any proceedings to recover the payment of any overdue amounts. Notwithstanding the foregoing provisions of this
Section 2.03, neither Administrative Agent nor any Lender shall commence any action or proceeding to enforce any Note, unless all of the Notes are sought to be enforced in the same action or proceeding. Nothing in the preceding sentence shall modify the definition of the term "Required Lenders" or modify in any other manner the number or percentage of the Lenders required to make any determinations or waive any rights hereunder or the authority of the Required Lenders, pursuant to Section 9 hereof, to require Administrative Agent to take certain actions with respect to all of the Commitments and all of the Loans at the request of the Required Lenders.

2.04. FEES. In consideration of Administrative Agent's entering into this Agreement, Borrower shall pay a non-refundable commitment fee of $202,500.00. By paying such fee to Administrative Agent, Borrower shall not be liable to the Lenders, and the Lenders hereby release Borrower from any such liability, with respect to such commitment fee.

2.05. CONDITIONS PRECEDENT AND THIRD PARTIES. No Person shall be a third party beneficiary of any provision of this Agreement or any other Basic Document or of the right of the Lenders to require or to waive the satisfaction of conditions precedent hereunder in connection with the making of any Loans other than the Lenders and Administrative Agent.

2.06. INTENTIONALLY OMITTED.

2.07. NOTES. The Loan or Loans, as the case may be, of each Lender shall be evidenced by a separate promissory note or notes, as the case may be, of Borrower payable to such Lender in the principal amount equal to the amount of such Lender's Commitment (each such note, as the same may hereafter be amended, modified, extended, severed, assigned, substituted, renewed or restated from time to time in accordance with the terms of this Agreement, including, without limitation, any substitute notes pursuant to Section 12.06, each, a "Note" and collectively, the "Notes"), which shall be substantially in the form of Schedule I hereto and otherwise duly completed. In case of any loss, theft, destruction or mutilation of any Lender's Note, Borrower shall, upon its receipt of an affidavit of an officer of such Lender as to such loss, theft, destruction or mutilation and an appropriate indemnification, execute and deliver a replacement Note to such Lender in the same principal amount and otherwise of like tenor as the lost, stolen, destroyed or mutilated Note.

SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST; YIELD PROTECTION

3.01. PRINCIPAL AT MATURITY. Borrower agrees to pay Administrative Agent, for the pro rata account of the Lenders, the entire outstanding principal amount of the Loans, together with all accrued and unpaid interest hereunder and under the Notes, and all other cost and charges under the Basic Documents, and each Loan shall mature, on the Maturity Date.

3.02. AMORTIZATION PAYMENTS. In addition to the interest payments required to be made hereunder and under the Notes, as provided below, Borrower shall pay to Administrative Agent, for the pro rata account of the Lenders, the sum of $53,645.00 on February 1, 2003 and on the first day of each and every month thereafter (if any such day is not a Business Day, such payment shall be due and payable on the first Business Day immediately prior thereto) until the Maturity Date, when the remaining principal balance of the Loans, all accrued and unpaid interest hereunder (and under the Notes) and all costs and charges hereunder and under the Basic Documents shall be due and payable (each such payment is defined as an "Amortization Payment"). Each Amortization Payment shall be applied in reduction of the outstanding principal amount of the Loans.

3.03. INTEREST; LATE CHARGES; OTHER COSTS.

(a) The Loans shall bear interest on the unpaid balance from and after the date hereof at the Prime Based Rate until Borrower shall have effectively exercised its first LIBOR Option hereunder (i.e., the interest rate converts from the Prime Based Rate to the Adjusted LIBOR Rate), which Administrative Agent and Borrower acknowledge will be on or about December 18, 2002. The Loans, unless otherwise provided herein, shall bear interest on the unpaid principal balance from the date hereof until maturity (whether by acceleration or otherwise) at an interest rate equal to the Adjusted LIBOR Rate, as determined by the Administrative Agent pursuant to, and in accordance with, the provisions of this Agreement. Interest shall be calculated for each day at 1/360th of the applicable per annum rate, which will result in a higher effective annual rate. In no event shall interest under this Note exceed the maximum rate of interest authorized by applicable law.

(b) Borrower agrees to pay to Administrative Agent, for the pro rata account of the Lenders, interest on the unpaid principal amount of each Loan, in arrears, on January 1, 2003 and on the first day of each and every month thereafter through and including the Maturity Date, when the remaining principal balance of the Loans, all accrued and unpaid interest hereunder (and under the Notes), and all costs and charges hereunder and under the Basic Documents shall be due and payable.

(c) Borrower agrees that if any payment due hereunder (including, but not limited to, the entire principal balance under the Loans if accelerated or otherwise matured) is not paid when due, and the applicable notice and/or grace period, if any, with respect to such payment shall have expired, or if any other Event of Default shall have occurred and be continuing, then the Loans shall bear interest at a per annum rate of four (4.00%) percent in excess of the interest rate that was payable hereunder immediately prior to the expiration of such notice and/or grace period (or due date of such payment if no grace period is applicable) or the occurrence of such Event of Default, as the case may be ("Default Rate"), from the due date of such payment to and including the date when paid, or from the occurrence of the default giving rise to the Event of Default to and including the date when such Event of Default shall have been cured (which cure must be consented to by the Administrative Agent if the Loans shall have been duly accelerated as a result of the Event of

Default), as the case may be, but in no event shall such interest exceed the maximum rate of interest authorized by applicable law. The Default Rate shall be subject to increase or decrease based upon the Prime Rate from and after the expiration of the LIBOR Interest Period in effect at the time the Default Rate is first implemented. For example, if the Loans were accelerated during a LIBOR Interest Period, the principal balance would bear interest at six (6.00%) percent per annum in excess of the LIBOR Rate then in effect until the end of the applicable LIBOR Interest Period and immediately thereafter the Loans would bear interest at a fluctuating interest rate equal to four and one quarter (4.25%) percent in excess of the Prime Rate. Borrower agrees to pay to Administrative Agent, on demand and from time to time, for the pro rata account of the Lenders, any and all interest payable at the Default Rate.

(d) Borrower agrees that if any payment due hereunder, whether principal, interest or otherwise, made after the applicable grace period, if any, provided in Section 2.01(a) of the Mortgage, shall be accompanied by a late payment charge of four (4.00%) percent of the amount so due, which shall be due with such late payment. Borrower agrees to pay to Administrative Agent such late payment charge, for the pro rata account of the Lenders.

(e) If the payment of any interest and any other charges hereunder or under the Notes is in excess of the maximum rate permitted by law in commercial loan transactions between parties of the character of the parties hereto, then ipso facto the obligations of the Borrower to make such payment shall be reduced to the highest rate authorized under applicable law and all prior payments in excess of such highest rate shall be applied and shall be deemed to have been payments in reduction of the principal sum of the Loans.

(f) Borrower shall have the option to select from time to time, pursuant to, in accordance with, and subject to the provisions of this Agreement, that the entire outstanding principal balance of the Loans accrue interest at an Adjusted LIBOR Rate ("LIBOR Option"). Borrower's selection shall be exercised by making a written or telephonic request to Administrative Agent for a LIBOR Rate, which must be received by Administrative Agent on or prior to the applicable Interest Determination Date and must designate the proposed LIBOR Interest Period and the proposed commencement date of the LIBOR Interest Period ("Borrowing Date"). Any request made by Borrower to have the aggregate outstanding principal balance of the Loans accrue interest based upon a LIBOR Rate shall be irrevocable after the applicable Interest Determination Date and Borrower shall be bound therewith. Administrative Agent shall not incur any liability to Borrower in acting upon telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized to act on behalf of Borrower. Borrower agrees to indemnify Administrative Agent and the Lenders and hold Administrative Agent and the Lenders harmless from any and all claims, losses, costs and expenses incurred or suffered by Administrative Agent and the Lenders in good faith reliance by the Administrative Agent on the telephone requests or instructions from any representative of Borrower. Upon the expiration of a LIBOR Interest Period under this Agreement, unless Borrower shall have designated (in accordance with the terms of this Agreement) a proposed LIBOR Interest Period to take effect immediately upon the end of the then current LIBOR Interest Period, the interest rate with respect to the Loans shall automatically convert to an Adjusted LIBOR Rate based upon a new LIBOR Interest Period of equal (or approximately equal) duration as the then-expiring LIBOR Interest Period, as determined by Administrative Agent as of the date that is two LIBOR Business

Days prior to the last day of the expiring LIBOR Interest Period; provided, however, if Borrower's LIBOR Option is no longer permitted or is otherwise unavailable for the reasons set forth in subparagraphs (i), (ii) and (iii) of subsection 3.03(g) below, then the interest rate shall automatically convert to the Prime Based Rate (or shall continue at the Default Rate if an Event of Default has occurred and is continuing) at the end of the then current LIBOR Interest Period. Administrative Agent's calculation of the interest rate hereunder shall be conclusive in the absence of manifest error.

(g) Borrower shall not have the LIBOR Option if Administrative Agent shall have determined (which determination shall be final, conclusive and binding absent manifest error) that: (i) quotations of interest rates for the relevant deposits referred to in the definition of "LIBOR Rate" in Section 1.01 hereof are not being provided in the relevant amounts or for the relevant maturities for purposes of determining rates of interest for any LIBOR Loan as provided herein, or (ii) the Required Lenders determine and notify Administrative Agent that by reason of circumstances affecting the London interbank market the relevant rates of interest referred to in the definition of "LIBOR Rate" in Section 1.01 hereof upon the basis of which the rate of interest for the LIBOR Loan for such Interest Period is to be determined are not likely to adequately cover the cost to the Lenders of making or maintaining a LIBOR Loan for such LIBOR Interest Period, or (iii) an Event of Default shall have occurred and be continuing. Administrative Agent, as soon as possible after making such determination, shall give telephonic or written notice to Borrower that Borrower no longer has the LIBOR Option and the Lenders shall be under no obligation to make any LIBOR Loan(s). If, however, the circumstances referred to in this subsection cease to exist, Administrative Agent shall thereafter give telephonic or written notice to Borrower of such change in circumstances, and Borrower shall again have the LIBOR Option, subject to the provisions of this paragraph.

(h) Notwithstanding anything herein contained to the contrary, if during any LIBOR Interest Period, Administrative Agent shall have reasonably determined (which determination shall be final, conclusive and binding), that
(i) any change in any law, regulation or official directive, or in the interpretation thereof deemed to be binding by Administrative Agent in its reasonable judgment, by any governmental body charged with the administration thereof, shall make it unlawful for Administrative Agent or any Lender to fund or maintain funding in Euro-dollars of the principal amount of any LIBOR or otherwise to give effect to Administrative Agent's and Lenders' obligations to offer the LIBOR Option, or (ii)the continuation of any LIBOR Loan would cause Administrative Agent or any Lender severe hardship as a result of a contingency occurring after the date of this Loan Agreement that materially and adversely affects the London interbank market (such as, but not limited to, disruptions resulting from political or economic events) then in either such event (x) Administrative Agent may by telephonic or written notice to Borrower declare that Administrative Agent's and Lenders' obligation to provide the LIBOR Option to be immediately terminated, (y) the availability of the LIBOR Option hereunder shall forthwith cease to be in effect, and interest on the outstanding principal balance of this Note shall, from and after the date of the notice set forth in subparagraph (x) above, be calculated and payable at the Prime Based Rate (subject to increase to the Default Rate if an Event of Default shall have occurred and be continuing); and (z) Borrower shall indemnify Administrative Agent and the Lenders against any loss, expense, penalty or other charge suffered by it in liquidating prior to maturity such LIBOR deposits obtained pursuant to the terms of this Loan Agreement. No failure on the part of

Administrative Agent to demand compensation, for the pro rata account of the Lenders, for any such increased costs shall constitute a waiver of Administrative Agent's right to demand such compensation at any time during the term of this Agreement. The good faith determination by Administrative Agent of the amount of any such loss, expense, penalty or other charge ("Change in Law Costs") shall be deemed conclusive in the absence of manifest error. Borrower shall pay such Change In Law Costs to the Administrative Agent, for the pro rata account of the Lenders, on demand. In the event the Change in Law Costs, as computed in accordance with the provisions of this paragraph, shall exceed the maximum amount permissible by law, the amount of the Change in Law Costs shall be reduced to such maximum permissible amount.

(i) If, for any reason, (i) Borrower shall make a repayment to Administrative Agent of all or any portion of any LIBOR Loan prior to the expiration of the applicable LIBOR Interest Period, other than a monthly Amortization Payment as provided herein, or (ii) demand for repayment of LIBOR Loans, as provided for hereunder or under the Mortgage, shall be made, then, in each and every case, Borrower agrees to indemnify Administrative Agent and Lenders against, and to pay, on demand, directly to Administrative Agent, for the pro rata account of the Lenders, any loss, cost, or expense suffered or incurred by Administrative Agent or Lenders as a result of any and all of such events, including without limitation (A) any loss, expense, penalty or other charge incurred or suffered by Administrative Agent or Lenders during the period from the date of Administrative Agent's receipt of such early repayment to the last LIBOR Business Day of the proposed, or actual, LIBOR Interest Period in question; but only if, and to the extent that, the rate of interest obtainable by Administrative Agent and the Lenders with respect to each LIBOR Loan upon the redeployment of funds in an amount equal to each such Lender's repayment (for the period from the date of Administrative Agent's receipt of such early repayment to the last LIBOR Business Day of the proposed, or actual, LIBOR interest Period in question) is less than the applicable LIBOR Rate that would have been paid during such actual, or proposed, LIBOR interest Period, and (B) any loss, expense, penalty or other charge suffered or incurred by Administrative Agent or any Lender in liquidating deposits prior to maturity in amounts that correspond to such repayment (collectively, "Liquidation Fee"). In the event the Liquidation Fee as computed in accordance with the provisions of this paragraph, shall exceed the maximum amount permissible by law, the amount of the Liquidation Fee shall be reduced to such maximum permissible amount. No failure on the part of Administrative Agent to demand compensation for any such increased costs for the pro rata account of the Lenders, shall constitute a waiver of Administrative Agent's right to demand such compensation at any time during the term of this Note. The good faith determination by Administrative Agent of the amount of any such Liquidation Fee shall be conclusive in the absence of manifest error.

(j) Borrower hereby agrees to reimburse directly to Administrative Agent, for the pro rata account of the Lenders, all of Administrative Agent's, and each such Lender's, costs and expenses in complying with all applicable laws, executive orders, and regulations of the governments of the United States and the United Kingdom and of any regulatory or administrative agency thereof (including, without limitation, The Bank of England and the Board of Governors of the Federal Reserve System) or any change therein or in the interpretation thereof, that impose, modify or deem applicable any reserve or asset or special deposit requirements on deposits obtained in the London interbank market in respect of the unpaid principal amount of any LIBOR Loan, or which subject Administrative Agent and/or any Lender to any tax with respect to any LIBOR Loan or change the basis of taxation of payments to Administrative Agent and/or any Lender of principal, interest or fees payable under any LIBOR Loan (except for any tax, or changes in the rate of tax, on Administrative Agent's and/or any Lender's net income or profits imposed by the United States or any other government having jurisdiction or any political subdivision or taxing authority thereof). The cost to Administrative Agent and/or any Lender in complying with laws, executive orders or regulations that impose, modify or deem applicable any reserve, asset or special deposit requirements on deposits in the London interbank market shall be computed by determining the amount by which such requirements effectively increase Administrative Agent's and/or each Lender's cost of making and maintaining deposits attributable to the unpaid principal balance or any LIBOR Loan and by computing the additional interest which would have been owing to Administrative Agent and/or such Lender if such effective increase had been added to the LIBOR

Rate for purposes of determining the LIBOR Rate during the applicable LIBOR Interest Period. Upon notice from Administrative Agent that there has been a change in such reserve requirements, Borrower agrees to pay to Administrative Agent, on demand, for the pro rata account of each Lender, as applicable, such additional sums as will compensate Administrative Agent and each such Lender for the effect of any change in such reserve requirements. No failure on the part of Administrative Agent to demand compensation for any increased cost in any LIBOR Interest Period shall constitute a waiver of Administrative Agent's right to demand such compensation, for the pro rata account of each Lender, as applicable, at any time during the term of this Agreement. Administrative Agent's determination of the amount of such costs ("Reserve Costs") shall be conclusive in the absence of manifest error. If the Reserve Costs as computed in accordance with the provisions of this paragraph shall exceed the maximum amount permissible by law, the amount of the Reserve Costs shall be reduced to such maximum permissible amount.

(k) If any law, regulation or guideline or any change therein or interpretation or application thereof by any regulatory body, court, administrative or governmental authority charged with the interpretation or administration thereof, or compliance with any request, directive, ruling, decree, judgment or recommendation of any regulatory body, court, administrative or governmental authority now existing or hereafter adopted (whether or not having the force of law) imposes, modifies or deems applicable any capital adequacy, increased capital adequacy or similar requirement and the result is to increase the cost of, or reduce the rate of return on, any Lender's capital as a consequence of such Lender's obligations hereunder, Administrative Agent (after being notified by such Lender) shall notify the Borrower of such fact by telephone or in writing. Upon such notice from Administrative Agent that there has been a change in such capital adequacy requirements, Borrower agrees to, and shall, pay to Administrative Agent, for the account of the applicable Lenders, on demand, such additional sums as will compensate such Lenders for the effect of any change in such capital adequacy requirements. No failure on the part of Administrative Agent to demand compensation for any such increased costs shall constitute a waiver of Administrative Agent's right to demand such compensation, for the pro rata account of the applicable Lenders, at any time during the term of this Agreement. Each Lender's good faith determination of the amount of such costs ("Capital Adequacy Costs") shall be conclusive in the absence of manifest error. If the Capital Adequacy Costs as computed in accordance with the provisions of this paragraph shall exceed the maximum amount permissible by law, the amount of Capital Adequacy Costs shall be reduced to such maximum permissible amount.

(l) Any Lender may wish to purchase one or more deposits in order to fund or maintain its funding of the outstanding principal balance of a LIBOR Loan during any LIBOR Interest Period in question; it being understood that the provisions of this Agreement relating to such funding are included only for the purpose of determining the rate of interest to be paid and any amounts owing to Lenders hereunder with respect to the Liquidation Fee, Reserve Costs, Capital Adequacy Costs and Change in Law Costs (each "Funding Cost" and, collectively, "Funding Costs") and any other amounts payable hereunder. The

Lenders shall be entitled to fund and maintain its funding of the principal amount of such Lenders' LIBOR Loan in any manner it sees fit, but all such determinations hereunder shall be made based on the assumption that the Lender had actually funded and maintained the outstanding principal balance of its LIBOR Loan at the LIBOR Rate applicable during such LIBOR Interest Period through the purchase of deposits in an amount equal to such outstanding principal balance and having a maturity corresponding to such LIBOR Interest Period in accordance with this Agreement. In determining the amount of Funding Costs, of any, due from time to time from Borrower to Administrative Agent, for the pro rata account of the Lenders, if any cost or expense is included in more than one type of Funding Cost, such cost or expense shall not be included in any other type of Funding Cost (i.e., Borrower shall not be charged twice for the same Funding Cost).

(m) Any notices under this Section 3.03 that are permitted to be made by telephone, shall be made as follows:

(i) if to Administrative Agent, by calling Christopher A. Whyte at telephone number 212-525-1143 or such other persons as may be hereafter designated by Administrative Agent; and

(ii) if to Borrower, by calling Richard J. Lampen at telephone number 305-579-8000, or such other persons as may be hereafter designated by Borrower.

3.04. PREPAYMENTS. Borrower shall have the right, upon not less than ten (10) days' advance written notice to the Administrative Agent, which notice shall be irrevocable, to prepay the principal of the Loans in whole or in multiples of $1,000,000.00 at any time, without any premium or penalty other than any Liquidation Fee (as itemized by the Administrative Agent to the Borrower) due in connection with any prepayment of principal that was a LIBOR Loan; provided, however, such prepayment must be accompanied by all accrued and unpaid interest on the principal so prepaid to the date of such prepayment and all other amounts then due under this Agreement (including any Funding Costs, as itemized by Administrative Agent to Borrower). If a partial prepayment is made, there will be no change in the due dates or the amounts of the monthly Amortization Payments.

SECTION 4. PAYMENTS; COMPUTATIONS; ETC.

4.01. PAYMENTS.

(a) Except to the extent otherwise provided herein, all payments of principal, interest and other amounts to be made by Borrower under this Agreement and the Notes and all payments to be made by Borrower under any other Basic Document shall be made in Dollars, in immediately available funds, without deduction, set-off or counterclaim, and flee and clear of, and without deduction or withholding for, any taxes, levies, imposts, duties, fees, charges, withholdings, restrictions or conditions of any nature whatsoever, to Administrative Agent at its office at 452 Fifth Avenue, New York, New York (or such other location in New York State as Administrative Agent may direct), not

later than 12:00 noon New York time on the date when due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day).

