EXHIBIT 10-71
 
 
PROJECT LOAN AGREEMENT
 
Dated as of December 10, 2007
 
Between
 
P/A-ACADIA PELHAM MANOR, LLC,
 
as Borrower
 
and
 
BEAR STEARNS COMMERCIAL MORTGAGE, INC.,
as Lender

 
MERS MIN: 8000101-0000007140-6
 
 
 

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TABLE OF CONTENTS
 
ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
1
 
Section 1.1
Definitions
1
 
Section 1.2
Principles of Construction
6
       
ARTICLE II. GENERAL TERMS
6
 
Section 2.1
Loan Commitment; Disbursement to Borrower
6
 
Section 2.2
Interest Rate
10
 
Section 2.3
Loan Payment
10
 
Section 2.4
Prepayments
12
 
Section 2.5
Defeasance
13
 
Section 2.6
Release of Property
15
 
Section 2.7
Clearing Account/Cash Management
16
 
Section 2.8
Intentionally Omitted
16
 
Section 2.9
Payments Not Conditional
16
 
Section 2.10
Initial Advance
16
 
Section 2.11
Project Loan Advances
19
 
Section 2.12
Final Advance
21
 
Section 2.13
No Reliance
24
 
Section 2.14
Method of Disbursement of Loan Proceeds
24
 
Section 2.15
Interest Advances
26
       
ARTICLE III. CONDITIONS PRECEDENT
27
 
Section 3.1
Conditions Precedent to Closing
27
       
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
27
 
Section 4.1
Borrower Representations
27
 
Section 4.2
Survival of Representations
27
       
ARTICLE V. BORROWER COVENANTS
27
 
Section 5.1
Affirmative Covenants
27
 
Section 5.2
Negative Covenants
27
       
ARTICLE VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
28
 
Section 6.1
Insurance
28
 
Section 6.2
Casualty and Condemnation
28
 
Section 6.3
Application of Net Proceeds
28
       
ARTICLE VII. RESERVE FUNDS
28
 
Section 7.1
Reserve Funds
28
 
Section 7.2
Other Loan Documents
28
 
Section 7.3
Reserve Funds, Generally
26
       
ARTICLE VIII. DEFAULTS
29
 
Section 8.1
Event of Default
29

 
 
 

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Section 8.2
Remedies
33
 
Section 8.3
Remedies Cumulative; Waivers
34
       
ARTICLE IX. SPECIAL PROVISIONS
34
     
ARTICLE X. MISCELLANEOUS
34
 
Section 10.1
Survival
34
 
Section 10.2
Lender’s Discretion
35
 
Section 10.3
Governing Law
35
 
Section 10.4
Modification, Waiver in Writing
36
 
Section 10.5
Delay Not a Waiver
36
 
Section 10.6
Notices
37
 
Section 10.7
Trial by Jury.
37
 
Section 10.8
Headings
38
 
Section 10.9
Severability
38
 
Section 10.10
Preferences
38
 
Section 10.11
Waiver of Notice
38

 
Section 10.12
Remedies of Borrower
38
 
Section 10.13
Expenses; Indemnity
38
 
Section 10.14
Schedules and Exhibits Incorporated
40
 
Section 10.15
Offsets, Counterclaims and Defenses
40
 
Section 10.16
No Joint Venture or Partnership; No Third Party Beneficiaries.
40
 
Section 10.17
Publicity
40
 
Section 10.18
Waiver of Marshalling of Assets
41
 
Section 10.19
Waiver of Counterclaim
41

 
Section 10.20
Identical Obligations; Conflict; Construction of Documents; Reliance
41
 
Section 10.21
Brokers and Financial Advisors
41
 
Section 10.22
Prior Agreements
42
 
Section 10.23
Joint and Several Liability
42
 
Section 10.24
Certain Additional Rights of Lender (VCOC)
42
 
Section 10.25
MERS
42

 
 
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PROJECT LOAN AGREEMENT
 
THIS PROJECT LOAN AGREEMENT, dated as of December 10, 2007 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
“Agreement” or sometimes, this “Project Loan Agreement”), is made by and between
BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York corporation, having an
address at 383 Madison Avenue, New York, New York 10179 (“Lender”) and
P/A-ACADIA PELHAM MANOR, LLC, a Delaware limited liability company, having its
principal place of business c/o Acadia Realty Trust, 1311 Mamaroneck Avenue -
Suite 260, White Plains, New York 10605  (“Borrower”).
 