(b) Each payment received by Administrative Agent under this Agreement for account of any Lender shall be paid by Administrative Agent promptly to such Lender, in immediately available funds, for account of such Lender's Applicable Lending Office. Borrower shall not be liable to any Lender for any amount paid by Borrower to Administrative Agent for the account of any of the Lenders in the event that Administrative Agent fails to pay such amount to the Lenders in accordance with the terms of this Agreement.

(c) If the due date of any payment under this Agreement or the Notes would otherwise fall on a day that is not a Business Days such date shall be extended to the next succeeding Business Day, and interest (at the interest rate applicable to such payment as of its originally scheduled due date) shall be payable for any principal so extended for the period of such extension.

(d) Borrower shall have no obligation to cause, or liability for the failure of, Administrative Agent or any of the Lenders to perform their respective obligations under this Agreement.

4.02. PRO RATA TREATMENT. Except to the extent otherwise provided herein, (a) the Loans shall be made by the Lenders pro rata according to the amounts of their respective Commitments; (b) each payment or prepayment of principal of the Loans shall be made for account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Loans held by them; and (c) each payment of interest on the Loans shall be made for account of the Lenders pro rata in accordance with the respective amounts of interest on such Loans then due and payable to them.

4.03. INTENTIONALLY OMITTED.

4.04. INTENTIONALLY OMITTED.

4.05. INTENTIONALLY OMITTED.

4.06. SET-OFF.

(a) Borrower agrees that, in addition to (and without limitation of) any right of set-off, banker's lien or counterclaim any Lender may otherwise have, each Lender shall be entitled, at its option, to offset balances held by it for account of Borrower at any of its offices, in Dollars or in any other currency, against any principal of or interest on the Loan(s) or any other amount payable to such Lender hereunder that is not paid when due (regardless of whether such balances are then due to Borrower), in which case it shall promptly notify Borrower and Administrative Agent thereof; provided, that such Lender's failure to give such notice shall not affect the validity thereof.

(b) If any Lender shall obtain from Borrower payment of any principal of or interest on its Loan or payment of any other amount under this Agreement through the exercise of any right of set-off, Banker's lien or counterclaim or similar right or otherwise (other than from Administrative Agent as provided

herein), and, as a result of such payment, such Lender shall have received a percentage of the principal of or interest on such Loan or such other amounts then due hereunder by Borrower to such Lender in excess of its pro rata share thereof, it shall promptly purchase from such other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Loans or such other amounts, respectively, owing to such other Lenders (or in interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) pro rata in accordance with the unpaid principal of and/or interest on the Loans or such other amount respectively, owing to each of the Lenders. To such end all the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if such payment is rescinded or must otherwise be restored. Borrower shall have no liability or responsibility for the performance by the respective Lenders of their obligations under this
Section 4.06(b).

(c) Nothing contained herein shall require any Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other indebtedness or obligation of Borrower.

SECTION 5. INTENTIONALLY OMITTED.

SECTION 6. CONDITIONS PRECEDENT.

6.01. CONDITIONS PRECEDENT TO INITIAL BORROWING.

(a) The obligation of the Lenders to make their respective Loans on the occasion of the initial Borrowing is subject to the conditions precedent that Administrative Agent shall have received the following documents, each of which shall be satisfactory to Administrative Agent in form and substance:

(i) ORGANIZATIONAL DOCUMENTS. Copies, certified by Borrower to be complete and accurate, of the certificate of incorporation and by-laws, and of such other documents as shall evidence the existence and good standing of Borrower, and the due authorization of the making and performance by Borrower of this Agreement and each other Basic Document to which it is a party.

(ii) LEGAL OPINION. An opinion of special counsel to Borrower in form and substance satisfactory to the Administrative Agent. Borrower hereby instructs such counsel to deliver such opinion to the Lenders and Administrative Agent.

(iii) NOTES. The Notes, dated the date of the initial Borrowing, duly completed and executed by Borrower.

(iv) MORTGAGE. The Mortgage, dated the date of the initial Borrowing, duly completed and executed by Borrower in recordable form.

(v) TITLE POLICY. American Land Title Association, extended coverage, loan policy of title insurance on Form 1970 (Rev. 10-17-84) in a form satisfactory to Administrative Agent.

(vi) SURVEY. An updated land survey, prepared by a licensed surveyor acceptable to Administrative Agent showing such matters as may be required by Administrative Agent with respect to the Project, certified by the surveyor and otherwise satisfactory to Administrative Agent and the Title Company and adequate for the Title Company to remove the general survey exception from the Title Policy.

(vii) FINANCING STATEMENTS. Appropriately completed Uniform Commercial Code financing statements to perfect the security interests created pursuant to the Mortgage as first priority security interests.

(viii) INSURANCE. Certificates of insurance evidencing the existence of all insurance required to be maintained by Borrower pursuant to
Section 1.9 of the Mortgage.

(ix) ENVIRONMENTAL SURVEY. One or more Phase I environmental survey and assessments with respect to the Project, in form and substance satisfactory to Administrative Agent.

(x) PROPERTY CONDITION SURVEY. A property condition survey with respect to the Project, satisfactory to Administrative Agent.

(xi) APPRAISAL. An appraisal with respect to the Project, prepared by an Appraiser at Borrower's expense and satisfactory to Administrative Agent, which appraisal demonstrates that the loan to value ratio does not exceed 75%.

(xii) TAXES. Evidence that all property taxes with respect to the Project which are due and payable have been paid.

(xiii) UCC, TAX AND JUDGMENT SEARCHES. Evidence that searches of the public records disclose no conditional sales contracts, chattel mortgages, leases of personality, financing statements, Liens, taxes (except for taxes not yet due and payable) or judgments filed or recorded against Borrower or the Project or in respect of any other property interests covered or to be covered by the Lien of the Mortgage, other than those granted by Borrower to Administrative Agent or contemplated by this Agreement.

SECTION 7. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Administrative Agent and the Lenders that, as of the date hereof:

7.01. EXISTENCE; BENEFICIAL OWNERSHIP. Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware; and Borrower has all requisite power, and has all material governmental licenses, authorizations, consents and approvals, necessary to own its assets and carry on its business substantially as now being or as proposed

to be conducted and is qualified to do business and is in good standing in each location where such qualification is necessary to carry on its business.

7.02. FINANCIAL CONDITION. The financial statements heretofore furnished to Administrative Agent are, as of the dates specified therein, complete and correct in all material respects and fairly present the financial condition of Borrower, and are prepared in accordance with generally accepted accounting principles applied on a consistent basis. Borrower does not have on the date hereof any contingent liabilities, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments that in each case are known to Borrower, and which, in the opinion of Borrower, are reasonably likely to result in a Material Adverse Effect, except as referred to or reflected or provided for in said balance sheets or financial statements as at said dates and except for the purchase and financing of the Project. There has been no material adverse change in the financia1 condition of Borrower from that reflected on the financial statements of Borrower previously delivered to Administrative Agent.

7.03. LITIGATION. There are no legal or arbitral proceedings, or any proceedings by or before any Governmental Authority, now pending or (to the best of the knowledge of Borrower) threatened against the Project or Borrower that are reasonably likely to have a Material Adverse Effect.

7.04. NO BREACH. The making and performance by Borrower of this Agreement, the Notes and the other Basic Documents to which it is a party do not and will not result in a breach of the certificate of incorporation or by-laws of Borrower or any applicable law or regulation, or any order, writ, injunction or decree of any Governmental Authority, or any agreement or instrument to which Borrower is a party or by which it or any of its Property is bound or to which it is subject, or constitute a default thereunder, or (except for the Liens created pursuant to the Security Documents) result in the creation or imposition of any Lien upon any Property of Borrower.

7.05. ACTION. Borrower has all necessary corporate power to make and perform this Agreement, the Notes and each of the other Basic Documents to which it is a party; the making and performance by Borrower of said documents have been duly authorized by all necessary corporate action; and this Agreement has been duly and validly executed and delivered by Borrower and constitutes, and the Notes, and each of the other Basic Documents to which it is a party when executed and delivered, will constitute, its legal, valid and binding obligation, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors' rights, and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

7.06. APPROVALS. No authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority are necessary for the making or performance by Borrower of this Agreement, the Notes or any of the other Basic Documents.

7.07. USE OF CREDIT. Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock within the meaning of Regulations U and X of the Board of Governors of the Federal Reserve System, and no part of the proceeds of the Loans will be used by Borrower to buy or carry any such margin stock.

7.08. ERISA. Each Plan is in compliance in all material respects with the currently applicable provisions of ERISA and the Code.

7.09. TAXES. All federal, state and local tax returns required to be filed by Borrower have been filed, and all federal, state income or other taxes, assessments or fees imposed upon Borrower and/or any of the Mortgaged Property, which are due and payable, have been paid.

7.10. INVESTMENT COMPANY ACT. Borrower is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended.

7.11. PUBLIC UTILITY HOLDING COMPANY ACT. Borrower is not a "holding company", or an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended.

7.12. MATERIAL AGREEMENTS. Borrower has provided copies of all material contracts relating to ownership, operation and maintenance of the Project to Administrative Agent, it being understood that, for the purposes of this Section 7.12, "material contracts" shall not in any event include (i) any agreement for the purchase or leasing of services, supplies, furniture, fixtures, equipment or similar items in the ordinary course of business, (ii) any agreement with respect to the advertising or marketing of the Project, (iii) any other agreement entered into in the ordinary course of business which (a) is either terminable by Borrower on not more than thirty (30) days' notice or is to be fully performed by the parties thereto within one year and (b) requires aggregate payments by Borrower not in excess of $500,000, and (iv) any other agreement entered into in the ordinary course of business which requires aggregate annual payments not in excess of $500,000.

7.13. CONDEMNATION. No condemnation or eminent domain proceeding has been commenced or, to the best knowledge of Borrower, is threatened against the Mortgaged Property or any portion thereof.

7.14. PERMITS. Except as previously disclosed to Administrative Agent in writing, Borrower has all material Permits required to be obtained as of the date of this Agreement with respect to use, occupancy and operation of the Project; all of the foregoing are in full force and effect and not subject to any pending actions or proceedings for revocation, amendment, release, suspension, forfeiture or the like; no appeals with respect to same are pending from any order, decision or determination; and the present and/or contemplated use, occupancy and operation of the Project does not conflict with or violate any such Permit.

7.15. INSURANCE. The insurance policies required by Section 1.9 of the Mortgage are in full force and effect and all premiums payable in respect thereof have been paid to date.

7.16. OWNERSHIP. Borrower is lawfully seized and possessed of a good and marketable fee simple title in and to the Project free and clear of all Liens except for Permitted Exceptions.

7.17. INTENTIONALLY OMITTED.

7.18. MATERIAL ADVERSE EFFECT. No event or circumstance has occurred that could or might have a Material Adverse Effect.

7.19. NO PRIOR LIENS. Borrower has entered into no contract or arrangement of any kind the performance of which by the other party thereto would give rise to a lien on the Mortgaged Property prior to the Mortgage.

7.20. FLOOD ZONE. No part of the Mortgaged Property is located in an area designated by the Federal Emergency Management Agency as having special flood hazards.

SECTION 8. COVENANTS OF BORROWER.

Borrower covenants and agrees with the Lenders and Administrative Agent that, so long as any principal of or interest on the Loans is outstanding and until payment in full of all amounts payable by Borrower under this Agreement and the other Basic Documents:

8.01. FINANCIAL STATEMENTS, ETC. Borrower shall deliver or cause to be delivered to Administrative Agent the financial statements and operating reports in accordance with Section 1.11 of the Mortgage.

8.02. LITIGATION. Borrower shall promptly give to Administrative Agent notice of all legal or arbitral proceedings, and of all proceedings by or before any Governmental Authority, and any material development in respect of such legal or other proceedings, affecting Borrower or the Project, except proceedings which, if adversely determined, would not have a Material Adverse Effect. Without limiting the generality of the foregoing, Borrower shall give to Administrative Agent prompt notice of the assertion of any claim or notice by any Governmental Authority or the commencement or written threat of commencement of any action or proceeding by any Person with respect to any alleged violation of or non-compliance by Borrower or the Project with any Environmental Laws or any material Permits pertaining to the Project.

8.03. MORTGAGE COVENANTS. Borrower shall, for the benefit of the Administrative Agent and the Lenders, comply with all covenants contained in the Mortgage.

SECTION 9. EVENTS OF DEFAULT.

If one or more of the following events (each being herein called an "Event of Default") shall happen, that is to say:

(a) Borrower shall default in the payment when due of any principal of, or interest on, the Loans or in the payment when due of any fee or any other amount payable hereunder or under any other Basic Document and such default shall continue past any notice and/or grace period provided in Section 2.01(a) of the Mortgage; or

(b) an "Event of Default" shall have occurred under the Mortgage, including without limitation, the "Events of Default" listed in
Section 2.l(a)-(q) of the Mortgage.

THEREUPON: (1) in the case of an Event of Default other than one referred to in clause (c) or (d) and (f) of the Mortgage, Administrative Agent may and shall, upon request of the Required Lenders, by notice to Borrower, declare the Commitments to be terminated forthwith, whereupon the Commitments shall be terminated, and/or Administrative Agent may and shall, upon request of the Required Lenders, declare the principal amount then outstanding of, and the accrued interest on, the Notes and all other amounts payable by Borrower hereunder and under the Notes (including, without limitation, the applicable Funding Costs) to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by Borrower;
(2) in the case of the occurrence of an Event of Default referred to in clause
(c), (d) and (f) of the Mortgage, the Commitments shall automatically be terminated and the principal amount then outstanding of, and the accrued interest on, the Notes and all other amounts payable by Borrower hereunder and under the Notes (including, without limitation, the applicable Funding Costs) shall automatically become immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by Borrower; and (3) Administrative Agent may and shall, upon the request of the Required Lenders, exercise such rights and remedies available under this Agreement, the Notes, and the Security Documents or under applicable law, for the pro rata benefit of the Lenders, which Administrative Agent deems appropriate under the circumstances in order to enforce such documents.

SECTION 10. INTENTIONALLY OMITTED.

SECTION 11. ADMINISTRATIVE AGENT.

11.01. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender hereby appoints and authorizes Administrative Agent to act as its agent hereunder and under the Security Documents with such powers as are specifically delegated to Administrative Agent by the terms of this Agreement and the Security Documents, together with such other powers as are reasonably incidental thereto, including, without limitation, the power to execute all documents, filings and notices relating to the transactions contemplated by the Security Documents. Administrative Agent (which term as used in this sentence and in Section 11.06 and the first sentence of Section 11.07 hereof shall include reference to its affiliates and its own and its affiliates' respective officers, directors, employees and agents):

(a) shall have no duties or responsibilities except those expressly set forth in this Agreement, and shall not by reason of this Agreement be a trustee for or partner of any Lender or to have assumed any relationship of agency, trust or partnership with Borrower;

(b) shall not be responsible to the Lenders for any recitals, statements, representations or warranties contained in this Agreement, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, the Security Documents or the Notes or any other document referred to or provided for herein

or for any failure by Borrower or any other Person to perform any of its obligations hereunder or thereunder;

(c) shall not be required to initiate or conduct any litigation or collection proceedings hereunder; and

(d) shall not be responsible for any action taken or omitted to be taken by it hereunder or under any other document or instrument referred to or provided for herein or in connection herewith, except for its failure to exercise the same diligence and standard of care that is customarily used by Administrative Agent with respect to similar loans held by Administrative Agent solely for its own account (the "Standard of Care").

Administrative Agent may employ agents and attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith, subject to the Standard of Care. Administrative Agent shall take, or refrain from taking, such actions as may be directed in writing by the Required Lenders provided that (i) such actions are not contrary to the provisions of this Agreement or contrary to applicable law, rule or regulation, and (ii) it shall receive further assurances to its satisfaction from the Lenders of their indemnification obligations under Section 11.06 hereof against any and all liability and expense that may be incurred by it by reason of taking or refraining to take any such action.

11.02. RELIANCE BY AGENT. Administrative Agent shall be entitled to rely upon any certification, notice or other communication (including, without limitation, any thereof by telephone, telecopy, telex, telegram or cable) reasonably believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel and other experts selected by Administrative Agent. As to any matters not expressly provided for by this Agreement, Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions given by the Required Lenders, and such instructions of the Required Lenders and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. If Administrative Agent shall request instruction from the Lenders with respect to any act or action (including failure to act) in connection with this Agreement, the Notes, the Security Documents or any other document related thereto, Administrative Agent shall be entitled to refrain from such act or taking such action unless and until Administrative Agent shall have received instructions from all of the Lenders, or all of the Required Lenders (as applicable), and Administrative Agent shall not incur liability to any Person by so refraining.

11.03. RELIANCE BY BORROWER. Unless an Event of Default shall have occurred and remains uncured, Borrower shall have no obligation to give notices to, furnish financial or other information to, or otherwise deal directly with, any Lender, but may deal solely with Administrative Agent and no Lender shall have any right to deal directly with Borrower under this Agreement or any of the other Basic Documents. The Administrative Agent shall not have any liability or, as the case may be, any duty or obligation, to Borrower on account of any failure of any Lender to perform, or the delay of any Lender in the performance of, any of its respective obligations under this Agreement, the Security Documents or any of the other documents in connection herewith.

11.04. DEFAULTS. Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of a Default (other than a failure to make a payment of principal of or interest on the Loans) unless Administrative Agent has actual knowledge thereof or has received notice from a Lender or Borrower specifying such Default and stating that such notice is a "Notice of Default". In the event that Administrative Agent has actual notice of a Default or receives such a notice of the occurrence of a Default, Administrative Agent shall give prompt notice thereof to the Lenders. Administrative Agent shall (subject to Section 11.08 hereof) take such action with respect to such Default as shall be directed by the Required Lenders; provided, that unless and until Administrative Agent shall have received such directions, Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable in the best interest of the Lenders except to the extent that this Agreement expressly requires that such action be taken, or not be taken, only with the consent or upon the authorization of the Required Lenders or all of the Lenders. No Lender shall, individually, commence or maintain an action against Borrower with respect to the Loan or this Agreement, it being understood that any such action shall be taken only by Administrative Agent on behalf of all Lenders as Administrative Agent may be directed hereunder.

11.05. RIGHTS AS A LENDER. With respect to its Commitment and the Loans made by it, HSBC Realty Credit Corporation (USA) (and any successor acting as Administrative Agent) in its capacity as a Lender hereunder shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as Administrative Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise indicates, include Administrative Agent in its individual capacity. HSBC Realty Credit Corporation (USA) (and any successor acting as Administrative Agent), HSBC Bank USA, and its affiliates may (without having to account therefor to any Lender) accept deposits from, lend money to, make investments in and generally engage in any kind of banking, trust or other business with Borrower and its Affiliates and subsidiaries as if it were not acting as Administrative Agent, and HSBC Realty Credit Corporation (USA) (and any such successor), HSBC Bank USA and its affiliates may accept fees and other consideration from Borrower for services in connection with this Agreement or otherwise without having to account for the same to the Lenders.

11.06. INDEMNIFICATION. The Lenders agree to indemnify Administrative Agent (to the extent not reimbursed under Section 12.03 hereof, but without limiting the obligations of Borrower under said Section 12.03) ratably in accordance with the aggregate principal amount of the Loans held by the Lenders (or, if no Loans are at the time outstanding, ratably in accordance with their respective Commitments), for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against Administrative Agent (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other documents contemplated by or referred to herein or the transactions contemplated hereby (including, without limitation, the costs and expenses that Borrower is obligated to pay under Section 12.03 hereof, but excluding, unless an Event of Default has occurred and is continuing, normal administrative costs and expenses incident to the performance

of its agency duties hereunder) or the enforcement of any of the terms hereof or of any such other documents, or the acquisition or disposition of any part of the Mortgaged Property or any other collateral for Borrower's obligations to the Lenders or the making of advances pursuant to Section 1.10 of the Mortgage; provided, that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified.

11.07. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that it has, independently and without reliance on Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own credit analysis of Borrower, its own analysis of the Project, and its own decision to enter into this Agreement and that it will, independently and without reliance upon Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement, the Notes and the other Basic Documents. Administrative Agent shall not be required to keep itself informed as to the performance or observance by Borrower of this Agreement or the Notes or any other document referred to or provided for herein or to inspect the properties or books of Borrower. Copies of all reports and other documents expressly required to be furnished to Administrative Agent hereunder shall be forwarded by Administrative Agent to each of the Lenders, provided, however, that except for such reports and other documents, Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of Borrower that may come into the possession of Administrative Agent or any of its affiliates.

11.08. FAILURE TO ACT. Except for action expressly required of Administrative Agent hereunder, Administrative Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall receive further assurances to its satisfaction from the Lenders of their indemnification obligations under Section 11.06 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

11.09. RESIGNATION OR REMOVAL OF AGENT. Subject to the appointment and acceptance of a successor Administrative Agent as provided below, (i) Administrative Agent may resign at any time by giving notice thereof to the Lenders and Borrower, (ii) Administrative Agent may be removed at any time with or without cause by the Required Lenders and (iii) Administrative Agent may be removed by Lenders holding at least 50% of the aggregate unpaid principal amount of the Loans (the "Majority Lenders") in the event of Administrative Agent's gross negligence or willful misconduct or a material breach by Administrative Agent in the performance of its obligations under the terms of this Agreement, which gross negligence, willful misconduct or material breach is not cured or discontinued by Administrative Agent with reasonable promptness following its receipt of written notice of such breach from one of the Lenders. Upon any such resignation or removal, the Required Lenders (or, in the case of a removal under clause (iii) of this Section 11.09, the Majority Lenders) shall have the right to appoint a successor Administrative Agent, which successor Administrative Agent shall be approved by Borrower (such approval not to be unreasonably withheld or delayed and provided, however, that if an Event of Default shall exist, no such consent of Borrower shall be required). If no successor Administrative Agent shall have been so appointed by the Required Lenders (or, in the case of a removal under clause (iii) of this Section 11.09, the Majority Lenders) or shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent's giving of notice of resignation or the Required Lenders' or the Majority Lenders', as the case may be, removal of the retiring Administrative Agent, then the retiring Administrative Agent

may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a bank or other financial institution that has an office in New York, New York and that has a combined capital and surplus of at least $50,000,000 and that shall be approved by Borrower (such approval not to be unreasonably withheld or delayed and provided, however, that if an Event of Default shall exist, no such consent of Borrower shall be required). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation or removal hereunder as Administrative Agent, the provisions of this Section 11 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent.

11.10. BORROWER NOT LIABLE FOR INTERCREDITOR MATTERS. Borrower shall not be liable for nor shall its rights be impaired or its obligations increased by reason of any failure by Administrative Agent to perform any of its obligations to the Lenders or any failure by any Lender to perform its obligations to Administrative Agent or any other Lender. Borrower shall have no duty to inquire as to the performance by or satisfaction of any obligation of Administrative Agent to the Lenders or any obligation of any Lender to Administrative Agent or any other Lender. Without limiting the foregoing, Borrower shall have no obligation to see to the proper application of any payment made by Borrower to Administrative Agent.

11.11. SECURITY DOCUMENTS. Each Lender and Borrower agrees that the Liens granted to the Administrative Agent pursuant to the Security Documents shall be granted to Administrative Agent for the pro rata benefit of the Lenders, and each Lender shall have an undivided interest therein equal to its pro rata amount of the Loans.

11.12. APPLICATION OF MONEY. All moneys realized by the Administrative Agent from any payment or other recovery from Borrower, under the Security Documents, or otherwise in connection with the Loans, shall be distributed and applied by the Administrative Agent and the Lenders against the following in the following priority: first, to costs and expenses of the Administrative Agent or any Lender which are reimbursable by Borrower pursuant to this Agreement, the Notes and any Security Document; second, to interest on the Notes and fees payable to the Lenders and the Administrative Agent pursuant to this Agreement; third, to the unpaid principal balances of the Notes; and fourth, any remaining moneys shall be paid over to such other Person as is entitled thereto. If any payments and/or recoveries applied from time to time are not sufficient to pay in full all items described in one of the above levels of priority, such payments and/or recoveries will be distributed and shared ratably by the Lenders and the Administrative Agent based on the aggregate of such items in such level of priority owed to the Lenders and the Administrative Agent. The Administrative Agent is authorized to deduct from the portion of any such payments or recoveries to be distributed to a Lender the amount of any payment due from such Lender to the Administrative Agent and to retain for itself the amount so deducted.

SECTION 12. MISCELLANEOUS.

12.01. WAIVER. No failure on the part of Administrative Agent or any Lender or Borrower to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege under this Agreement or the Notes or any of the other Basic Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or the Notes or any of the other Basic Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

12.02. NOTICES. All notices, requests and other communications provided for herein and under the Security Documents (including, without limitation, any modifications of, or waivers or consents under, this Agreement) shall be given or made in writing (including, without limitation, by telex or telecopy) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof; or, as to any party, at such other address as shall be designated by such party in a notice to each other party. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telex or telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid, provided, however, that any notice that is a notice of Default or Event of Default shall be given by certified or registered mail, return receipt requested, addressed as aforesaid, and shall be deemed to have been duly given when received or when receipt or delivery is refused.

12.03. EXPENSES, ETC.

(a) Borrower agrees to pay or reimburse Administrative Agent and the Lenders on demand for paying (i) all reasonable out-of-pocket costs and expenses of Administrative Agent (including, without limitation, the reasonable fees and actual expenses of its attorneys) in connection with (x) the negotiation, preparation, execution and delivery of this Agreement and the other Basic Documents and the making of the Loans hereunder and (y) the negotiation and preparation of any modification, supplement or waiver of any of the terms of this Agreement or any of the other Basic Documents (whether or not consummated);
(ii) all reasonable out-of-pocket costs and expenses of Administrative Agent (including, without limitation, reasonable counsels' fees and expenses) in connection with (x) any Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or "work-out" (whether or not consummated) of the obligations of Borrower hereunder and (y) the enforcement of this Section 12.03; (iii) all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any Federal, New York State or local governmental or revenue authority in respect of this Agreement or any of the other Basic Documents or any other document referred to herein or therein (but not including any income or franchise tax) and all costs, expenses, taxes, assessments and other charges heretofore or at any time hereafter properly incurred with respect to any filing, registration, recording or perfection of any security interest contemplated by any Basic Document or any other document referred to therein; (iv) all costs, expenses and other charges in respect of title insurance procured with respect to the Liens created pursuant to the Mortgage; and (v) all fees and disbursements of each title company, engineer, surveyor and environmental engineering concern referred to in this Agreement. Additionally, Borrower agrees that upon me request of

Administrative Agent, at the direction of the Required Lenders, the Borrower shall consent to any reasonable amendments or modifications to this Agreement and the Basic Documents that are merely required to facilitate the sale by a Lender that is a party to this Agreement on the date hereof (hereinafter "Original Lender") to an Eligible Assignee pursuant to 12.06 of this Agreement. Borrower further covenants and agrees to pay all of Original Lender's actual out-of-pocket costs and expenses of any such sales (including Original Lender's reasonable legal fees and disbursements); provided however, that such out-of-pocket costs and expenses (including Original Lender's reasonable legal fees and disbursements) shall not exceed $15,000.00 ("Syndication Expense Cap") in the aggregate with respect to any one or more sales.

(b) Borrower hereby agrees to indemnify Administrative Agent and each Lender and their respective affiliates and directors, officers, employees, attorneys and agents from, and hold each of them harmless against, any and all losses, liabilities, claims, damages or reasonable and documented expenses incurred by any of them (excluding consequential damages) arising out of or by reason of any investigation, litigation or other proceedings relating to the Loans or the Project or the use by Borrower of the proceeds of any of the Loans, including, without limitation, the fees and disbursements of counsel incurred in connection with any such litigation or other proceedings (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence, bad faith or willful misconduct of the Person to be indemnified).

12.04. AMENDMENTS, ETC. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be modified or supplemented only by an instrument in writing signed by Borrower and Administrative Agent and any provision of this Agreement may be waived by Administrative Agent; provided, that (a) no modification, supplement or waiver shall, unless by an instrument signed by all of Lenders or by Administrative Agent acting with the consent of all of the Lenders: (i) increase, or extend the term of the Commitments, (ii) extend the date fixed for the payment of principal of or interest on any Loan or any fee hereunder, (iii) reduce the amount of any such payment of principal, (iv) reduce the rate at which interest is payable thereon or any fee is payable hereunder, (v) alter the terms of this Section 12.04, (vi) release the collateral provided for in the Mortgage, or (vii) modify the definition of the term "Required Lenders" or modify in any other manner the number or percentage of the Lenders required to make any determinations or receive any rights hereunder or to modify any provision hereof, (b) any modification or supplement of Section 12 hereof, or of any of the rights or duties of Administrative Agent hereunder, shall require the consent of Administrative Agent, and (c) Administrative Agent will not execute or consent to any modification, supplement or waiver that affects the rights or obligations of the Lenders in any material, adverse respect without the consent of the Required Lenders.

12.05. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

12.06. ASSIGNMENTS AND PARTICIPATIONS.

(a) Borrower may not assign any of its rights or obligations hereunder without the prior written consent of all of the Lenders and Administrative Agent.

(b) Each Lender may, in accordance with applicable law and without the prior written consent of Borrower but with the prior written consent of Administrative Agent, assign its Loans and its Commitment or any portion thereof to an Eligible Assignee; PROVIDED, that

(i) except in the case of an assignment to one of the other Lenders and except to the extent Administrative Agent shall otherwise consent, any such partial assignment shall be in an amount at least equal to $5,000,000.00; and

(ii) upon each such assignment, the assignor and assignee shall each execute, acknowledge and deliver to Borrower and Administrative Agent an Assignment and Assumption, in the form of Exhibit A hereto, which shall provide for the assignment by the assignor to the assignee, in accordance with this Agreement, of the assignor's rights and under this Agreement and the assumption by the assignee of all of the assignor's obligations under this Agreement.

Upon execution and delivery by the assignor and the assignee to Borrower and Administrative Agent of such Assignment and Assumption, and upon consent thereto by Administrative Agent, the assignee shall have, to the extent of such assignment (unless otherwise consented to by Administrative Agent), the obligations, rights and benefits of a Lender hereunder holding the Commitment and Loans (or portion thereof) assigned to it and specified in such Assignment and Assumption (in addition to the Commitment and Loans, if any, theretofore held by such assignee) and the assigning Lender shall, to the extent of such assignment, be released from the Commitment (or portion thereof) so assigned. Upon its receipt of an Assignment and Assumption complying with the foregoing and executed by an assigning Lender and an Eligible Assignee together with payment by the assigning Lender of an assignment fee of $5,000.00, Administrative Agent shall (i) promptly accept such Assignment and Assumption; and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register (as hereinafter defined) and give notice of such acceptance and recordation to the Lenders and Borrower. Notwithstanding anything to the contrary contained herein, Borrower shall not be obligated to pay to any Lender (or any assignee of any Lender) any Funding Costs greater than the amount Borrower would have been obligated to pay such Lender if such Lender had not made any assignment of its rights under this Agreement, unless such assignment is made at a time when the circumstances giving rise to such greater payments did not exist. Upon the consummation of any assignment pursuant to this paragraph, substitute notes, in substantially the form of Schedule II, shall be issued to the assigning Lender (in the case of a partial assignment) and such assignee by Borrower, in exchange for the return of the assigning Lender's original Note. All such substitute notes shall constitute "Notes" and the obligations evidenced by such substitute notes shall constitute obligations secured by the Mortgage. In connection with Borrower's execution of substitute notes as aforesaid, Borrower shall deliver to Administrative Agent such evidence of the due authorization, execution and delivery of the substitute notes and any related documents as Administrative Agent may reasonably request.

(c) Administrative Agent shall maintain at the address of Administrative Agent referred to in Section 12.02 hereof a copy of each Assignment and Assumption delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amounts of the Loans owing to, each Lender from time to time. Borrower, Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register as the owner of a Loan or other obligations hereunder as the owner thereof for all purposes of this Agreement,

notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation hereunder shall be effective only upon appropriate entries with respect thereto being made in the Register. The Register shall be available for inspection by Borrower, Administrative Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(d) A Lender may, in accordance with applicable law, sell or agree to sell to one or more other financial institutions (each a "Participant") a participation in all or any part of any Loans held by it, or in its Commitment; provided, that such Participant shall not have any rights or obligations under this Agreement (the Participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant). All amounts payable by Borrower to any Lender for Funding Costs in respect of Loans held by it, and its Commitment, shall be determined as if such Lender had not sold or agreed to sell any participations in such Loan and Commitment, and as if such Lender were funding each of such Loan and Commitment in the same way that it is funding the portion of such Loan and Commitment in which no participations have been sold. In no event shall a Lender that sells a participation agree with the Participant to take or refrain from taking any action hereunder except that such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to (i) increase or extend the term of such Lender's Commitment, (ii) extend the date fixed for the payment of principal of or interest on the related Loans or any portion of any fee hereunder payable to the Participant, (iii) reduce the amount of any such payment of principal, (iv) release any collateral provided for in the Mortgage, or (v) reduce the rate at which interest is payable thereon to a level below the rate at which the Participant is entitled to receive such interest.

(e) In addition to the assignments and participations permitted under the foregoing provisions of this Section 12.06, any Lender may (without notice to, or consent of, Borrower, Administrative Agent or any other Lender and without payment of any fee) assign and pledge all or any portion of its Loans or Note to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank.

(f) A Lender may furnish any information concerning the Project or Borrower obtained by such Lender hereunder from time to time to assignees and participants (including prospective assignees and participants).

(g) In addition to the assignments and participations permitted under the foregoing provisions of this Section 12.06, any Lender may (without notice or consent of Borrower, Administrative Agent or any other Lender and without payment of any fee) change the booking office of its Loans or Notes.

12.07. SURVIVAL. The obligations of Borrower (i) to pay Funding Costs, and (ii) under 12.03 hereof, shall survive the repayment of the Loans and termination of the Commitments.

12.08. CAPTIONS. The table of contents and captions and section headings appearing herein are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

12.09. COUNTERPARTS. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.

12.10. GOVERNING LAW; SUBMISSION TO JURISDICTION; SEVERABILITY. This Agreement and the Note shall be governed by, and construed in accordance with, the law of the State of New York. Each of Borrower, Administrative Agent and the Lenders hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each of Borrower, Administrative Agent and the Lenders further agrees that service of process may be made by certified mail, return receipt requested, to its address for notices on the signature page hereof or in any other manner permitted by law. Each of Borrower, Administrative Agent and the Lenders hereby waives any objection to such service. Each of Borrower, Administrative Agent and the Lenders irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Any provision of this Agreement or any of the other Basic Documents which is prohibited or unenforceable in any jurisdiction shall be ineffective in such jurisdiction, but only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or thereof. This Agreement and the other Basic Documents constitute the entire agreement with respect to the subject matter hereof.

12.11. WAIVER OF JURY TRIAL. BORROWER, ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER BASIC DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

12.12. AGREEMENT TO CONTROL. In the event of any conflicts or inconsistencies between this Agreement and one or more of the other Basic Documents, the provisions of this Agreement shall control, and such other Basic Document or Basic Documents shall, to the extent of any such conflicts or inconsistencies, be deemed to be modified to comport with the provisions of this Agreement.

12.13. NON-RECOURSE. THE LIABILITY OF THE BORROWER UNDER THIS LOAN AGREEMENT SHALL BE LIMITED AS PROVIDED IN SECTION 3.21 OF THE MORTGAGE.

12.14. VERIFICATION OF FACTS. Any condition of this Agreement which requires the submission of evidence of the existence or non-existence of a specified fact or facts implies as a condition the existence or non-existence, as the case may be, of such fact or facts, and Administrative Agent shall, at all times, be free independently to establish to its satisfaction and in its absolute discretion such existence or non-existence.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

NEW VALLEY CORPORATION (doing business in New Jersey as New Valley Realty Company)

By: /s/ BENNETT P. BORKO
   ------------------------------------------
     Bennett P. Borko
     Assistant Secretary

Address for Notices:

100 S.E. Second Street
Miami, Florida 33131
Attention: Richard J. Lampen, Executive Vice
President and General Counsel
Telephone: (305) 579-8000
Facsimile: (305) 579-8009

HSBC REALTY CREDIT CORPORATION (USA),
as Administrative Agent

By: /s/ CHRISTOPHER A. WHYTE
   ------------------------------------------
     Christopher A. Whyte
     Vice President

452 Fifth Avenue New York, New York 10018 Attention: Mr. Christopher A. Whyte, Vice President Telecopier No.: (212) 525-8496 Telephone No.: (212) 525-1143

COMMITMENT                       "LENDERS"
----------

$40,500,000.00                   HSBC REALTY CREDIT CORPORATION (USA)




                                 By: /s/ CHRISTOPHER A. WHYTE
                                    -------------------------------------------
                                      Christopher A. Whyte
                                      Vice President


                                 LENDING OFFICE:
                                 --------------

                                 452 Fifth Avenue
                                 New York, New York 10018

                                 ADDRESS FOR NOTICES:
                                 -------------------

                                 452 Fifth Avenue
                                 New York, New York 10018
                                 Attention: Mr. Christopher A. Whyte, V.P.
                                 Telecopier No.: (212) 525-8496
                                 Telephone No.: (212) 525-1143

                                 [FORM OF NOTE]

$[__________]                                                _________,2002
                                                             New York, New York

                  FOR VALUE RECEIVED, NEW VALLEY CORPORATION, a Delaware

corporation (doing business in New Jersey as New Valley Realty Company) ("Borrower"), hereby promises to pay to the order of _______________________________________ (the "Lender"), the principal amount of
[___________ ] in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Loan Agreement, and to pay interest on the unpaid principal amount hereof, in like money and funds, for the period commencing on the date hereof until such principal amount shall be paid in full, at the rates per annum and on the dates provided in the Loan Agreement. Any amount of principal hereof that is not paid when due, whether at stated maturity, by acceleration or otherwise, shall bear interest from the date when due until paid in full at the Default Rate.

All sums payable hereunder are payable at the office of the Administrative Agent, as agent and for the account of the Lender, located at 452 Fifth Avenue, New York, New York 10018, Attention: Christopher A. Whyte, or at such other address as the Administrative Agent may direct in writing.

This Note is one of the Notes referred to in the Loan Agreement dated as of December 13, 2002 (as amended from time to time, the "Loan Agreement") by and between Borrower, each of the lenders party thereto and HSBC Realty Credit Corporation (USA), as Administrative Agent, and evidences a Loan made by the Lender thereunder. Terms used but not defined in this Note have the respective meanings assigned to them in the Loan Agreement.

The date, amount, interest rate and duration of any LIBOR interest Period (if applicable) of the principal amount evidenced hereby, and each payment made on account thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof PROVIDED, that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of Borrower to make a payment when due of any amount owing under the Loan Agreement or hereunder in respect of the principal amount evidenced hereby.

This Note evidences borrowing under the Loan Agreement, to which reference is made with respect to rights of acceleration of the maturity of this Note upon the occurrence of certain events, prepayment of the Loan upon the terms and conditions specified therein and certain other rights. This Note is secured by the Mortgage and the Assignment of Leases and Rents and the liability of the Borrower under this Note shall be limited as provided in
Section 3.21 of the Mortgage.

Borrower waives diligence, presentment, protest and demand, and also notice of protest, demand, dishonor and nonpayment of this Note. No failure by the holder hereof to exercise, and no delay in exercising, any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the holder of any right or power hereunder preclude any

other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the holder as herein specified are cumulative and not exclusive of any other rights or remedies which the holder may otherwise have.

This Promissory Note shall be governed by and construed in accordance with the law of the State of New York.

NEW VALLEY CORPORATION (doing
business in New Jersey as New Valley Realty Company)

                                                  DURATION OF     AMOUNT PAID,
                                                     LIBOR          PREPAID,          UNPAID
                  PRINCIPAL                         INTEREST      CONTINUED OR       PRINCIPAL      NOTATION
DATE MADE      AMOUNT OF LOAN    INTEREST RATE       PERIOD         CONVERTED         AMOUNT        MADE BY
---------      --------------    -------------   -------------   -------------      ----------      -------

SCHEDULE II

ASSIGNMENT AND ASSUMPTION AGREEMENT

DATE: __________ __, 200__

This ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is dated as of this ______ day of ___________, ________, and is made by and between ("Assignor") and ("Assignee").

PRELIMINARY STATEMENT

Assignor is a party to that certain Loan Agreement dated December 13, 2002 (the Loan Agreement, as the same may be amended, supplemented, restated or otherwise modified from time to time shall be referred to herein as the "Loan Agreement") by and among New Valley Corporation (doing business in New Jersey as New Valley Realty Company), a Delaware corporation ("Borrower"), HSBC Realty Credit Corporation (USA), a Delaware corporation, as Administrative Agent ("Administrative Agent"), and the lenders named therein (collectively, "Lenders"). Pursuant to the Loan Agreement, Lender agreed to make a loan of ______ Dollars ($_____. 00) ("Loan") to Borrower. Assignee desires to purchase from Assignor an undivided interest in the Loan under the terms and conditions set forth herein. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.

AGREEMENT

Assignor and Assignee, in consideration of the matters described in the foregoing Preliminary Statement, which are incorporated herein, and in consideration of the mutual covenants and agreements and provisions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, do hereby covenant and agree as follows:

1. ASSIGNMENT AND ASSUMPTION. Assignor hereby sells and assigns to Assignee, and Assignee hereby purchases and assumes from Assignor, an undivided interest in and to the Loan, the Loan Agreement, and the Basic Documents (the Loan Agreement and the Basic Documents are collectively referred to herein as the "Loan Documents") an undivided interest in and to Assignor's rights and obligations thereunder, which interest shall equal a percentage of ____% of the Loan and a corresponding Commitment in the amount of $______, such that after giving effect to this assignment (i) Assignee shall hold a ___% of all Loans and a Commitment in the amount of $___________, together with the outstanding rights and obligations under the Loan Documents in connection with such Commitment, and (ii) Assignor shall hold a ____% of all Loans and a Commitment in the amount of $_________________.