 
W I T N E S S E T H :
 
WHEREAS, Borrower desires to obtain the Project Loan (as hereinafter defined)
from Lender; and
 
WHEREAS, Lender is willing to make the Project Loan to Borrower, subject to and
in accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
 
NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
 
ARTICLE I.
 

 
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
 
Section 1.1                      Definitions.
 
For all purposes of this Agreement, except as otherwise expressly required or
unless the context clearly indicates a contrary intent, all capitalized terms
used herein but not otherwise defined shall have their respective meanings set
forth in the Building Loan Agreement and:
 
“Advance” or “Advances” shall mean any disbursement of the proceeds of the
Project Loan by Lender pursuant to the terms of this Agreement.
 
“Agreement” shall mean this Project Loan Agreement, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
 
“Borrower” shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and permitted assigns.
 
“Building Loan” shall mean the loan made by Lender to Borrower pursuant to the
Building Loan Agreement in the principal amount of up to the Building Loan
Amount.
 
 
 

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“Building Loan Agreement” shall mean that certain Building Loan Agreement dated
as of the date hereof between Borrower and Lender as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
 
“Building Loan Amount” shall have the meaning set forth in the Building Loan
Agreement.
 
“Building Loan Assignment of Leases” shall have the meaning set forth in the
Building Loan Agreement.
 
 “Building Loan Documents” shall have the meaning set forth in the Building Loan
Agreement.
 
“Building Loan Earn Out Advance” shall have the meaning set forth in Section
2.12.2 hereof.
 
“Building Loan Mortgage” shall have the meaning set forth in the Building Loan
Agreement.
 
“Building Loan Note” shall have the meaning set forth in the Building Loan
Agreement.
 
“Contingency Excess” shall have the meaning set forth in Section 2.1.7(b)
hereof.
 
“Debt” shall mean the outstanding principal amount of the Project Loan set forth
in, and evidenced by, this Agreement, the Project Loan Note and the other
Project Loan Documents, together with all interest accrued and unpaid thereon
and all other sums due to Lender in respect of the Project Loan under the
Project Loan Note, this Agreement, the Project Loan Mortgage or any other
Project Loan Document.
 
“Debt Service” shall mean, with respect to any particular period of time, the
aggregate scheduled principal and interest payments due under this Agreement and
the Project Loan Note.
 
“Defeasance Date” shall have the meaning set forth in Section 2.5.1(a)(i)
hereof.
 
“Defeasance Event” shall have the meaning set forth in Section 2.5.1(a) hereof.
 
“Earn Out Advances” shall have the meaning set forth in Section 2.12.2 hereof.
 
“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.
 
“Final Advance” shall have the meaning set forth in Section 2.12.1 hereof.
 
“Final Building Loan Advance” shall mean the Final Advance as defined in Section
2.12.1 of the Building Loan Agreement.
 
“Home Depot” shall have the meaning set forth in Section 2.11.15 hereof.
 
 
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“Home Depot Estoppel Certificate” shall have the meaning set forth in Section
2.10.8 hereof.
 
“Home Depot Lease” shall have the meaning set forth in Section 2.11.15 hereof.
 
“Indemnified Liabilities” shall have the meaning set forth in Section 10.13(a)
hereof.
 
“Initial Advance” shall have the meaning set forth in Section 2.10 hereof.
 
“Initial Advance Conditions” shall have the meaning set forth in Section 2.10
hereof.
 
“Interest Period” shall mean:  (a)  the period commencing on the Closing Date
and  ending on the last day of the month in which the Closing Date occurs, both
dates inclusive; and (b) the period commencing on and including the first day of
each calendar month thereafter during the term of Loan and ending and including
the last day of such calendar month.
 