2. EFFECTIVE DATE. The effective date of this Agreement ("Effective Date") shall be _________,200__, which shall be no earlier than three (3) Business Days prior to receipt by the Administrative Agent of a fully executed copy of this Agreement. As of the Effective Date (i) Assignee shall have the rights and obligations of a Lender under the Loan Documents with

respect to the rights and obligations assigned to Assignee hereunder, and the assumption of such obligations by Assignee inuring to the direct benefit of Borrower, and (ii) Assignor shall relinquish its rights and be released from its corresponding obligations under the Loan Documents with respect to the rights and obligations assigned to Assignee hereunder.

3. PAYMENT OBLIGATIONS. On the Effective Date, Assignee shall pay to Assignor the outstanding principal balance in respect of the interest purchased hereunder. Accrued and unpaid interest shall be prorated when received from the Borrower. Assignee shall not be entitled to any interest or fees, of any nature, paid by the Borrower to Assignor pursuant to the Loan Agreement and the other Loan Documents or otherwise owed to Assignor prior to the Effective Date.

4. REPRESENTATIONS OF ASSIGNOR; LIMITATIONS ON ASSIGNOR'S LIABILITY. Assignor represents and warrants that (a) it is the legal and beneficial owner of the interest being assigned by it hereunder, and (b) that such interest is free and clear of any adverse pledge, security interest, claim or other lien or encumbrance. It is understood and agreed that the assignment and assumption hereunder are made without recourse to Assignor and that Assignor makes no other representation or warranty of any kind to Assignee. Neither Assignor, nor any of its officers, directors, employees, agents or attorneys shall be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting Assignor and the other Lenders a security interest ha and to the Project, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrower, (iv) the performance of, or compliance with, any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Borrower,
(vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loan, or
(vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loan or the Loan Documents. This Section shall survive the assignment of the interest assigned herein.

5. REPRESENTATIONS AND COVENANTS OF ASSIGNEE. Assignee (i) confirms that it has received a copy of the Loan Agreement, together with copies of such financial statements, Loan Documents and other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement, (ii) agrees that it will, independently and without reliance upon Administrative Agent, Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Administrative Agent to take such action on its behalf and to exercise such powers under the Loan Documents as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) agrees for the benefit of Borrower and the other Lenders that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (v) agrees that its payment instructions and notice instructions are as set forth in Schedule 1, (vi) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are "plan assets" as defined

under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be "plan assets" under ERISA, and (vii) attaches the forms prescribed by the Internal Revenue Service of the United States certifying that Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes.

6. SUBSEQUENT ASSIGNMENTS. After the Effective Date, Assignee shall have the right pursuant to the terms of the Loan Agreement to assign the rights that are assigned to the Assignee, provided that any such subsequent assignment does not violate any of the terms and conditions of the Loan Agreement or any of the other Loan Documents or any law, rule, regulation, order, writ, judgment, injunction or decree and that any consent required under the terms of the Loan Documents has been obtained.

7. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understandings between the parties hereto supersedes all prior agreements and understandings between the parties hereto relating to the subject matter hereof, and cannot be amended or modified other than pursuant to a writing signed the parties hereto.

8. GOVERNING LAW. This Agreement shall be governed by the internal law, and not the law of conflicts, of the State of New York.

9. NOTICES. Notices shall be given under this Agreement in the manner set forth in the Loan Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the date first above written.

ASSIGNOR:

                                        By:
                                           ------------------------------------
                                             Name
                                             Title:

CONSENTED TO:                           HSBC REALTY CREDIT
                                        CORPORATION (USA),
                                        as Administrative Agent


                                        By:
                                           ------------------------------------
                                             Name

Title:

Street Address             100-150 College West Road
      Town of:             Plainsboro
    County of:             Middlesex
     State of:             New Jersey
        Block:             3
         Lots:             1.61 and 1.62

RECORD & RETURN TO:

Trans-County Title Agency, LLC
83 Morris Street
P.O. Box 675
New Brunswick, New Jersey 08903
Attn: Alan J. Finkel
Title No.: TC-32594

MORTGAGE AND SECURITY AGREEMENT

THIS MORTGAGE AND SECURITY AGREEMENT ("Mortgage"), made the 13th day of December 2002, from NEW VALLEY CORPORATION, a Delaware corporation (doing business in New Jersey as New Valley Realty Company) with offices located at 100 S.E. Second Street, Miami, Florida 33131 ("Mortgagor") in favor of HSBC REALTY CREDIT CORPORATION (USA), a corporation organized under the laws of the State of Delaware, with offices at 452 Fifth Avenue, New York, New York 10018, as Administrative Agent (in such capacity, "Mortgagee") for certain lenders in connection with a loan agreement dated the date hereof among the Mortgagor, as borrower, each of the "Lenders" (as hereinafter defined), and the Mortgagee, as Administrative Agent ("Loan Agreement")

DEFINITIONS

The Mortgagor and the Mortgagee agree that, unless the context otherwise specifies or requires, the following terms shall have the meanings herein specified, such definitions to be applicable equally to the singular and to the plural forms of such terms.

"Chattels" means all fixtures, fittings, appliances, apparatus, equipment, machinery and articles of personal property, all additions thereto and replacements thereof and articles in substitution therefore, now or hereafter owned by the Mortgagor or in which the Mortgagor has or shall have an interest, now or at any time hereafter affixed to, attached to, placed upon, or used in any way in connection with the complete and comfortable use, enjoyment, occupancy or operation of, the Improvements (as hereinafter defined) or the Premises (as hereinafter defined).

"Code" means the Uniform Commercial Code adopted in New York State, as the same may be from time to time in effect.

"Event of Default" means an event of default described as such in Section 2.1 hereof.

"Improvements" means all structures and buildings, and replacements thereof, now or hereafter located or erected upon the Premises, including all Chattels of every kind and nature whatsoever forming part of said structures and/or buildings.

"Intangibles" means all "general intangibles" (as such term is defined in the Code) in any way relating to the Premises and/or the Improvements and in which the Mortgagor has any interest, including, without limitation, all licenses, trade names, and books and records relating to the Premises, the construction of any Improvements, and/or to the business operated or to be operated on the Premises or any part thereof, and all unearned premiums, accrued, accruing or to accrue under all insurance policies now or hereafter obtained by the Mortgagor insuring the Mortgaged Property (as hereinafter defined), and all rights and interests of Mortgagor thereunder.

"Involuntary Rate" means the Default Rate as set forth in the Loan Agreement, but in no event to exceed the maximum rate allowed by law.

"Lenders" mean each of the lenders that is a signatory to the Loan Agreement under the caption "Lenders" on the signature page(s) thereof, including each assignee that becomes a "Lender" after the date hereof pursuant to Section 12.06 of the Loan Agreement.

"Notes" shall have the meaning ascribed to such term in the Loan Agreement.

"Premises" means all that certain plot, piece or parcel of land owned by the Mortgagor as more particularly described in Schedule A hereto, together with all of the improvements thereon, air space, easements, rights, privileges, royalties and appurtenances belonging or in anyway appertaining thereunto, and all of the estate, right, title, interest, claim or demand whatsoever of the Mortgagor therein and in the streets, alleys and ways adjacent thereto, either at law or in equity, in possession or expectancy, now or hereafter acquired.

GRANTING CLAUSE

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the Mortgagor, in consideration of the premises and in order to secure payment of the principal of FORTY MILLION FIVE HUNDRED THOUSAND and 00/100 ($40,500,000.00) DOLLARS, and the interest, and any other sums payable, under the Notes, the Loan Agreement, and/or under this Mortgage, and the payment of any sums advanced by the Mortgagee pursuant to this Mortgage (collectively, all of such obligations are hereinafter referred to as the "Indebtedness"), hereby gives, grants, bargains, sells, warrants, aliens, premises, releases, conveys, assigns, transfers, mortgages, hypothecates, deposits, pledges, sets over and confirms unto the Mortgagee, for the pro rata benefit of the Lenders, all the Mortgagor's estate, right, title and interest in, to and under any and all of the following described property (the "Mortgaged Property"), whether now owned or held or hereafter acquired:

(a) the Premises;

(b) the Improvements;

(c) the Chattels;

(d) the Intangibles;

(e) all leases, subleases, lettings, licenses and other uses and occupancies of the Premises now or hereafter entered into and all right, title and interest of the Mortgagor thereunder, together with the rents, issues, income and profits thereof including, without limitation, cash or securities deposited thereunder to secure performance by the lessees of their obligations thereunder, whether such cash or securities are to be held until the expiration of the terms of such leases (except that the Mortgagor shall as licensee of the Mortgagee have the right to collect such rents and other amounts, subject to

provisions of this Mortgage, so long as no Event of Default shall have occurred and be continuing) and all guaranties of the obligations of the tenants, subtenants, lessees, licensees, users or occupants thereunder;

(f) all agreements and/or contracts now or hereafter entered into by the Mortgagor relating to the sale, leasing, brokerage, development, construction (including architectural and engineering contracts), equipping, management, maintenance, marketing, and/or operation of the Premises or the Improvements, including all moneys due and to become due thereunder;

(g) all books and records relating to the operation of the Premises and/or the construction of any Improvements, including the plans and specifications and working drawings relating to the construction of any Improvements;

(h) all options and agreements with respect to any additional real property for the use or development in connection with operation of the Premises and/or construction of any Improvements;

(i) all Chattel Paper, Accounts, Deposits, Accounts, Letter-of-Credit Rights, Documents, Inventory and Instruments, as such terms are defined in the Code, relating to the Premises and/or Improvements only, including, without limitation, all of the Mortgagor's operating accounts with respect to the Premises and the Improvements;

(j) all consents, certificates, authorizations, variances, waivers, licenses, permits and approvals from any governmental authority relating to the Premises and/or the construction of any Improvements; and

(k) all proceeds of the conversion, voluntary or involuntary, of any of the foregoing into cash or liquidated claims, including, without limitation, proceeds of hazard and title insurance and condemnation awards.

TO HAVE AND TO HOLD unto the Mortgagee, its successors and assigns forever.

ARTICLE I.

PARTICULAR COVENANTS OF THE MORTGAGOR

The Mortgagor covenants and agrees as follows:

Section 1.1. (a) Mortgagor represents and warrants that it has and will continue to hold good and marketable title to an indefeasible fee estate in the Premises subject to no lien, charge or encumbrance, except such as are listed as exceptions in Schedule B attached hereto ("Permitted Exceptions").

(b) Mortgagor represents and warrants: (i) that it is the owner of, and shall own, the Mortgaged Property free and clear of any liens and claims, other than the Permitted Exceptions, (ii) that this Mortgage is and

shall remain a valid and enforceable first lien on the Mortgaged Property subject only to the Permitted Exceptions, (iii) that the execution and delivery of this Mortgage, the Loan Agreement and the Notes have been duly authorized by the Mortgagor and that there is no provision in any document evidencing or establishing the existence of the Mortgagor that requires the further consent for such action by any other entity or person, (iv) that it is duly organized, validly existing and is in good standing under the laws of the State of Delaware, and is authorized to do business in the State of New Jersey, (v) that it has all necessary licenses, authorizations, registrations, permits and/or approvals, and full power and authority, to own its properties and carry on its business as currently conducted, (vi) that the execution and delivery by it of, and performance of its obligations under this Mortgage, the Loan Agreement and the Notes shall not result in the Mortgagor being in default under any provision of any document evidencing or establishing the existence of the Mortgagor or of any mortgage, credit or other agreement to which the Mortgagor is a party or that affects the Mortgagor or the Premises, or any part thereof, (vii) that it shall preserve its fee simple title in and to the Premises and shall forever warrant and defend the same to the Mortgagee, (viii) that it shall forever warrant and defend the validity and priority of the lien hereof against the claims of all persons and parties whomsoever, and (ix) that the execution of this Mortgage has been duly authorized by the executive committee of the board of directors of the Mortgagor.

Section 1.2. The Mortgagor shall, at its sole cost and expense, and without expense to the Mortgagee, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, mortgages, assignments, notices of assignment, transfers and assurances as the Mortgagee shall from time to time reasonably require, for the better assuring, conveying, assigning, transferring and confirming unto the Mortgagee the Mortgaged Property and the rights hereby conveyed or assigned or intended now or hereafter so to be, or which the Mortgagor may be or may hereafter become bound to convey or assign to the Mortgagee, or for carrying out the intention or facilitating the performance of the terms of this Mortgage, or for filing, registering or recording this Mortgage and, on demand, shall execute and deliver, and hereby authorizes the Mortgagee to execute and file in the name of the Mortgagor to the extent it may lawfully do so, one or more financing statements to evidence more effectively the lien hereof upon the Mortgaged Property or any part thereof.

Section 1.3. (a) The Mortgagor forthwith upon the execution and delivery of this Mortgage, and thereafter from time to time, shall, at the sole cost of the Mortgagor, cause this Mortgage and any security instrument creating a lien or evidencing the lien hereof upon the Mortgaged Property and each instrument of further assurance, to be filed, registered and/or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and to fully protect the lien hereof upon, and the interest of the Mortgagee in, the Mortgaged Property.

(b) The Mortgagor shall pay all filing, registration or recording fees, and all expenses incident to the execution and acknowledgment of this Mortgage, any mortgage supplemental hereto, any security instrument with respect to the Mortgaged Property, and any instrument of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges (other than the Mortgagee's franchise or income taxes) arising out of or in connection with the execution and delivery of the Loan Agreement, the Notes, this Mortgage or any mortgage supplemental hereto, any security instrument with respect to the Mortgaged Property or any instrument of further assurance.

Section 1.4. The Mortgagor shall punctually pay the principal and interest and all other sums to become due in respect of the Notes at the time and place and in the manner specified in the Loan Agreement, and all amounts due under the Loan Agreement, according to the true intent and meaning thereof, all in any coin or currency of the United States of America that at the time of such payment shall be legal tender for the payment of public and private debts and all such principal and interest due in respect of the Loan Agreement and the Notes is hereby deemed an obligation due under and secured by this Mortgage.

Section 1.5. Mortgagor represents and warrants that Mortgagor shall, so long as it is owner of the Mortgaged Property or any part thereof, do all things necessary to preserve and keep in full force and effect its existence, franchises, rights and privileges as a corporation under the laws of the State of Delaware and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental authority or court applicable to the Mortgagor or to the Mortgaged Property or any part thereof.

Section 1.6. All right, title and interest of the Mortgagor in and to all extensions, improvements, betterments, renewals, substitutes and replacements of, and all additions and appurtenances to, the Mortgaged Property hereafter acquired by, or released to, the Mortgagor, or constructed, assembled or placed by the Mortgagor on the Premises or any part thereof, and all conversions of the security constituted thereby, immediately upon such acquisition, release, construction, assembling, placement or conversion, as the case may be, and in each such case, without any further mortgage, conveyance, assignment or other act by the Mortgagor or Mortgagee, shall become subject to the lien of this Mortgage as fully and completely, and with the same effect, as though now owned by the Mortgagor and specifically described in the granting clause hereof, but at any and all times the Mortgagor shall execute and deliver to the Mortgagee any and all such further assurances, mortgages, conveyances or assignments thereof as the Mortgagee may reasonably require for the purpose of expressly and specifically subjecting the same to the lien of this Mortgage.

Section 1.7. (a) The Mortgagor, from time to time when the same shall become due and payable, shall pay and discharge all taxes of every kind and nature, all general and special assessments, levies, permits, inspection and license fees, all water and sewer rents and charges, and all other public charges whether of a like or different nature, imposed upon or assessed against the Mortgaged Property, or any part thereof, or upon the revenue, rents, issues, income and profits of the Mortgaged Property, or any part thereof, or arising in respect of the occupancy, use or possession thereof. In default thereof the Mortgagee may, but shall be under no obligation to, pay the same, and the Mortgagor shall repay the same to the Mortgagee with interest and the same shall be a lien of the Premises secured on this Mortgage. If requested by the Mortgagee, the Mortgagor shall deliver to the Mortgagee receipts evidencing the payment of all such taxes, assessments, levies, fees, rents and other public charges imposed upon or assessed against the Mortgaged Property, or any part thereof, or the revenues, rents, issues, income or profits thereof, promptly upon the payment thereof. The Mortgagor shall deposit with the Mortgagee, at the time of each payment of an installment of interest or principal under the Note, an additional amount sufficient to discharge the obligations under this subsection (a) when they become due. The determination of the amount so payable and of the fractional part thereof to be deposited with the Mortgagee, so that the aggregate of such deposit shall be sufficient for this purpose, shall be made by the Mortgagee in its sole and reasonable

discretion. Such amounts shall be held by the Mortgagee without interest and applied to the payment of the obligations in respect to which such amounts were deposited on or before the respective dates on which the same or any of them would become delinquent or, at the option of the Mortgagee, but only if an Event of Default shall have occurred and shall be continuing, to the payment of any amount due under the Loan Agreement, the Notes or hereunder (including principal, interest and any late charges) in such order or priority as the Mortgagee shall determine. If one (1) month prior to the due date of any of the aforementioned obligations, the amounts then on deposit therefor shall be insufficient for the payment of such obligation in full, the Mortgagor, within five (5) business days after demand by the Mortgagee, shall deposit the amount of the deficiency with the Mortgagee. Nothing herein contained shall be deemed to affect any right or remedy of the Mortgagee under any provision of this Mortgage or of any statute or rule of law to pay any such amount and to add the amount so paid to the Indebtedness. The Mortgagor hereby grants the Mortgagee a security interest in any and all such funds to secure the repayment of the Indebtedness.

(b) Nothing in this Section 1.7 shall require the payment or discharge of any obligation imposed upon the Mortgagor by this Section 1.7 so long as the Mortgagor shall in good faith and at its own expense contest the same or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection thereof or other realization thereon and the sale or forfeiture of the Mortgaged Property or any part thereof to satisfy the same; provided that during such contest the Mortgagor shall, at the option of the Mortgagee, provide reasonable security satisfactory to the Mortgagee assuring the discharge of the Mortgagor's obligation under this Section 1.7 and of any additional charge, penalty, or expense arising from or incurred as a result of such contest; and provided further that if, at any time, payment of any obligation imposed upon the Mortgagor by subsection (a) of this Section 1.7 shall become necessary to prevent the delivery of a tax deed, or its equivalent, conveying the Mortgaged Property, or any part thereof, because of non-payment, then the Mortgagor shall pay the same in sufficient time to prevent the delivery of such tax deed or its equivalent.

Section 1.8. (a) The Mortgagor shall pay, or adequately bond, from time to time when the same shall become due, all lawful claims and demands of mechanics, materialmen, laborers and others, which claims and demands, if unpaid, might result in, or permit the creation of, a lien on the Mortgaged Property or any part thereof, or on the revenues, rents, issues, income and profits arising therefrom and in general shall do or cause to be done everything necessary so that the lien on this Mortgage shall be fully preserved, at the cost of the Mortgagor, without expense to the Mortgagee.

(b) The Mortgagor shall pay any and all taxes, charges, fees and/or levies by reason of Mortgagee's ownership of this Mortgage or any Lender's ownership of its Note and/or resulting from the exercise by Mortgagee of any of its rights and/or remedies provided for under this Mortgage, except for franchise and income taxes of the Mortgagee. The obligations assumed by Mortgagor pursuant to this Section 1.8 shall survive the exercise by the Mortgagee of any of its rights and/or remedies under this Mortgage.

Section 1.9. (a) The Mortgagor, at its sole cost and expense, shall maintain the following insurance:

(i) intentionally omitted.

(ii) Insurance on the Improvements and the Chattels against loss or damage by fire and against loss or damage by other risks now or hereafter embraced by "All-Risks" insurance, so called, in an amount sufficient to prevent the Mortgagor from becoming a co-insurer under the applicable policies but, in any event, not less than 100% of the "full replacement cost" thereof, without deduction for depreciation, and with a replacement cost endorsement and agreed amount endorsement satisfactory to the Mortgagee. As used herein, "full replacement cost" shall mean (A) with reference to the Improvements, the cost of replacing the Improvements exclusive of the cost of excavations, foundations and footings below the lowest basement floor, and (B) with reference to the Chattels, the cost of replacing the Chattels, and in either case, without deduction for the physical depreciation thereof. Such full replacement cost shall be determined from time to time (but not more often than once every twenty-four months) at the request of the Mortgagee by an insurer or by an appraiser, architect or contractor designated by the Mortgagee and paid by the Mortgagor. No omission on the part of the Mortgagee to request any such determination shall relieve the Mortgagor of any of its obligations under this
Section 1.9.

(iii) Comprehensive general liability insurance (with contractual liability on an occurrence basis and including blanket contractual liability, completed operations and personal injury coverage) against claims for bodily injury, death or property damage occurring on, in or about the Premises, such insurance to afford protection, during the term of this Mortgage, in such amounts as the Mortgagee may from time to time require.

(iv) Worker's compensation insurance, in accordance with all applicable statutory requirements.

(v) Insurance against loss or damage from (A) leakage of sprinkler systems and (B) explosion of steam boilers, air conditioning equipment, pressure vessels or similar apparatus now or hereafter installed in the Premises, in for and in such amounts as the Mortgagee shall from time to time reasonably requires.

(vi) Rent and business interruption insurance for loss occasioned by the perils commonly insured in the "All Risks" policy, so-called, in an amount not less than one year's gross income from the Premises plus the annual real estate taxes thereon.

(vii) Insurance in such amounts as may from time to time be reasonably required by the Mortgagee, against such other insurable casualties, hazards or risks as shall from time to time commonly be insured against in the case of premises comparable to the Premises, including, without limitation, insurance against loss and damage resulting from perils and acts of terrorism; PROVIDED, HOWEVER with respect to insurance against loss and damage resulting from perils and acts of terrorism, Mortgagor shall only be required to use commercially reasonable efforts, consistent with those of prudent owners of real estate comparable to the Premises and Improvements, to maintain commercial property and business income insurance for loss and damage resulting from perils and acts of terrorism on terms (including amounts) consistent with those required under this Section 1.9.

Each policy of insurance required by clauses (ii), (iv), (v),
(vi) and (vii) of this subdivision (a) of this Section 1.9 shall contain the standard non-contributory mortgagee endorsement in favor of the Mortgagee, shall name the Mortgagee as loss payee of any and all proceeds payable under such insurance, and shall provide that the Mortgagee shall have the right to participate in the adjustment of any insurance awards. All policies of insurance required by clause (iii) of this subdivision (a) of this Section 1.9 shall be written on an "on occurrence" basis and shall name the Mortgagee as an additional insured.

All insurance policies and endorsements required pursuant to this Section 1.9 shall be fully paid for, nonassessable and contain such provisions and expiration dates and be in such form and amounts and issued by such insurance companies as shall be reasonably satisfactory to the Mortgagee. Without limiting the foregoing, each policy shall specifically provide that (A) such policy may not be canceled or modified except upon thirty (30) days prior written notice to the Mortgagee via certified mail and that no act or thing done by the Mortgagor shall invalidate the policy as against the Mortgagee, and (B) any and all insurance proceeds shall be paid to the Mortgagee, except for insurance proceeds of less than $150,000.00 for any single occurrence, which may be paid directly to the Mortgagor, so long as no Event of Default shall have occurred and be continuing. In addition, from time to time, upon the occurrence of any change in the use, operation or value of the Premises, or in the availability of insurance in the area in which the Premises are located, the Mortgagor shall, within ten (10) business days after demand by the Mortgagee, take out such additional amounts and/or require other kinds of insurance as the Mortgagee may reasonably require. The Mortgagor shall assign and deliver the policies of all such insurance to the Mortgagee, in such manner and form that the Mortgagee and its successors and assigns shall at all times have and hold said policy or policies as collateral and further security for the payment of the Indebtedness until the full payment of the Indebtedness.

(b) Mortgagor shall not take out separate insurance concurrent in form or contribution in the event of loss with that required to be maintained under this Section 1.9, unless the Mortgagee is included thereon as a named insured with loss payable to the Mortgagee under a standard mortgagee endorsement of the character above described. The Mortgagor shall immediately notify the Mortgagee whenever any such separate insurance is taken out and shall immediately notify the Mortgagee whenever such separate insurance is taken out and shall promptly deliver to the Mortgagee the policy or policies of such insurance.

(c) If the Premises, or any part thereof, are located in an area which has been identified by the Secretary of Housing and Urban Development as a flood hazard area, the Mortgagor shall keep, for as long as any Indebtedness remains unpaid, the Premises covered by flood insurance in an amount at least equal to the full amount of the Indebtedness or the maximum limit of coverage available for the Premises under the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1983, as the same may have been or may hereafter be amended or modified (and any successor act thereto), whichever is less, naming Mortgagee as an additional insured party.

(d) The Mortgagor shall give the Mortgagee prompt notice of any loss covered by insurance and the Mortgagee shall have the right to join the Mortgagor in adjusting any loss. Notwithstanding anything to the contrary contained herein or under applicable law, the proceeds of insurance policies coming into the possession of the Mortgagee shall not be deemed trust funds and, unless the Mortgagor shall be entitled to receive disbursement of the insurance

proceeds pursuant to and in accordance with the provisions of 1.9(h) below, the Mortgagee shall have the option in its sole discretion to apply any insurance proceeds it may receive pursuant hereto, or otherwise, to the payment of the Indebtedness, or to allow all or a portion of such proceeds to be used for the restoration of the Premises in accordance with Section 1.9(h) below without affecting the lien of this Mortgage for the full amount of the Indebtedness owing prior to receipt of such proceeds. In the event any such insurance proceeds shall be used to reduce the Indebtedness, the same shall be applied by the Mortgagee, after the deduction therefrom and repayment to the Mortgagee of any and all costs and expenses incurred by the Mortgagee in the recovery thereof, in any manner Mortgagee shall designate including but not limited to, the application of such proceeds to the then unpaid installments of the principal balance due under the Loan Agreement and the Notes in the inverse order of their due dates, such that the regular payments, if any, under the Loan Agreement and the Notes shall not be reduced or altered in any manner.

(e) All insurance provided for in this Section 1.9 shall be effected under valid and enforceable policies issued by financially responsible insurers having a general policyholder's and financial rating of not less than "A", as rated in the most currently available Best's Insurance Reports (or an equivalent rating with a publication of a similar nature if Bests Insurance Reports is no longer being published), and incorporated under the Laws of the United States or any state thereof and authorized to do business in the State of New York and in the State of New Jersey and which are approved in writing by the Mortgagee. It is further agreed that the aggregate amount of coverage underwritten by any insurer in conformance with the provisions of this Mortgage shall not exceed 10% of that insurer's surplus to policyholders. Upon the execution of this Mortgage and thereafter, not less than thirty (30) days prior to the expiration dates of the expiring policies theretofore furnished pursuant to this section or any other section of this Mortgage, originals or certified copies of the policies bearing notations (or certificates thereof) evidencing the payment of not less than one year's premiums, or accompanied by other evidence reasonably satisfactory to the Mortgagee of such payment, shall be delivered by the Mortgagor to the Mortgagee.

(f) If the Mortgagor shall fail to procure, pay for or deliver to the Mortgagee any policy or policies of insurance (or certificates, as the case may be) and/or renewals thereof as in this Section 1.9 required, the Mortgagee may, at its option, but shall be under no obligation to do so, effect such insurance and pay the premium therefor, and the Mortgagor shall upon five
(5) business days prior written notice repay to the Mortgagee any premiums so paid, with interest thereon at the Involuntary Rate. Any amount so expended by the Mortgagee, with interest thereon at the Involuntary Rate, shall be secured by the lien of this Mortgage. The Mortgagor hereby waives any claim against the Mortgagee by reason of the failure of the Mortgagee to (i) notify the Mortgagor of the cancellation or non-renewal of any insurance required by this Section 1.9, or (ii) effect any such insurance.

(g) After an Event of Default, the Mortgagee may, at its option, to be exercised by thirty (30) days written notice to the Mortgagor, require the deposit by the Mortgagor, at the time of each payment of an installment of interest or principal under the Loan Agreement and the Notes, of an additional amount sufficient to pay the insurance premiums due for the insurance required under this Section 1.9 when such premiums become due. The determination of the amount so payable and of the fractional part thereof to be deposited with the Mortgagee, so that the aggregate of such deposit shall be sufficient for this purpose, shall be made by the Mortgagee in its sole and reasonable discretion. Such amounts shall be held by the Mortgagee without

interest and applied to the payment of the premiums in respect to which such amounts were deposited on or before the respective dates on which the same or any of them would become delinquent or, at the option of the Mortgagee, but only if an Event of Default shall have occurred and shall be continuing, to the payment of any amount due under the Loan Agreement or the Notes or hereunder (including principal, interest and late charges) in such order or priority as the Mortgagee shall determine. If one (1) month prior to the due date of any of the aforementioned premiums, the amounts then on deposit therefor shall be insufficient for the payment of such premiums in full, the Mortgagor, within five (5) business days after demand by the Mortgagee, shall deposit the amount of the deficiency with the Mortgagee. Nothing herein contained shall be deemed to affect any right or remedy of the Mortgagee under any provision of this Mortgage or of any statute or rule of law to pay any such amount and to add the amount so paid to the Indebtedness. The Mortgagor hereby grants the Mortgagee a security interest in any and all such funds to secure the repayment of the Indebtedness.

(h) If (A) the Debt Coverage Ratio (as defined in subsection 1.23(b)(ii) of this Mortgage) shall equal or exceed the Acceptable Ratio (as defined in subsection 1.23(b)(v) of this Mortgage) for all Periods (as defined in subsection 1.23(b)(iv) of this Mortgage) during which insurance proceeds are being made available for the restoration of the Improvements, and (B) the stabilized value of the Premises and Improvements as set forth In the then most recent Appraisal Report (as defined in Section 1.25 of this Mortgage) equals or exceeds the Principal Balance (as defined in Section 1.25 of this Mortgage), then the Mortgagee shall permit the Mortgagor to use the insurance proceeds for the restoration of the Mortgaged Property, provided that (i) the net insurance proceeds are sufficient in the opinion of the Mortgagee, on advice from Mortgagee's architect or engineer, to restore the Mortgaged Property, or if such proceeds are insufficient to restore the Mortgaged Property, Mortgagor shall have deposited with the Mortgagee cash or other security reasonably acceptable to the Mortgagee in an amount equal to the difference between the cost of such restoration and such proceeds, (ii) there shall exist no Event of Default, and
(iii) in the opinion of the Mortgagee, on advice from Mortgagee's architect or engineer, the Mortgaged Property can be completely restored within two hundred seventy (270) days after the occurrence of such casualty or the Maturity Date (as such term is defined in the Loan Agreement), whichever comes first. In the event insurance proceeds are used to repair or restore the Mortgaged Property pursuant to this subsection, Mortgagor shall obtain, at its sole cost and expense, an architect who shall submit plans to the Mortgagee for the repair or restoration of the Mortgaged Property indicating that such repair or restoration can be completed within the period provided for herein, together with an estimated budget itemizing the projected costs of such repair or restoration, which plans and budget shall be subject to the approval of the Mortgagee, which approval shall not be unreasonably withheld, conditioned or delayed. Mortgagor shall also obtain and post, at its sole cost and expense, all necessary Federal, State and local permits and approvals prior to the commencement of such repair or restoration. Mortgagor agrees that all insurance proceeds (and any shortfall deposits) to be used to repair or restore the Mortgaged Property shall be held by the Mortgagee and disbursed monthly: (i) on advice from the Mortgagor's architect or engineer (subject to the review and approval of the Mortgagee's

architect or engineer) that the work completed or materials installed conform to said budget and plans, as reasonably approved by the Mortgagee; and (ii) upon presentment of receipted bills and releases reasonably satisfactory to the Mortgagee. The expenses incurred by the Mortgagee, including reasonable architects' and reasonable attorneys' fees, and all soft and hard costs in connection with such restoration, shall be paid by Mortgagor to the extent insurance proceeds (and any shortfall deposits) are insufficient to pay same. At no time shall the Mortgagee be obligated to disburse any funds if (i) the undisbursed balance is, in the opinion of the Mortgagee based on advice from its architect or engineer, insufficient to timely complete the restoration of the Mortgaged Property free and clear of all liens or if the advance of funds will, in the reasonable opinion of the Mortgagee, adversely affect the priority of the lien of this Mortgage, or (ii) an Event of Default shall have occurred and be continuing. The Mortgagor agrees to post such bonds, obtain such guaranteed maximum price general contract agreement and/or enter into such agreements and arrangements as the Mortgagee may require to insure lien-free completion of such repairs or restoration by the end of the period provided herein for completion of such repairs or restoration.

(i) For the purpose of subsection 1.9(h) and Section 1.13 only, in determining the Debt Coverage Ratio (a) the DCR Shortage (as such term is defined in subsection 1.23 of this Mortgage), if any, shall not be included in determining whether the Debt Coverage Ratio is equal to or exceeds the Acceptable Ratio, (b) the proceeds of rent insurance, to the extent such proceeds are actually available to be used to pay debt service under the Loan Agreement and the Notes, shall be included in determining Net Property Cash Flow (as defined in subsection 1.23(b)(i) of this Mortgage), and (c) notwithstanding the provisions of Section 1.23 of this Mortgage, the Mortgagee shall be entitled to order an Appraisal Report at any time after the casualty/proceeding giving rise to the insurance/condemnation claim and the Mortgagor shall be responsible to pay all fees and expenses of the Mortgagee incurred with respect thereto.

Section 1.10. If the Mortgagor shall fail to perform any of the covenants contained in Sections 1.1, 1.3, 1.7, 1.8, 1.9 or 1.12 hereof, the Mortgagee may make advances to perform the same on Mortgagor's behalf, and all sums so advanced shall be a lien upon the Mortgaged Property and shall be secured hereby. The Mortgagor shall repay upon five business days prior written demand by Mortgagee all such sums so advanced by Mortgagee on Mortgagor's behalf with interest at the Involuntary Rate. The provision of this Section 1.10 shall not prevent any default in the observance by Mortgagor of any covenant contained in Sections 1.1, 1.3, 1.7, 1.8, 1.9 or 1.12 hereof from constituting an Event of Default.

Section 1.11. (a) The Mortgagor shall keep adequate records and books of account with respect to the Mortgaged Property, and shall keep adequate records and books of account with respect to its overall operations, in accordance with the principles of the accrual basis method of accounting, consistently applied. Mortgagor shall permit the Mortgagee, by its agents, accountants and attorneys, to visit and inspect the Premises at reasonable times during normal business hours upon reasonable prior written or telephonic notice and to examine the Mortgagor's records and books of account with respect to the Mortgaged Property and to discuss its affairs, finances and accounts with the partners or officers, members, accountants, employees, attorneys and agents of the Mortgagor, at such reasonable times as may be requested by the Mortgagee upon reasonable prior written or telephonic notice.

(b) The Mortgagor shall deliver to the Mortgagee (i) with reasonable promptness after the close of each fiscal year of the Mortgagor, but in no event later than one hundred twenty (120) days thereafter, the Mortgagor's

operating report with respect to the Mortgaged Property, statement of income, balance sheet, and statement of cash flow, for such fiscal year, together with all schedules appurtenant thereto, prepared on the accrual basis method of accounting in accordance with Generally Accepted Accounting Principles ("GAAP"), consistently applied, and certified by an independent certified public accountant engaged by the Mortgagor, which certified public accountant shall be reasonably satisfactory to the Mortgagee; provided that, with respect to the operating report, the certified public accountant shall review, but shall not be required to certify, such report, but such report shall be signed by a financial officer of the Mortgagor to certify that said operating report is true, accurate and complete and that no events have occurred subsequent to the date of said report that have or would cause a material adverse change in the financial conditions represented therein, (ii) with reasonable promptness after the close of each fiscal year of the Mortgagor, but in no event later than ninety (90) days thereafter, the rent roll for the Premises in the form described in Section 1.1 l(d) of this Mortgage, (iii) with reasonable promptness after the close of each fiscal year of the Mortgagor, but in no event later than fifteen (15) days thereafter, the Mortgagor's business plan and projections for the Mortgaged Property for the then immediately upcoming fiscal year, in form reasonable satisfactory to the Mortgagee, (iv) with reasonable promptness after its filing with the Securities and Exchange Commission ("SEC"), but in no event later than thirty (30) days thereafter, Mortgagor's annual report on Form 1OK, and (v) with reasonable promptness after its filing with the SEC, but in no event later than thirty (30) days after the end of the second fiscal quarter of each fiscal year of the Mortgagor, its quarterly report on Form 10Q.

(c) intentionally omitted.

(d) The Mortgagor, within ten (10) days after written request, shall deliver to the Mortgagee a current rent roll of the Premises showing the names of tenants, space occupied by each tenant, rent paid by each tenant (gross and per square foot), lease security if any, lease or occupancy expiration dates, options for renewal, rental during renewal terms, cancellation provisions and other relevant information.

(e) The Mortgagor shall, within five (5) business days after written request from the Mortgagee, but not more often than once every, twelve months, furnish to Mortgagee a written statement, duly acknowledged, and to the best of the Mortgagor's knowledge, of the amount due whether for principal or interest under the Notes and all amounts due under the Loan Agreement, whether any offsets, counterclaim or defenses exist against payment of the Indebtedness or any part thereof.

(f) The Mortgagor, with reasonable promptness, shall deliver or cause to be delivered to the Mortgagee such other information (financial or otherwise) with respect to Mortgagor and/or the Mortgaged Property as Mortgagee may reasonably request from time to time.

Section 1.12. The Mortgagor shall not commit any physical waste on the Mortgaged Property, or any part thereof, nor make any material change in the use of the Mortgaged Property, nor any part thereof, which shall in any way increase any ordinary fire or other hazard arising out of alteration, construction or operation. The Mortgagor shall, at all times, maintain the Improvements in good operating order and condition and shall promptly make, at

its sole expense, from time to time, all repairs, renewals, replacements, additions and improvements in connection therewith which are needful or desirable to such end.

Section 1.13. The Mortgagor, immediately upon obtaining knowledge of the institution of any proceedings for the condemnation of the Premises or any part thereof, shall notify the Mortgagee of the pendency of such proceedings. The Mortgagee may participate in any such proceedings and the Mortgagor from time to time shall promptly deliver to the Mortgagee all instruments requested by the Mortgagee to permit such participation. The award or compensation payable to the Mortgagor in any such condemnation proceedings is hereby assigned to and shall be paid to the Mortgagee. The Mortgagee shall be under no obligation to question the amount of any such award or compensation and may accept the same in the amount in which the same shall be paid. In any such condemnation proceedings, the Mortgagee may be represented by counsel selected by the Mortgagee, at the sole cost and expense of Mortgagor. The proceeds of any award or compensation so received shall be applied toward the payment of the Indebtedness, notwithstanding the fact that the Indebtedness may not then be due and payable; provided, however, if the Mortgagor meets the Debt Coverage Ratio and loan to value requirements set forth in subsections (A) and (B) of Section 1.9(h) as pre-conditions for the receipt of insurance proceeds, then such condemnation proceeds shall be applied to the restoration of the Improvements in the same manner set Section 1.9(h) for the use of insurance proceeds. In the event that any portion of the condemnation awards or compensation shall be used to reduce the Indebtedness, same shall be applied by the Mortgagee in any manner it shall designate including, but not limited to, the application of such award or compensation of the then unpaid installments of the principal balance due under the Loan Agreement and the Notes in the inverse order of their maturity such that the regular payments under the Loan Agreement and the Notes shall not be reduced or altered in any manner. The Mortgagor, upon request by the Mortgagee, shall make, execute and deliver to the Mortgagee any and all instruments requested for the purpose of confirming the assignment of the aforesaid awards and compensation to the Mortgagee free and clear of any liens, charges or encumbrances of any kind or nature whatsoever. The Mortgagee shall not be limited to the interest paid on the proceeds of any award or compensation, but shall be entitled to the payment by the Mortgagor of interest at the applicable rate provided for in the Loan Agreement and the Notes.

Section 1.14. (a) The Mortgagor has no right or power, as against the Mortgagee without the Mortgagee's prior written consent, which consent shall not be unreasonably withheld, conditioned, or delayed, to cancel, abridge or otherwise modify the leases or subleases of the Premises or any of the terms, provisions or covenants thereof or to accept prepayments of installment of rent to become due thereunder and the Mortgagor shall not do so without such consent, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however that the Mortgagee's written consent to non-material modifications and amendments shall only be required with respect to leases for space covering 20,000 square feet or more.

(b) The Mortgagor shall not enter into any lease of all or any portion of the Premises and/or the Improvements without the prior written consent of the Mortgagee, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however that the Mortgagee's written consent shall only be required with respect to leases for space covering 20,000 square feet or more.

(c) The Mortgagor shall at all times, and in all commercially reasonable respects, promptly and faithfully perform, or cause to be performed promptly, all of the covenants, conditions and agreements contained in all leases of the Premises, or any part thereof, now or hereafter existing, on the part of the lessor thereunder to be kept and performed and shall at all times do all things necessary and commercially reasonable to compel performance by the lessees under each lease of all obligations, covenants and agreements by such lessee to be performed thereunder. If any of such leases provide for the giving by the lessee of certificates with respect to the status of such leases, the Mortgagor shall exercise its right to request such certificates within five (5) business days of any demand therefor by the Mortgagee.

(d) The Mortgagor shall at all times promptly and faithfully perform, or cause to be performed promptly, all of the covenants, conditions and agreements contained in all deeds, instruments, deed restrictions, notices, easements or other agreements affecting the Premises, or any part thereof, now or hereafter existing, on the part of the Mortgagor to be kept and performed and shall at all times do all things necessary and commercially reasonable to compel performance by the lessees, operators or other occupants of the Premises of all obligations, covenants and agreements by such lessee, operator or other occupant to be performed thereunder, as the case may be. Without limiting the generality of the aforementioned, Mortgagor shall at all times promptly and faithfully perform, or cause to be performed promptly, all of the covenants, conditions and agreements on the part of the Mortgagor to be kept and performed under those certain Deed Notices by The Trustees of Princeton University dated as of October 15, ! 999 affecting the Premises, including, without limitation, all institutional controls and associated monitoring and maintenance activities, if any, and shall prepare and deliver, or cause to be prepared and delivered, all biennial reports and documentation required to be submitted to the New Jersey Department of Environmental Protection with respect to such Deed Notices, the Premises or any part thereof.