“Interest Rate” shall mean seven and one hundred eighty-two one thousandths
percent (7.182%), provided, however, in the event that (a) on or before June 1,
2009, the Property shall have achieved a Debt Service Coverage Ratio as
determined by Lender of 1.15 to 1.00, and Borrower delivers to Lender a MAI
appraisal performed, at Borrower’s sole cost and expense, by an appraiser
approved by Lender and dated, or updated, to a date within 30 days of such date
made in compliance with FIRREA and reasonably satisfactory to Lender in all
respects; the appraisal value shall be subject to review and confirmation and
updating as to valuation by Lender’s internal appraisal staff, whose decision
shall be final absent manifest error showing that loan-to-value ratio for the
Property is no greater than 80% assuming a fully advanced Loan, Lender shall,
upon Borrower's written request, reduce the Interest Rate to a per annum rate
equal to five and ninety-three one hundredth percent (5.93%), commencing on the
first Payment Date after Borrower's request, and (b) on or before June 1, 2010,
the Property shall have achieved a Debt Service Coverage Ratio as determined by
Lender of 1.15 to 1.00, and Borrower delivers to Lender a MAI appraisal
performed, at Borrower’s sole cost and expense, by an appraiser approved by
Lender and dated, or updated, to a date within 30 days of such date made in
compliance with FIRREA and reasonably satisfactory to Lender in all respects;
the appraisal value shall be subject to review and confirmation and updating as
to valuation by Lender’s internal appraisal staff, whose decision shall be final
absent manifest error showing that loan-to-value ratio for the Property is no
greater than 80% assuming a fully advanced Loan, Lender shall, upon Borrower's
written request, reduce the Interest Rate to a per annum rate equal to five and
ninety-eight one hundredth percent (5.98%), commencing on the first Payment Date
after Borrower's request.  Any reduction in the Interest Rate as set forth above
shall be effective commencing on the first Payment Date after Borrower's request
for such reduction and satisfaction of the conditions set forth above and no
reduction in the Interest Rate shall be retroactive.  In the event that Borrower
fails to satisfy the conditions for a reduction of the Interest Rate within the
time periods set forth above, time being of the essence, Borrower shall have no
further right to obtain a reduction in the Interest Rate.  Notwithstanding
anything to the contrary contained herein, Lender shall have the right, in its
sole discretion, at any time prior to a Securitization of the Loan, to increase
the Interest Rate by up to two-tenths of one percent (0.20%).
 
 
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“Interest Reserve Line Item” shall mean the interest reserve Line Item of the
Project Loan Budget.
 
 “Lender” shall have the meaning set forth in the introductory paragraph hereto,
together with its successors and assigns.
 
“Loan” shall mean collectively, the Building Loan and the Project Loan.
 
“Loan Agreement” shall mean collectively, this Project Loan Agreement and the
Building Loan Agreement.
 
“Loan Documents” shall mean collectively, the Building Loan Documents and the
Project Loan Documents, the Environmental Indemnity, the Guaranty of Completion,
the Guaranty of Recourse Carveouts, the Cash Management Agreement, the Clearing
Account Agreement, the Collateral Assignment of Condominium Documents, the
Assignment of Contracts, the Administration Fee Agreement, the Rate Lock
Agreement and all other documents executed and/or delivered in connection with
the Loan.
 
“Maturity Date” shall mean January 1, 2020 or such earlier date on which the
final payment of principal of the Project Loan Note becomes due and payable as
therein or herein provided, whether at such stated maturity date, by declaration
of acceleration, or otherwise.
 
“Monthly Debt Service Payment Amount” shall mean (a) an amount equal to interest
only on the outstanding principal balance of the Building Loan, calculated in
accordance with Section 2.2 hereof, for each Payment Date commencing with the
Payment Date occurring in February, 2008 through and including the Payment Date
occurring in January, 2013, and (b) a constant monthly payment of $85,625.17
commencing with the Payment Date occurring in February, 2013 and on each Payment
Date thereafter, provided, however, that in the event that the Interest Rate is
modified in accordance with the provisions of the definition of “Interest Rate,”
the Monthly Debt Service Payment Amount shall be adjusted by Lender based upon
the modified Interest Rate and a thirty (30) year amortization schedule,
Lender's determination of the Monthly Debt Service Payment Amount being binding
absent manifest error.
 
“MERS” shall have the meaning set forth in Section 10.25 hereof.
 
“Open Period Date” shall have the meaning set forth in Section 2.4.1 hereof.
 