Section 1.15. Each lease covering the Premises, or any part thereof, shall by its terms be subject and subordinate to the lien of this Mortgage.

Section 1.16. Mortgagor shall not grant any licenses covering the Premises or a portion thereof without the prior written consent of the Mortgagee, which consent sha11 not be unreasonably withheld, conditioned or delayed.

Section 1.17. In the event any payment provided for herein, the Loan Agreement, or in the Notes (whether principal, interest or otherwise) shall become overdue for a period in excess often (10) days, a late payment premium of four (4) cents for each dollar so overdue shall become immediately due to the Mortgagee for the purpose of defraying the expenses incident to handling such delinquent payment, and such premium shall be deemed to be part of the Indebtedness and therefore secured by the lien of this Mortgage. Late payment premiums shall be payable together with the payment of such overdue payment.

Section 1.18. (a) The Mortgagor shall receive the advances secured by this Mortgage and shall hold the right to receive such advances as a trust fund to be applied first for the purpose of paying the cost of constructing the Improvements and shall apply the same first to the payment of the costs before using any part of the total of the same for any other purpose.

(b) The Mortgagor agrees that it shall indemnify and hold the Mortgagee harmless from and against any loss or liability, cost or expense, including, without limitation, any judgments, reasonable attorneys' fees, costs of appeal bonds and printing costs arising out of or relating to any proceeding instituted by any claimant alleging priority over the lien of this Mortgage, and/or by any claimant alleging a violation by the Mortgagor of any section of any applicable law.

Section 1.19. The Mortgagor shall (i) execute and deliver to the appropriate governmental authority any affidavit, instrument, document and/or filing required pursuant to any applicable statute, ordinance, rule and/or regulation, and (ii) deliver to the Mortgagee, within thirty (30) days after written and detailed request by Mortgagee, all information Mortgagee deems reasonably appropriate in order to comply with the provision of any applicable law.

Section 1.20. The Mortgagor expressly covenants and agrees to pay in full the reasonable costs and expenses of the Mortgagee (including, without limitation, the reasonable fees and actual out-of-pocket expenses of Mortgagee's counsel), promptly upon receipt of a statement therefor, which are incurred prior to and after the date hereof and which costs and expenses arise in connection with any matter incidental to the preparation, negotiation, execution, delivery, filing and recording, amendment or modification, and enforcement of the Loan Agreement and the Notes and/or this Mortgage including, without limitation, the reasonable costs and expenses of every kind incurred by Mortgagee (including, without limitation, the reasonable fees and actual out-of-pocket expenses of Mortgagee's counsel) in connection with the commencement of any action to foreclose this Mortgage or to collect the Indebtedness, all which costs and expenses shall, to the extent not prohibited by law, be a lien on the Mortgaged Property prior to any interest in, or claim upon, the Mortgaged Property arising subsequent to the date hereof. "Costs and expenses" as used in the preceding sentence shall include, without limitation (and in addition to those costs and expenses specified above), the reasonable attorneys' fees and actual out-of-pocket expenses incurred by Mortgagee in retaining counsel for advice, suit, appeal or any insolvency or other proceedings under the Federal Bankruptcy Code or otherwise. The Mortgagor also expressly covenants and agrees to pay in full the reasonable costs and expenses of the Mortgagee's and Lenders (including, without limitation, the reasonable fees and expenses of the Mortgagee and Lenders (including, without limitation, the reasonable fees and expenses of Mortgagee's and Lenders' counsel), promptly upon receipt of a statement therefore, which are incurred after the date hereof and which costs and expenses arise in connection with the Mortgagee's or any Lender's sale of one or more ownership interest(s) or participation interest(s) in the Indebtedness, the Loan Agreement, the Notes, this Mortgage and any and all of the documents executed in connection therewith; provided, however, such costs and expenses shall be subject to the "Syndication Expense Cap" (as such term is defined in the Loan Agreement) and shall only be paid in connection with the sale of such ownership or participation interests of a Lender that is a Lender as of the date of this Mortgage. The Mortgagor also covenants and agrees to provide to the Mortgagee all financial and other information with respect to the Mortgagor and/or Mortgaged Property reasonably requested by the Mortgagee, and the Mortgagor authorizes the Mortgagee to make available to such information to the Lenders, the proposed Lenders and such Lenders' participants.

Section 1.21. The Mortgagor shall not make any structural alterations to the Premises without the prior written consent of Mortgagee, which consent shall not be unreasonably withheld, conditioned, or delayed.

Mortgagor or any tenants shall be permitted to make non-structural alterations that do not materially adversely affect the Improvements.

Section 1.22. The Mortgagor hereby assigns to the Mortgagee the leases, rents, issues and profits of the Premises, if any, and the Mortgagor grants to the Mortgagee the right to enter upon and to take possession of the Premises for the purpose of collecting such rents, issues and profits and to let the Premises or any part thereof, and to apply the rents, issues and profits, after payment of all necessary charges and expenses, on account of the Indebtedness. This assignment and grant shall continue in effect until the Indebtedness shall have been paid in full. The Mortgagee hereby grants to Mortgagor a license for the purpose of collecting said rents, issues and profits, and the Mortgagor shall be entitled to collect and receive said rents, issues and profits; provided, however, after an Event of Default shall have occurred and be continuing under this Mortgage, such license shall automatically terminate upon the Mortgagee's written notice to any tenant of the Premises, or any part thereof, to pay rent directly to the Mortgagee.

Section 1.23. (a) The Mortgagor shall establish and maintain with HSBC Bank USA an interest bearing cash collateral account in the name of the Mortgagor and pledged to the Mortgagee ("Reserve Account") in which the Mortgagor shall maintain on deposit an amount calculated at the times and on the basis described below, that, if it were added to Net Property Cash Flow (as hereinafter defined) for the relevant period, would cause the Debt Coverage Ratio (as hereinafter defined) to be equal to the Acceptable Ratio (as hereinafter defined), which amount shall then be rounded up to the next increment of $10,000.00 (which amount, as rounded, is hereinafter referred to as the "DCR Shortage"); provided however, if the Debt Coverage Ratio for any Period (as hereinafter defined) shall be 1.00:1.00 or less, the Mortgagor shall, upon the Mortgagee's demand, either (i) prepay a portion of the principal balance of the Indebtedness in an amount sufficient to cause the Debt Coverage Ratio to be equal to the Acceptable Ratio, or (ii) post additional collateral reasonably acceptable to the Mortgagee of a value that, if it were offset against the principal balance of the Indebtedness, would be sufficient to cause the Debt Coverage Ratio to be equal to the Acceptable Ratio. The Mortgagor shall establish the Reserve Account with HSBC Bank USA promptly after the first date on which the Debt Coverage Ratio for any Period is determined to be below the Acceptable Ratio.

(b) The following terms shall have the following meanings:

(i) "Net Property Cash Flow" for any period of time shall mean the aggregate of all revenues of every nature and kind from all sources relating to the Mortgaged Property actually paid to the Mortgagor for such period of time including, without limitation, base rent, additional rent, and any other amounts (including, without limitation, reimbursement for common area maintenance, insurance premiums and real estate taxes) payable pursuant to any and all leases affecting the Premises and Improvements or any portion thereof less the aggregate of all reasonable and ordinary costs relating to the operation of the Premises and Improvements that are actually paid by the Mortgagor to independent third parties for such period of time including repairs, maintenance, insurance premiums, tenant improvement work, leasing commissions, real estate taxes, capital expenditures, and management fees (but excluding all non-cash expenses (such as depreciation)).

(ii) "Debt Coverage Ratio" shall mean the ratio of Net Property Cash Flow to Debt Service.

(iii) "Debt Service" for any period of time shall mean the greater of (A) the aggregate of all payments of principal and interest due under the Loan Agreement for such period of time, or (B) the aggregate of all payments of principal and interest that would be due under a $40,500,000.00 (less any principal prepayment(s) made in accordance with the terms of the Loan Agreement i.e., prepayments of $1,000,000.00 or a multiple thereof) obligation being amortized over a twenty-five year period beginning as of January 1, 2003 at an interest rate equal to 7.50% per annum.

(iv) "Periods" shall mean, during any calendar year, the six month period of January 1 through June 30 and the six month period of July 1 through December 31.

(v) "Acceptable Ratio" shall mean 1.25 to 1.00.

(c) The determination of the DCR Shortage shall be made as of the end of each Period during the term of the Loan Agreement beginning with the Period January 1, 2003 through June 30, 2003. The Mortgagor shall supply to the Mortgagee such information as is reasonably requested by the Mortgagee for the Mortgagee to determine the DCR Shortage on or prior to the date that is twenty-five (25) days after the end of each Period. Such information, at a minimum, shall include (without the necessity of explicitly requesting same) the Mortgagor's determination of the Net Property Cash Flow and Debt Service for such period. The determination of the DCR Shortage, if any, with respect to each Period, shall be based on the Mortgagee's reasonable determination of the Debt Coverage Ratio calculated as of the end of each Period by using the Net Property Cash Flow (as determined by the Mortgagee) and the Debt Service (as determined by the Mortgagee) for that Period, and shall be provided to the Mortgagor promptly after such calculation.

(d) The Mortgagor, promptly following demand by the Mortgagee, shall establish the Reserve Account at HSBC Bank USA and shall, from time to time, promptly following the Mortgagee's demand, deposit into the Reserve Account any amount that is necessary to maintain the balance of the Reserve Account at an amount equal to the then most current determination of the DCR Shortage.

(e) The amount of deposit in the Reserve Account shall not be subject to downward adjustment during the term of the Loan Agreement; provided, however, if the Debt Coverage Ratio (without the DCR Shortage) is greater than or equal to the Acceptable Ratio for two Periods after the last deposit into the Reserve Account, the amount in the Reserve Account shall be released to the Mortgagor.

(f) The Mortgagor hereby grants to the Mortgagee a security interest in the Reserve Account and shall confirm such grant pursuant to documentation in form and substance reasonably satisfactory to the Mortgagee and, in addition to all other remedies that the Mortgagee may have, the Mortgagor hereby specifically authorizes the Mortgagee to apply the funds in the Reserve Account to the reduction of the Indebtedness upon the occurrence, and during the continuance, of an Event of Default.

Section 1.24. The Mortgagor, beginning July 25, 2003, shall deliver to the Mortgagee on July 25 and January 25 of each calendar year a certificate signed by the Mortgagor certifying that the Mortgagor is in compliance with all of its covenants under this Mortgage, including the covenants contained in Section 1.23 and 1.25 of this Mortgage.

Section 1.25. The Mortgagor, promptly following the Mortgagee's demand, shall pay all fees and charges actually incurred by the Mortgagee with respect to any appraisal report of the Premises commissioned by the Mortgagee after the date hereof ("Appraisal Report"); provided however that the Mortgagor shall not be liable for fees and charges for any Appraisal Report dated within two years of the date hereof or within twelve months of any other Appraisal Report. On or after the date that is the second anniversary of the date of this Mortgage, the Mortgagee shall, at the Mortgagee's option, determine whether the then outstanding principal balance of the Indebtedness ("Principal Balance") exceeds seventy-five (75%) percent of the value of the Premises and Improvements as set forth in the latest Appraisal Report commissioned by the Mortgagee after the second anniversary date of this Mortgage. If the Mortgagee determines, in its reasonable discretion, that the Principal Balance exceeds seventy-five (75%) percent of the value of the Premises and Improvements as set forth in such Appraisal Report, then the Mortgagor, within ten (10) days after written demand from the Mortgagee, shall either (i) pay to the Mortgagee a sum sufficient to reduce the Principal Balance to an amount less than or equal to seventy-five (75%) percent of the value of the Premises and Improvements as set forth in such Appraisal Report, or (ii) deposit with the Mortgagee (or, at the Mortgagee's direction, HSBC Bank USA) cash collateral (or a letter of credit in favor of the Mortgagee issued by a financial institution reasonably satisfactory to the Mortgagee, and otherwise in form and substance satisfactory to the Mortgagee or other collateral reasonably acceptable to the Mortgagee) securing the repayment of the Principal Balance (pursuant to documentation reasonably satisfactory to the Mortgagee) so that the Principal Balance is less than or equal to seventy-five (75%) percent of the aggregate value of the Premises and Improvements and the cash collateral, or the amount available to be drawn by the Mortgagee under the letter of credit (or other collateral reasonably acceptable to the Mortgagee), as the case may be.

Section 1.26. The Mortgagor covenants and agrees to maintain (and cause to be maintained) all cash security deposits for any and all leases of the Premises and/or Improvements (or any part thereof) and all operating account(s) with respect to the Premises and/or Improvements (whether maintained by the Mortgagor or its agent) in one or more bank accounts at HSBC Bank USA.

Section 1.27. The Mortgagor covenants and agrees to deposit (or cause to be deposited) all rent checks and all other forms of rental payments from tenants at the Premises and/or Improvements, and all checks or other forms of payments representing any other income whatsoever from the Premises and/or Improvements, into the operating account(s) maintained by the Mortgagor (or its agent) at HSBC Bank USA.

Section 1.28. Mortgagor will not commit any intentional physical waste on the Premises or make any change in the use of the Premises which will in any way increase any ordinary fire or other hazard arising out of use or operation. Mortgagor will, at all times, maintain the Improvements and Chattels in good operating order and condition and will promptly make, from time to time, all repairs, renewals, replacements, additions and improvements in

connection therewith which are needful to such end. The Improvements shall not be demolished or substantially altered, nor shall any Chattels be removed without Mortgagee's prior consent, except where obsolete or appropriate replacements free of superior title, liens and claims are immediately made of value at least equal to the value of the removed Chattels.

Section 1.29. The Mortgagor represents and warrants that there is no management agreement with respect to the Premises or Improvements other than the Property Management Agreement by and between Mortgagor, as owner, and Crimson Corporate Services, LLC, a Texas limited liability company, as operator, effective as of December 13, 2002.

(End of Article I)

ARTICLE II.

EVENTS OF DEFAULT AND REMEDIES

Section 2.1. If one or more of the following Events of Default shall happen, that is to say:

(a) if (i) default shall be made in the payment of the principal and interest due under the Loan Agreement or the Notes at maturity, whether by acceleration or otherwise, (ii) default shall be made in the payment of any principal or interest due under the Loan Agreement or the Notes, when and as the same shall become due and payable, other than at maturity, and such default shall have continued for a period of ten (10) days, or (iii) default shall be made in the payment of any other fee or amount due under the Loan Agreement, the Notes or under this Mortgage and said default shall have continued for a period of twenty (20) business days after written notice thereof shall have been given to the Mortgagor by the Mortgagee; or

(b) if default shall be made in the due observance or performance of any covenant or agreement on the part of the Mortgagor in this Mortgage contained (other than those covered in clause (a) above) and such default shall have continued for a period of thirty (30) days after written notice thereof shall have been given to the Mortgagor by the Mortgagee, provided however that if such default is of a nature that the same cannot reasonably be cured within said thirty (30) days, it shall not be an Event of Default so long as the Mortgagor diligently continues to pursue such cure, but in no event shall such cure period extend beyond an additional reasonable period of time not to exceed one hundred twenty (120) days; or

(c) if by the order of a court of competent jurisdiction, a trustee, receiver or liquidator of the Mortgaged Property, or any part thereof, or of the Mortgagor shall be appointed and such order shall not be discharged or dismissed within ninety (90) days after such appointment; or

(d) if the Mortgagor shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case under any such law or to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Mortgagor or of any substantial part of its property, or if the Mortgagor shall make any general assignment for the benefit of creditors, or if the Mortgagor shall fail generally to pay its debts as such debts become due, or if the Mortgagor shall take any action in furtherance of any of the foregoing; or

(e) if any of the creditors of the Mortgagor shall commence against the Mortgagor an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect and if such case shall not be discharged or dismissed within ninety (90) days after the date on which such case was commenced; or

(f) if final judgment for the payment of money in excess of $250,000.00 in the aggregate shall be rendered against the Mortgagor and the Mortgagor shall not discharge the same or cause it to be bonded to the Mortgagee's reasonable satisfaction, or paid within sixty (60) days from the

entry thereof, or shall not appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered, and secure a stay of execution pending such appeal within the aforementioned sixty (60) day period, and shall not, after the expiration of such stay, immediately discharge or bond such judgment to the Mortgagee's reasonable satisfaction; or

(g) if the Mortgagor fails to discharge or bond to the Mortgagee's reasonable satisfaction any judgment lien filed against the Mortgaged Property, or any portion thereof, within twenty (20) days after notice to do so from the Mortgagee; or

(h) intentionally omitted; or

(i) if the Mortgagor sells, transfers, assigns, leases (except as expressly permitted herein), conveys, mortgages or encumbers the Mortgaged Property or any part of the Mortgaged Property or any interest in the Mortgaged Property without the prior written consent of the Mortgagee; or

(j) if a default beyond any applicable notice, grace and/or cure period occurs under any mortgage encumbering the Mortgaged Property or any part thereof (which mortgage would only be permitted with the prior written consent of the Mortgagee), including any other mortgage held by the Mortgagee encumbering the Mortgaged Property, or any part thereof; or

(k) intentionally omitted; or

(l) intentionally omitted; or

(m) intentionally omitted; or

(n) if the Mortgagor defaults under any covenant or agreement, or materially breaches any representation or warranty, contained in the Loan Agreement or defaults under any other agreement with the Mortgagee pertaining to the Mortgaged Property or the Indebtedness and such default continues beyond the expiration of any applicable notice, grace and/or cure period; or

(o) if the Mortgagor is dissolved, or is re-incorporated, or if the Mortgagor's certificate of incorporation or by-laws are materially modified or amended without the Mortgagee's prior written consent; provided however if such modification or amendment does not adversely affect the rights of the Mortgagee or the Lenders, any such amendment or modification shall not be deemed to be an Event of Default; or

(p) if any certificate, written statement, representation, warranty or financial statement furnished to the Mortgagee by or on behalf of the Mortgagor (including, without limitation, representations and warranties contained herein) shall prove to have been false in any material adverse respect at the time as of which the facts therein set forth were certified, or to have omitted any substantial contingent or unliquidated liability or claim against the Mortgaged Property or if on the date of the execution of this Mortgage there

shall have been any material adverse change in any of the facts disclosed by any such statement or certificate, which change shall not have been disclosed in writing by or on behalf of the Mortgagor to the Mortgagee at or prior to the time of such execution; or

(q) if (i) the Improvements are substantially damaged, demolished or destroyed in whole or in part, and (ii) the insurance proceeds have been obtained from the insurance company, and (iii) the Mortgagee makes the insurance proceeds available to the Mortgagor for restoration pursuant to the terms of this Mortgage, and (iv) the Mortgagor shall have failed to promptly commence and diligently prosecute the restoration of the Improvements and Chattels in accordance with the provisions of the Section 1.09(h) of this Mortgage, and (v) such default continues for thirty (30) days after notice from Mortgagee;

then and in each and every such case:

(i) The Mortgagee, by written notice given to the Mortgagor, may declare the Indebtedness then outstanding (if not then due and payable), to be due and payable immediately, and upon any such declaration the Indebtedness shall be immediately due and payable, anything in the Loan Agreement, the Notes or in this Mortgage to the contrary notwithstanding. The Indebtedness shall automatically be due and payable immediately, without demand or notice of any kind, during the continuance of an Event of Default under Sections 2.1 (c), (d) and (e) hereof.

(ii) The Mortgagee personally, or by its agents or attorneys, may enter into and upon all or any part of the Mortgaged Property (at reasonable times during normal business hours and after reasonable prior notice) and each and every part thereof, whereof it shall become possessed as aforesaid; having and holding the same, may use, operate, manage and control the Mortgaged Property and conduct the business thereof, either personally or by its superintendents, managers, agents, servants, attorneys or receivers; upon every such entry, the Mortgagee, at the expense of the Mortgaged Property, from time to time, may maintain and restore the Mortgaged Property, may complete the construction of any of the Improvements and in the course of such completion may make such changes in the contemplated Improvements as it may deem desirable and may insure the same; likewise, from time to time, at the expense of the Mortgaged Property, the Mortgagee may make all necessary or proper repairs, renewals and replacements and such useful alterations, additions, betterments and improvements thereto and thereon as it may deem advisable; in every such case the Mortgagee shall have the right to manage and operate the Mortgaged Property and to carry on the business thereof and exercise all rights and powers of the Mortgagor with respect thereto either in the name of the Mortgagor or otherwise as it shall deem best; the Mortgagee shall be entitled to collect and receive all earnings, revenues, rents, issues, profits and income of the Mortgaged Property and every part thereof, all of which shall for all purposes constitute property of the Mortgagee; and after deducting the expenses of conducting the business thereof and of all maintenance, repairs, renewals, replacements, alterations, additions, betterments and improvements and amounts necessary to pay for taxes, assessments, insurance and prior or other proper charges upon the Mortgaged Property, or any part thereof, as well as reasonable compensation for the services of the Mortgagee and for all of the Mortgagee's attorneys and agents, the Mortgagee shall apply the moneys arising as aforesaid to the payment of the Indebtedness in the manner and in the amounts as the Mortgagee shall elect in its sole discretion.

(iii) Upon the occurrence of any such Event of Default, the Mortgagee, with or without entry, personally or by its agents or attorneys, may:

(1) after reasonable prior written notice to Mortgagor, sell the Mortgaged Property, or any part thereof, to the extent permitted and pursuant to the procedures provided by applicable law, and all estate, right, title and interest, claim and demand therein, and right of redemption thereof, at one or more sales as a single entity or in parcels, and at such time and place upon such terms and after such notice thereof as may be required or permitted by law; or

(2) institute and maintain proceedings for the complete or partial foreclosure of this Mortgage; or

(3) take such steps to protect and enforce its rights whether by action, suit or proceeding in equity or at law for the specific performance of any covenant, condition or agreement in the Loan Agreement, the Notes or in this Mortgage, or in aid of the execution of any power herein granted, or for any foreclosure hereunder, or for the enforcement of any other appropriate legal or equitable remedy or otherwise as the Mortgagee shall elect.

Section 2.2. (a) The Mortgagee may adjourn from time to time any sale to be made pursuant to or by virtue of this Mortgage by announcement at the time and place appointed for such sale or for such adjourned sale or sales; and, except as otherwise provided by any applicable law, the Mortgagee, without further notice or publication, may make such sale at the time and place to which the same shall be so adjourned.

(b) Upon the completion of any sale or sales made pursuant to or by virtue of this Mortgage, the Mortgagee, or an officer of any court empowered to do so, shall execute and deliver to the purchaser or purchasers a good and sufficient instrument or instruments, conveying, assigning and transferring all estate, right, title and interest in and to the property and rights sold and shall execute and deliver to the appropriate governmental authority any affidavit, instrument, document and/or filing required pursuant to any applicable statute, ordinance, rule and/or regulation. The Mortgagee is hereby irrevocably appointed the true and lawful attorney of the Mortgagor, in its name and stead, to make all necessary conveyances, assignments, transfers and deliveries of the Mortgaged Property and rights so sold, and for that purpose the Mortgagee may execute all necessary instruments of conveyance, assignment and transfer, including, without limitation, any required affidavit, instrument, document and/or filing and may substitute one or more persons with like power. The Mortgagor hereby ratifies and confirms all that its said attorney or such substitute or substitutes shall lawfully do by virtue hereof. Nevertheless, the Mortgagor, if so requested by the Mortgagee, shall ratify and confirm any such sale or sales by executing and delivering to the Mortgagee or to such purchaser or purchasers all such instruments as may be advisable, in the judgment of the Mortgagee, for that purpose. Any such sale or sales whether made under or by virtue of this Article II, under the power of sale herein granted, or under or by virtue of judicial proceedings of sale herein granted or of a judgment or decree of foreclosure and sale, shall operate to divest all the estate, right, title, interest, claim and demand whatsoever, whether at law or

in equity, of the Mortgagor in and to the properties and rights so sold, and shall be a perpetual bar both at law and in equity against the Mortgagor and against any and all persons claiming or who may claim the same, or any part thereof, from, through or under the Mortgagor.

(c) In the event of any sale or sales whether made under or by virtue of this Article II, under the power of sale herein granted, or under or by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, the entire principal of, and interest on, the Loan Agreement and the Notes, if not previously due and payable, and all other sums required to be paid by the Mortgagor pursuant to this Mortgage, immediately thereupon, shall become due and payable.

(d) The purchase money proceeds or avails of any sale made under or by virtue of this Article II, together with any other sums which then may be held by the Mortgagee under this Mortgage, whether under the provisions of this Article II or otherwise, shall be applied as follows:

First: To the payment of the reasonable costs and expenses of such sale, including, but not limited to, the reasonable compensation to the Mortgagee, its agents and attorneys, and any sums that may be due under and/or pursuant to any statute, rule, regulation and/or law that imposes any tax, charge, fee and/or levy in connection with and/or arising from the exercise of any right and/or remedy under this Mortgage or the recording or filing of any deed, instrument of transfer or other such document in connection with any such sale and of any judicial proceedings wherein the same may be made, and of all expenses, liabilities and advances made or incurred by the Mortgagee under this Mortgage, together with interest at the Involuntary Rate, on all advances made by the Mortgagee pursuant to this Mortgage.

Second: To the payment of the whole amount then due, owing or unpaid under the Loan Agreement or the Notes for principal and interest, in such order as the Mortgagee shall determine in its sole and absolute discretion with interest on the unpaid principal at the Involuntary Rate from and after the due date (whether by acceleration or otherwise).

Third: To the payment of the surplus, if any, to whomsoever may lawfully be entitled to receive the same.

(e) Upon any sale made under or by virtue of this Article II, whether made under the power of sale herein granted or under by virtue of judicial proceedings or of a judgment or decree of foreclosure and sale, the Mortgagee may bid for and acquire the Mortgaged Property or any part thereof and in lieu of paying cash therefor may make settlement for the purchase price by crediting upon the Indebtedness of the Mortgagor secured by this Mortgage the net sales price after deducting therefrom the expenses of the sale and the costs of the action and any other sums which the Mortgagee is authorized to deduct under this Mortgage.

Section 2.3. (a) If all of the principal shall be due and payable under the Loan Agreement and the Notes, whether by acceleration or otherwise, the Mortgagor shall pay to the Mortgagee (i) interest at the Involuntary Rate on the then unpaid principal of the Loan Agreement and the Notes, and on the sums required to be paid by the Mortgagor pursuant to any provision of this Mortgage from the due date thereof until the payment in full of the Indebtedness, and (ii) such further amount as shall be sufficient to cover the reasonable costs and expenses of collection, including reasonable compensation to the Mortgagee, its agents, and attorneys and any expenses incurred by the Mortgagee pursuant to the exercise of any of the Mortgage rights hereunder.

(b) Subject to the exculpatory provisions of Section 3.21 of this Mortgage, in the event of a sale of the Mortgaged Property, or any part thereof, and of the application of the proceeds of sale, as in this Mortgage provided, to the payment of the debt hereby secured, the Mortgagee shall be entitled to enforce payment of, and to receive all amounts then remaining due and unpaid upon the Loan Agreement and the Notes, and to enforce payment of all other reasonable charges, payments, costs and amounts due under this Mortgage, and shall be entitled to recover judgment for any portion of the debt remaining unpaid, with interest at the Involuntary Rate. Subject to the exculpatory provisions of Section 3.21 of this Mortgage, in case of the commencement of any case against the Mortgagor under any applicable bankruptcy, insolvency, or other similar law now or hereafter in effect or any proceedings for its reorganization or involving the liquidation of its assets, the-n- the Mortgagee shall be entitled to prove the whole amount of principal and interest due upon the Loan Agreement and the Notes to the full amount thereof, and all other payments, charges, costs and amounts due under this Mortgage, without deducting therefrom any proceeds obtained from the sale of the whole or in part of the Mortgaged Property; provided, however, that in no case shall the Mortgagee receive a greater amount than such principal and interest and such other payments, charges, costs and amounts from the aggregate amount of the proceeds of the sale of the Mortgaged Property and the distribution from the estate of the Mortgagor.

(c) No recovery of any judgment by the Mortgagee and no levy of an execution under any judgment upon the Mortgaged Property shall affect in any manner or to any extent, the lien of this Mortgage upon the Mortgaged Property, or any part thereof, or of any liens, rights, powers or remedies of the Mortgagee hereunder, but such liens, rights, powers and remedies of the Mortgagee shall continue unimpaired as before.

(d) Any moneys collected by the Mortgagee under this Section 2.3 shall be applied by the Mortgagee in accordance with the provisions of subsection (d) of Section 2.2.

Section 2.4. After the occurrence of any Event of Default and immediately upon the commencement of any action, suit or other legal proceedings by the Mortgagee to obtain judgment for the Indebtedness, or any part thereof, the Mortgagor shall and hereby does, irrevocably consent to the appointment of a receiver or receivers of the Mortgaged Property, or any part thereof, and of all the earnings, revenues, rents, issues, profits and income thereof. After the happening of any Event of Default and during its continuance, or upon the commencement of any proceedings to foreclose this Mortgage or to enforce the specific performance hereof or in aid thereof, or upon the commencement of any other judicial proceeding to enforce any right of the Mortgagee, the Mortgagee shall be entitled, as a matter of right, if it shall so elect, on an EX PARTE

basis and without the giving of notice to any other party and without regard to the adequacy of any security for the Indebtedness, either before or after declaring the unpaid principal of the Loan Agreement and the Notes to be due and payable, to the appointment of a receiver or receivers with respect to the Mortgaged Property, or any part thereof, and of all the earnings, revenues, rents, issues, profits and income thereof. Any such receiver shall have the right to immediate possession of the Mortgaged Property (and of all the earnings, revenues, rents, issues, profits and income thereof) from and after his or her appointment.

Section 2.5. Notwithstanding the appointment of any receiver, liquidator or trustee of the Mortgagor, or of any of its property, or of the Mortgaged Property or any part thereof, the Mortgagee shall be entitled to retain possession and control of all property now or hereafter held by the Mortgagee under this Mortgage.

Section 2.6. No remedy herein conferred upon or reserved to the Mortgagee is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission of the Mortgagee to exercise any right or power accruing upon any Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Event of Default or any acquiescence therein; and every power and remedy given by this Mortgage to the Mortgagee may be exercised from time to time as often as may be deemed expedient by the Mortgagee. Nothing in this Mortgage, the Loan Agreement or in the Notes shall affect the obligation of the Mortgagor to pay the principal of, and interest under, the Loan Agreement, the Notes in the manner and at the time and place therein respectively expressed.

Section 2.7. The Mortgagor shall not insist upon, or plead, or in any manner whatever claim or take any benefit or advantage of any stay or extension or moratorium law, any exemption from execution or sale of the Mortgaged Property or any part thereof, wherever enacted, now or at any time hereafter in force, that may affect the covenants and terms of performance of this Mortgage, nor claim, take or insist upon any benefit or advantage of any law now or hereafter in force providing for the valuation or appraisal of the Mortgaged Property, or any part thereof, prior to any sale or sales thereof that may be made pursuant to any provision herein, or pursuant to the decree, judgment or order of any court of competent jurisdiction; nor, after any such sale or sales, claim or exercise any right under any statute heretofore or hereafter enacted to redeem the property so sold or any part thereof and the Mortgagor hereby expressly waives all benefit or advantage of any such law or laws, and covenants not to hinder, delay or impede the execution of any power herein granted or delegated to the Mortgagee, but to suffer and permit the execution of every power as though no such law or laws had been made or enacted. The Mortgagor, for itself and all who may claim under it, waives, to the extent that it lawfully may, all right to have the Mortgaged Property marshalled upon any foreclosure hereof.

Section 2.8. During the continuance of any Event of Default, and pending the exercise by the Mortgagee of its right to exclude the Mortgagor from all or any part of the Mortgaged Property, the Mortgagor agrees to pay the fair and reasonable rental value for the use and occupancy of the Mortgaged Property, or any part thereof that is in its possession for such period, and upon default of any such payment, shall vacate and surrender actual possession of the Mortgaged Property, or such part thereof, to the Mortgagee or to a receiver, if any, and in default thereof may be evicted by any summary action or proceeding for the recovery of possession of the Mortgaged Property, or the part thereof so occupied by the Mortgagor, for non-payment of rent, however designated. It is agreed that the fair and reasonable rental value for use and occupancy of the Mortgaged Property, or the part thereof so occupied by the Mortgagor, may be difficult or impossible to ascertain; therefore, Mortgagor and Mortgagee hereby agree that the fair and reasonable rental value shall in no event be less than an amount equal to the fair market rent for the part of the Mortgaged Property so occupied.

(End of Article II)

ARTICLE III.

MISCELLANEOUS

Section 3.1. In the event any one or more of the provisions contained in this Mortgage or in the Notes shall for any reason be held to be invalid, illegal or unenforceable in any respect, such in validity, illegality or unenforceability shall not affect any other provision of this Mortgage, but this Mortgage shall be construed as if such provision had never been contained herein or therein.

Section 3.2. All notices hereunder shall be in writing and shall be deemed to have been sufficiently given or served for all purposes when delivered in person or sent by first class certified mail, return receipt requested, or by reliable overnight carrier, to any party hereto at its address above stated (in the case of the Mortgagee, to the attention of Mr. Christopher
A. Whyte, with a copy to Phillips, Lytle, Hitchcock, Blaine & Huber, 437 Madison Avenue, New York, New York 10022, Attention: Robert J. Chanis, Esq. and in the case of the Mortgagor to the attention of Richard J. Lampen, Esq., with copy to Fischbein Badillo Wagner Harding, 909 Third Avenue, New York, New York 10022, Attention: Gerald N. Schrager, Esq. or at such other address of which it shall have notified the party giving such notice in writing as aforesaid. Each notice shall be deemed to have been sufficiently given or served for all purposes when delivered in person (or when delivery is first attempted, if delivery is refused), three (3) business days after mailing when sent by certified or registered mail, or on the following business day if sent by reliable overnight courier.

Section 3.3. Whenever notice is required herein, the giving of such notice may be waived in writing by the person or persons entitled to receive such notice.

Section 3.4. All of the grants, terms, conditions, provisions and covenants of this Mortgage shall run with the land, shall be binding upon the Mortgagor and shall inure to the benefit of the Mortgagee, the Mortgagee's assignees, the Mortgagee's participants, subsequent holders of this Mortgage, and their respective assignees, participants, successors and assigns. For the purpose of this Mortgage, the term "Mortgagor" shall include and refer to any subsequent owner of the Mortgaged Property, or any part thereof, and their respective heirs, executors, legal representatives, successors and assigns. If there is more than one Mortgagor, all their undertakings hereunder shall be joint and several, and each representation, warranty, covenant and agreement in this Mortgage shall apply to each and all of such mortgagors named herein.

Section 3.5. Nothing in this Mortgage, the Loan Agreement, the Notes or in any other agreement between the Mortgagor and the Mortgagee shall require the Mortgagor to pay, or the Mortgagee to accept, interest in an amount that would subject the Mortgagee to any penalty or forfeiture under applicable law. If the payment of any charges, fees or other sums due hereunder or under the Loan Agreement, the Notes or any such other agreement that are or could be held to be in the nature of interest and that would subject the Mortgagee to any penalty or forfeiture under applicable law, then, ipso facto, the obligations of

the Mortgagor to make such payment shall be reduced so that interest under the Loan Agreement and the Notes shall be the highest rate authorized under applicable law. Should the Mortgagee receive any payment that is or would be in excess of the highest rate authorized under applicable law, such payment shall be deemed to have been made in error, and shall automatically be applied to reduce the outstanding principal balance of the Indebtedness without any penalty.

Section 3.6. The Loan Agreement and the Notes each provides that it is governed by, and construed and enforced in accordance with, the laws of the State of New York. This Mortgage shall also be construed under and governed by the laws of the State of New York. Notwithstanding the parties' choice of New York law, however, the terms and provisions of this Mortgage pertaining to the priority, enforcement or realization by the Mortgagee of its rights and remedies under this Mortgage with respect to the Mortgaged Property shall be governed and construed and enforced in accordance with the internal law of the State of New Jersey without giving effect to the conflicts-of-law rules and principles of the State of New Jersey. Additionally, New Jersey law shall also be included in the definition of Environmental Laws for the purposes of the indemnities contained in 3.15 of this Mortgage.

Section 3.7. Except as expressly set forth herein to the contrary, whenever the consent or approval of the Mortgagee is required, the decision whether to consent or approve shall be in the sole and absolute discretion of the Mortgagee.

Section 3.8. This Mortgage, the Loan Agreement and the Notes, and all other documents executed and delivered in connection herewith shall be given a fair and reasonable construction in accordance with the intention of the parties as expressed herein and therein and without regard for any rule of law requiring construction against the party that prepared such instruments.

Section 3.9. This Mortgage shall constitute a "security agreement," as such term is defined in the Code. By executing and delivering this Mortgage, the Mortgagor has granted, in the same manner and with the same effect described in the Granting Clause hereof, to the Mortgagee, a security interest in the Chattels, the Intangibles, and those items listed as (f) - (j) in the Granting Clause of this Mortgage (collectively, "Collateral Documents"). The Mortgagor authorizes the Mortgagee to file any financing statements or other documents or instruments, with or without the Mortgagor's signature, that the Mortgagee may require to protect, perfect or establish any lien or security interest granted to the Mortgagee and further authorizes the Mortgagee to authenticate or sign the Mortgagor's name on same. If any Event of Default shall occur, the Mortgagee shall have, in addition to any and all other rights and remedies set forth in this Mortgage, and may exercise without demand, any and all rights and remedies granted to a secured party under the Code, including, but not limited to, the right to take possession of the Chattels, the Collateral Documents, and the Intangibles, or any part thereof, and the right to advertise and sell the Chattels, the Collateral Documents, and the Intangibles, or any part thereof, pursuant to and in accordance with the power of sale provided for in this Mortgage. The Mortgagor agrees that any notice of public or private sale with respect to the Chattels, the Collateral Documents, and the Intangibles, or any part thereof, shall constitute reasonable notice if it is sent to the Mortgagor not less than ten (10) days prior to the date of any such sale. The proceeds of any such sale of the Chattels, the Collateral Documents, and the Intangibles, or any part thereof, shall be applied in the manner set forth in
Section 2.2(d) of this Mortgage.

Section 3.10. All covenants hereof shall be construed as affording to the Mortgagee rights additional to and not exclusive of the rights conferred under the provisions of any applicable law.

Section 3.11. This Mortgage cannot be altered, amended, waived, modified or discharged orally, and no executory agreement shall be effective to modify, waive or discharge, in whole or in part, anything contained in this Mortgage unless it is in writing and signed by the party against whom enforcement of the modification, alteration, amendment, waiver or discharge is sought.

Section 3.12. The Mortgagor acknowledges that it has received a true copy of this Mortgage.

Section 3.13. This Mortgage may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts shall together constitute but one and the same Mortgage.

Section 3.14. The information set forth on the cover hereof is hereby incorporated herein.

Section 3.15. (a) As used in this Section 3.15, the following capitalized terms shall have the meanings set forth below:

"ADA" means the requirements of the Americans with Disabilities Act of 1990, Pub. Law 101-336, U.S.C. 12101 ET SEQ., together with any federal, state or local law, rule, ordinance, regulation, order, or policy thereunder as now or at any time hereafter in effect.

"Disposal" means the intentional or unintentional abandonment, discharge, deposit, injection, dumping, spilling, leaking, storage, burning, thermal destruction or placing of any substance so that it or any of its constituents may enter the Environment.

"Environment" means any water including but not limited to surface water and ground water or water vapor, any land including land surface or subsurface, stream sediments, air, fish, wildlife, plants, and all other natural resources or environmental media.

"Environmental Laws" means all federal, state (including the State of New Jersey) and local environmental, land use, health, chemical use, safety and sanitation laws, statutes, ordinances, regulations, codes and rules relating to the protection of the Environment and/or governing the use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances and the policies, guidelines, procedures, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto.

"Environmental Permits" means all licenses, permits, approvals, authorizations, consents or registrations required by any applicable Environmental Laws and all applicable judicial and administrative orders in connection with ownership, lease, purchase, transfer, closure, use and/or

operation of the Premises and/or as may be required for the storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Substances.

"Environmental Report" means a written report prepared for the Mortgagee by an environmental consulting or environmental engineering firm.

"Hazardous Substances" means, without limitation, any explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances and any other material defined as a hazardous substance in Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601(14).

"Release" has the same meaning as given to that term in
Section 101(22) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 (22), and the regulations promulgated thereunder.

(b) The Mortgagor represents and warrants to the Mortgagee that to the Mortgagor's knowledge and except as may be set forth in the Phase 1 Environmental Site Assessment dated November 15, 2002 prepared by Environmental Liability Management, Inc. and an Environmental Report with respect to the Premises prepared by ENSR International in November, 2002:

(i) intentionally omitted,

(ii) no asbestos or urea formaldehyde foam insulation is located in any of the buildings or structures improving the Premises,

(iii) no above-ground or underground storage tanks containing Hazardous Substances are or have been located at the Premises,

(iv) radon gas is not present in buildings on any of the Premises in concentrations exceeding 4 pCi/1,

(v) no electrical transformers, capacitors, lighting ballasts or other electric equipment on any of the Premises contain polychlorinated biphenyls (PCBs) in concentrations exceeding amounts allowed by any applicable Environmental Law,

(vi) the Premises are not being used and have not been used for the Disposal of any Hazardous Substance or for the treatment, storage or Disposal of Hazardous Substances in violation of applicable Environmental Laws,

(vii) no Release of a Hazardous Substance has occurred or is threatened on, at, or from the Premises, in violation of applicable Environmental Laws,

(viii) neither the Mortgagor nor the Premises is subject to any existing, pending or threatened suit, claim, notice of violation or request for information under any applicable Environmental Law, and

(ix) the Mortgagor is in compliance with the Environmental Laws applicable to its operations at the Premises.

(c) The Mortgagor covenants and agrees with the Mortgagee that so long as this Mortgage remains a lien on the Premises that:

(i) the Mortgagor shall comply with applicable Environmental Laws in connection with its ownership or use of the Premises or any related property,

(ii) Mortgagor shall not suffer, cause or permit the Disposal of Hazardous Substances at the Premises in violation of applicable Environmental Laws,

(iii) the Mortgagor shall not suffer, cause or permit the generation, handling, processing, use, or storage of Hazardous Substances on the Premises, in violation of applicable Environmental Laws,

(iv) the Mortgagor shall promptly notify the Mortgagee if Mortgagor receives notice, or becomes aware, of the Disposal of any Hazardous Substance at the Premises, or any Release, or threatened Release, of a Hazardous Substance, from the Premises, in violation of applicable Environmental Laws;

(v) the Mortgagor shall allow the Mortgagee and its agents access to the Premises at all reasonable times upon reasonable prior written notice and permit such inspections, tests, drilling of monitoring wells, soil borings or other analysis of the Premises as the Mortgagee, subject to the rights of tenants, may reasonably require,

(vi) the Mortgagor shall, at the Mortgagee's reasonable request, provide to the Mortgagee, at the Mortgagor's expense, Environmental Reports concerning the Premises,

(vii) the Mortgagor shall deliver promptly to the Mortgagee (A) copies of any documents received from the United States Environmental Protection Agency or any state, county or municipal environmental or health agency concerning the Mortgagor's operations at the Premises, and (B) copies of any documents submitted by the Mortgagor to the United States Environmental Protection Agency or any state, county or municipal environmental or health agency concerning its operations at the Premises, and

(viii) the Mortgagor shall: (1) comply with all applicable requirements of the ADA; (2) notify Mortgagee promptly following receipt of knowledge by the Mortgagor in the event of any non-compliance of the Premises and/or Improvements with any provision of the ADA; (3) promptly forward to Mortgagee copies of all orders, notices, permits, applications, and other communications and reports in connection with any other matters relating to the non-compliance of the Premises and/or Improvements with any provision of the ADA.

(d) The Mortgagor agrees to indemnify, defend, and hold harmless the Mortgagee from and against any and all liabilities, claims, damages, penalties, expenditures, losses or charges including, but not limited to, all costs of investigation, monitoring, legal representation, remedial response, removal, restoration or permit acquisition, which may now or in the future be undertaken, suffered, paid, awarded, assessed or otherwise incurred by the Mortgagee as a result of the presence of, Release of, or threatened Release of, Hazardous Substance on, in, under or near the Premises or as a result of, or with respect to, any past, present or future non-compliance with the ADA, including any loss of value of the Mortgaged Property. The liability of the Mortgagor to the Mortgagee under the covenants of this Section 3.15 is not

limited by any exculpatory provisions of this Mortgage, the Loan Agreement or in the Notes or in any of the other documents securing the loan and shall survive any foreclosure of this Mortgage, transfer of the Premises by deed in lieu of foreclosure or any other transfer or termination of this Mortgage regardless of the means of such transfer or termination; but the indemnity hereunder shall not apply to acts committed by the Mortgagee, or its designee, nominee, agents, employees or any purchaser at a foreclosure sale that are committed after any of such parties shall have taken title to the Premises or before such time if resulting from the gross negligence or willful misconduct of the Mortgagee, its designee, nominee, agents, employees or any such purchaser at a foreclosure sale.

(e) If the Mortgagor defaults on any of its obligations pursuant to this Mortgage, the Loan Agreement, the Notes or any other loan document, the Mortgagee or its designee shall have the right, upon reasonable prior written notice to the Mortgagor, to enter upon the Premises at reasonable times and, subject to the rights of tenants, conduct such tests, investigations and samplings, including but not limited to, installation of monitoring wells, as shall be reasonably necessary for the Mortgagee to determine whether any Disposal of Hazardous Substances has occurred on, at or near the Premises. The costs of all such tests, investigations and samplings shall be added to the balance of the Indebtedness.

(f) The Mortgagor agrees that the Mortgagee shall not be liable in any way for the completeness or accuracy of any Environmental Report or the information contained therein. The Mortgagor further agrees that the Mortgagee has no duty to warn the Mortgagor or any other person or entity about any actual or potential environmental contamination or other problem that may have become apparent or will become apparent to the Mortgagee.

Section 3.16. Notwithstanding anything contained herein to the contrary, the maximum amount of indebtedness secured by this Mortgage at execution or which under any contingency may become secured hereby at any time hereafter is $40,500,000.00 plus interest thereon, plus all amounts expended by the Mortgagee after default by the Mortgagor that constitute payment of (i) taxes, charges or assessments that may be imposed by law upon the Premises; (ii) premiums on insurance policies covering the Premises; (iii) reasonable expenses incurred in protecting or upholding the lien of this Mortgage, including, but not limited to the reasonable expenses of any litigation to prosecute or defend the rights and lien created by this Mortgage; (iv) reasonable expenses incurred in protecting the collateral encumbered by this Mortgage; or (v) any amount, cost or charge to which the Mortgagee becomes subrogated upon payment, whether under recognized principles of law or equity, or under express statutory authority.

Section 3.17. No course of dealing between Mortgagor and Mortgagee and no act, delay or omission by Mortgagee in exercising any right or remedy hereunder, including, without limitation, acceptance of any partial payment on the Indebtedness, shall operate as a waiver of any right, remedy or

default hereunder, or of any other right or remedy, and no single or partial exercise of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. All rights and remedies of Mortgagee hereunder are cumulative.

Section 3.18. The Mortgagee may release any portion or portions of or interest or interests in the Mortgaged Property from the lien of this Mortgage, either with or without consideration, and may release or discharge in whole or in part any other property which it may at any time hold as security for payment of the Indebtedness or any part thereof and may take any other bond, note or obligation as evidence of the Indebtedness, payable at such time and on such terms as the Mortgagee may approve, and may change the rate of interest in accordance with the provisions of the Loan Agreement, and until the Indebtedness shall have been paid in full, every person who shall be or become personally liable for the Indebtedness shall be bound and continue to be liable for the Indebtedness as fully and effectively as if his consent had been previously obtained.

Section 3.19. If the Mortgagee shall receive from or on behalf of the Mortgagor any sum less than the full amount then due and payable, the Mortgagee may, but shall not be obligated to, accept the same and if the Mortgagee elects to accept any such payment, it may hold the same or any part thereof, without liability for interest, in a special account and may from time to time apply the same or any part thereof to the Indebtedness or to the payment of any taxes, assessments, sewer or water charges or insurance premiums desirable to maintain the lien of this Mortgage or to any reasonable expenses, including reasonable costs and attorneys' fees and disbursements, incurred by the Mortgagee in attempting to collect any amount owing on the Indebtedness and in bringing any foreclosure proceedings with respect to this Mortgage.

Section 3.20. Without limiting any other right of Mortgagee, whenever Mortgagee has the right to declare any Indebtedness to be immediately due and payable (whether or not it has so declared), Mortgagee at its sole election may set off against the Indebtedness any and all moneys then owed to Mortgagor by Mortgagee in any capacity, whether or not the Indebtedness or the obligation to pay such moneys owed by Mortgagee is then due, and Mortgagee shall be deemed to have exercised such right of setoff immediately at the time of such election even though any charge therefor is made or entered on Mortgagee's records subsequent thereto.

Section 3.21. The extent of the Mortgagor's liability for any sums due under this Mortgage, the Loan Agreement and the Notes or any document or certificate executed in connection therewith or pursuant thereto (collectively, "Relevant Documents") shall be limited to the Mortgagor's estate, right, title and interest in, to and under the Mortgaged Property, the Mortgagee agreeing not to look personally to the Mortgagor or to any director, officer, shareholder or employee of Mortgagor (all of the foregoing, collectively, "Members"), but to look solely to the Mortgaged Property and no other assets of the Mortgagor for payment of any of such sums; PROVIDED, HOWEVER, the foregoing shall not release the Mortgagor from personal liability to the Mortgagee and the Lenders with respect to the environmental and ADA indemnities set forth in
Section 3.15 of this Mortgage; provided FURTHER, the foregoing shall not affect the Mortgagor's personal liability to the Mortgagee and the Lenders for, and the

Mortgagor hereby explicitly indemnifies and holds the Mortgagee and the Lenders harmless from, and agrees to be personally liable to the Mortgagee and the Lenders for, any actual loss, cost, expense, liability, damage or claim incurred or suffered by Mortgagee and the Lenders relating to, in connection with, or arising from (i) any fraud committed by the Mortgagor and/or any Member in connection with the Indebtedness, (ii) intentional misapplication by the Mortgagor or any Member of proceeds under any insurance policies disbursed by reason of damage, loss or destruction to all or any portion of the Mortgaged Property, (iii) intentional misapplication by the Mortgagor or any Member of proceeds or awards resulting from the condemnation, or other taking in lieu of condemnation, of all or any portion of the Mortgaged Property, (iv) intentional misapplication by the Mortgagor or any Member of tenant security deposits or other refundable deposits paid to or held by the Mortgagor or any agent of the Mortgagor in connection with any leases of all or any portion of the Mortgaged Property, (v) intentional waste or mismanagement of the Premises and/or Improvements, or (vi) any intentional misrepresentation made to the Mortgagee by the Mortgagor and/or any Member in connection with the Indebtedness. The foregoing provisions shall not (a) constitute a waiver of any obligation evidenced by the Loan Agreement, the Notes or this Mortgage or any of the other documents executed in connection herewith, (b) limit the right of the holder of this Mortgage to name the Mortgagor as a party defendant in any action or suit for judicial foreclosure and sale under the Loan Agreement, the Notes and this Mortgage or any action or proceeding hereunder so long as no judgment in the nature of a deficiency judgment shall be asked for or taken against the Mortgagor or any Member (nothing in this subsection 3.21(b), however, shall prevent Mortgagee from naming the Mortgagor as a defendant in any such action or proceeding in order to enforce the Mortgagee's rights and remedies with respect to the Mortgagor's personal liability to the Mortgagee and the Lenders pursuant to section 3.15 of this Mortgage or with respect to subsections (i)-(vi) of this
Section 3.21), (c) release or impair the Loan Agreement, the Notes or the lien of this Mortgage, (d) prevent or in any way hinder the Mortgagee from exercising, or constitute a defense, an affirmative defense, a counterclaim or other basis for relief in respect of the exercise of any other remedy against the Mortgaged Property, or under any other instrument securing the Loan Agreement, the Notes, or under any of the other documents executed in connection herewith, or as prescribed by law or in equity in case of default, or (e) prevent or in any way hinder the Mortgagee from exercising, or constitute a defense, an affirmative defense, a counterclaim or other basis for relief in respect of the exercise of, its remedies in respect of any deposits, insurance proceeds, condemnation awards or other monies or other collateral securing the Loan Agreement or the Notes. Nothing herein shall be deemed to be a waiver of any right which the Mortgagee may have under Section 506(a), 506(b), 1111(b) or any other provision of the Bankruptcy Reform Act of 1978 or any successor thereto or similar provisions under applicable state law to file a claim for the full amount of the debt owing to the Mortgagee by the Mortgagor or to require that all of the Mortgaged Property shall continue to secure all of the Indebtedness owing to the Mortgagee in accordance with the Loan Agreement, the Notes or this Mortgage.

Section 3.22. The Mortgagor acknowledges that this Mortgage, the Loan Agreement, the Notes, and all instruments referred to in any of them can be extended, modified or amended only in writing executed by the Mortgagee and that none of the rights or benefits of the Mortgagee can be waived permanently except in a written document executed by the Mortgagee. The Mortgagor further acknowledges the Mortgagor's understanding that no officer or administrator of the Mortgagee has the power or the authority from the Mortgagee to make an oral extension or modification or amendment of any such instrument or agreement on behalf of the Mortgagee.

Section 3.23. (a) Mortgagor shall not claim or demand or be entitled to any credit against the Indebtedness for any part of the taxes paid with respect to the Mortgaged Property or any part thereof and no deduction shall otherwise be made or claimed from the taxable value of the Mortgaged Property, or any part thereof, by reason of this Mortgage.

(b) Mortgagor represents and warrants that the loans or other financial accommodations included as the Indebtedness secured by this Mortgage were obtained solely for the purpose of carrying on or acquiring a business or commercial investment and not for residential, consumer or household purposes.

(c) This Mortgage is subject to "modification" as such term is defined in P.L. 1985 c.353 (N.J.S.A. 46:9-8.1 ET SEQ.) and shall be subject to the priority provisions thereof.

(d) This Mortgage is a purchase money mortgage as a portion of the indebtedness is being used by the Mortgagor to finance the acquisition of the Mortgaged Property.

IN WITNESS WHEREOF, this Mortgage and Security Agreement has been duly executed by the Mortgagor as of the date first above written.

NEW VALLEY CORPORATION
(doing business in New Jersey as New
Valley Realty Company)

By: /s/ BENNETT P. BORKO
   ----------------------------------
     Bennett P. Borko
     Assistant Secretary

Street Address                100-150 College West Road
Town of:                      Plainsboro
County of:                    Middlesex
State of:                     New Jersey
Block:                        3
Lots:                         1.61 and 1.62

RECORD & RETURN TO:

Trans-County Title Agency, LLC
83 Morris Street
P.O. Box 675
New Brunswick, New Jersey 08903
Attn: Alan J. Finkel
Title No: TC-32594

ASSIGNMENT OF LEASES AND RENTS

THIS ASSIGNMENT OF LEASES AND RENTS made this 13 th day of December 2002 by NEW VALLEY CORPORATION, a Delaware corporation (doing business in New Jersey as New Valley Realty Company) with offices at 100 S.E. Second Street, Miami, Florida 33131 ("Assignor") in favor of HSBC REALTY CREDIT CORPORATION (USA), a corporation organized under the laws of the State of Delaware with offices at 452 Fifth Avenue, 3rd Floor, New York, New York 10018, as Administrative Agent (in such capacity, "Assignee") for certain lenders ("Lenders") in connection with a loan agreement dated the date hereof among the Assignor, as borrower, each of the Lenders, and the Assignee, as Administrative Agent ("Loan Agreement"):

The Assignor is the fee owner of the real property described on Schedule A attached hereto and made a part hereof ("Premises") and is obligated to pay to the Assignee, for the PRO RATA benefit of the Lenders, indebtedness in the principal amount of FORTY MILLION FIVE HUNDRED THOUSAND and 00/100 DOLLARS ($40,500,000.00), together with interest thereon, pursuant to the terms of the Loan Agreement as evidenced by the Notes (as such term is defined in the Loan Agreement), which is secured by, INTER ALIa, that certain Mortgage and Security Agreement dated the date hereof executed by the Assignor in favor of the Assignee, for the PRO RATA benefit of the Lenders (as the same may be modified or amended, "Mortgage"), together with any other amounts due from the Assignor to the Assignee pursuant to the Loan Agreement, Notes and/or Mortgage (collectively, with the principal and interest evidenced by the Notes, "Indebtedness").

Assignor does hereby assign to Assignee, for the PRO RATA benefit of the Lenders, any and all existing and future leases, including any and all extensions, renewals, and replacements thereof, upon all or any part of the Premises. As used herein, "lease" shall include subleases, licenses, tenancies and all other forms of demising of space in the Premises.

Together with any and all guaranties of tenants' performance under any leases.

Together with the immediate and continuing right, for the PRO RATA benefit of the Lenders, to collect and receive all of the rents, income, receipts, revenues, issues, and profits (hereinafter the "rents"), now due or which may become due or to which Assignor may now or shall hereafter become entitled or which it may demand or claim, including those rents coming due during any redemption period, arising or issuing from or out of the leases or from or out of the Premises or any part thereof, including but not limited to, minimum rents, additional rents, percentage rents, deficiency rents, and liquidated damages following default, and all proceeds payable under any policy of insurance covering loss of rents resulting from untenantability caused by destruction or damage to the Premises, together with any and all rights and claims of any kind that Assignor may have against any tenant under the leases or any subtenants or occupants of the Premises.

To have and to hold the same unto Assignee, its successors and assigns.

This Assignment is intended to be and shall constitute an unconditional, absolute and present assignment from Assignor to Assignee, for the PRO RATA benefit of the Lenders, of all of Assignor's right, title and interest in and to the leases and rents and not an assignment in the nature of a pledge of such leases and rents or the mere grant of a security interest therein. Provided, however, that so long as there shall exist no Event of Default under the Mortgage, Assignor shall have the right to collect the rents and monies assigned hereunder as they come due and to retain and use the same.

AND the Assignor covenants, agrees and represents as follows:

1. All existing leases submitted to Assignee are now valid and enforceable according to their terms as applied by New York courts, and have not, since their execution, been altered or amended in any manner other than as disclosed in writing by Assignor to Assignee and no rents thereunder have been collected more than one (1) month in advance of the time when such rent is due.

2. Assignor will duly perform, in all commercially reasonable respects, all of the duties and comply with all the material terms, covenants, conditions, provisions and agreements required of or made by Assignor according to the aforesaid leases and any renewal, extension or modification thereof or any subsequent lease or rental agreement affecting the Premises.

3. Intentionally omitted.

4. The Assignor has the right to the rents currently due or to become due under the existing leases, has not previously assigned such rents or any part thereof except to Assignee, has the right and authority to make this Assignment, has performed or will perform all necessary acts to authorize payment of the rents to Assignee and will execute and deliver to Assignee any and all other documents and perform all acts reasonably requested by Assignee in connection with such leases and this Assignment.

5. Assignee is hereby appointed attorney-in-fact of Assignor with full power and authority to act in the name of Assignor from and after any Event of Default under the Mortgage:

(a) to demand, recover and receive any and all rents and income of the Premises;

(b) to perform such acts as may be required of Assignor by all leases, any other tenancies of the Premises and this Assignment;

(c) to let or lease the Premises or any part thereof which is now or may become vacant for such periods as Assignee may deem proper;

(d) to maintain any and all actions or proceedings to recover rents or other income from the Premises or to remove tenants therefrom;

(e) to pay all sums deemed necessary toward taxes, assessments, utility charges, prior liens, insurance premiums or repairs affecting the Premises, and if the income of the Premises is not sufficient to cover such payments, together with sums then due on the Indebtedness secured hereby, Assignor will promptly reimburse Assignee to the extent thereof and such sums shall be secured hereby; but nothing herein shall in any way obligate Assignee to act in any manner on behalf of the Assignor or relieve Assignor from its duty to perform according to the provisions of the leases and this Assignment. The rights and powers granted to Assignee hereby shall be irrevocable so long as any part of the Indebtedness remains unpaid; and

(f) to apply the rents and income of the Premises in reduction of the Indebtedness in such manner and order as the Assignee may deem appropriate (subject to the terms of the Mortgage).

6. Nothing contained in this Assignment shall operate as or be deemed to be an extension of the time for payment of the Indebtedness or to in any way affect any of Assignee's rights, powers or remedies to enforce payment of the Indebtedness or any part thereof, no delay or omission by Assignee in exercising any right or remedy hereunder or with respect to any Indebtedness shall operate as a waiver thereof or of any other right or remedy, and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Assignee may remedy any default by Assignor hereunder or with respect to any Indebtedness in any manner without waiving the default remedied and without waiving any other prior or subsequent default by Assignor. All rights and remedies of Assignee hereunder are cumulative.

7. Assignor shall indemnify and hold Assignee and each Lender harmless from and against any and all claims, actions, suits, proceedings, costs, expenses, losses, damages and liabilities, including, but not limited to, reasonable attorneys' fees and out-of-pocket expenses arising out of or which Assignee may incur in any manner as a result of this Assignment.

8. The Loan Agreement and the Notes each provide that it is governed by, and construed and enforced in accordance with, the laws of the State of New York. This Assignment shall also be construed under and governed by the laws of the State of New York. Notwithstanding the parties' choice of New York law, however, the terms and provisions of this Assignment pertaining to the priority, enforcement or realization by the Assignee of its rights and remedies under this Assignment with respect to the Premises and leases shall be governed and construed and enforced in accordance with the internal law of the State of New Jersey without giving effect to the conflicts-of-law rules and principles of the State of New Jersey.

THE LIABILITY OF THE UNDERSIGNED HEREUNDER SHALL BE LIMITED AS

PROVIDED IN SECTION 3.21 OF THE MORTGAGE.

This Assignment shall be binding upon the Assignor, its successors and assigns, and inure to the benefit of the Assignee, its successors and assigns.

IN WITNESS WHEREOF, Assignor has duly executed this Assignment, as of the date first above written.

NEW VALLEY CORPORATION
(doing business in New Jersey as New Valley
Realty Company)

By: /s/ BENNETT P. BORKO
    ----------------------------------------
     Bennett P. Borko
     Assistant Secretary