“Other Debt” shall mean the “Debt” as defined in both the Building Loan
Agreement and the Mezzanine Loan Documents, if applicable.
 
“Other Obligations” shall have the meaning as set forth in the Mortgage.
 
“Payment Date” shall mean February 1, 2008, and the 1st day of every month
thereafter during the term of the Loan until and including the Maturity Date or,
if such day is not a Business Day, the immediately preceding Business Day.
 
 
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“Prepayment Date” shall have the meaning set forth in Section 2.4.4 hereof.
 
“Project Loan” shall mean the loan being made by Lender to Borrower pursuant to
this Project Loan Agreement in the principal amount of up to the Project Loan
Amount.
 
“Project Loan Amount” shall mean Twelve Million Six Hundred Thirty-Seven
Thousand Ninety-Three and 40/100 Dollars ($12,637,093.40).
 
“Project Loan Assignment of Leases” shall mean that certain Project Loan
Assignment of Leases and Rents, dated the date hereof, from Borrower, as
assignor, to Lender, as assignee, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.
 
“Project Loan Documents” shall mean, collectively, this Agreement, the Project
Loan Note, the Project Loan Mortgage, the Project Loan Assignment of Lease as
well as all other documents not or hereafter executed and/or delivered with
respect to the Project Loan.
 
“Project Loan Earn Out Advance” shall have the meaning set forth in Section
2.12.2 hereof.
 
“Project Loan Mortgage” shall mean that certain Project Loan Fee and Leasehold
Mortgage and Security Agreement dated the date hereof, executed and delivered by
Borrower to Lender as security for the Project Loan and encumbering the
Property, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
 
“Project Loan Note” shall mean that certain Project Loan Promissory Note, dated
the date hereof, in the principal amount of up to the Project Loan Amount made
by Borrower in favor of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
 
“Required Equity Funds” shall have the meaning set forth in Section 2.11.13.
 
“Retaining Wall Letter” shall have the meaning set forth in Section 2.10.10
hereof.
 
 “Scheduled Defeasance Payments” shall have the meaning set forth in Section
2.5.1(b) hereof.
 
“Security Agreement” shall have the meaning set forth in Section 2.5.1(a)(v)
hereof.
 
“Severed Loan Documents” shall have the meaning set forth in Section 8.2(c).
hereof.
 
“Shortfall” shall have the meaning set forth in Section 2.1.10 hereof.
 
“Successor Borrower” shall have the meaning set forth in Section 2.5.3 hereof.
 
 
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Section 1.2                      Principles of Construction.
 
(a)           All references to sections and schedules are to sections and
schedules in or to this Agreement unless otherwise specified.  All uses of the
word “including” shall mean “including, without limitation” unless the context
shall indicate otherwise.  Any reference in this Agreement or in any other Loan
Document to any Loan Document shall be deemed to include references to such
documents as the same may hereafter be amended, modified, supplemented,
extended, replaced and/or restated from time to time (and, in the case of any
note or other instrument, to any instrument issued in substitution
therefor).  Unless otherwise specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.  Unless otherwise specified, all meanings attributed to defined terms
herein shall be equally applicable to both the singular and plural forms of the
terms so defined.
 
(b)           With respect to any cross-reference to the Building Loan Documents
or the Project Loan Documents or any combination thereof, as the case may be,
for terms defined therein or provisions set forth therein or Schedules or
Exhibits thereto, such cross-references shall be to referenced defined terms or
provisions or Schedules or Exhibits, as the case may be, as the same are set
forth in the Building Loan Documents or the Project Loan Documents or any
combination thereof, as the case may be, as of the date hereof, and as the same
may be amended, modified, supplemented, extended, replaced or restated or any
combination thereof from time to time, and shall survive the repayment or
satisfaction of the Building Loan or the Project Loan as the case may be, or the
termination of the Building Loan Agreement or this Agreement or any combination
thereof, as the case may be, for so long as the Project Loan remains
outstanding.
 
ARTICLE II.
 
GENERAL TERMS
 
Section 2.1                      Loan Commitment; Disbursement to Borrower.
 
2.1.1             Agreement to Lend and Borrow.  Subject to and upon the terms
and conditions set forth herein, Lender hereby agrees to make and Borrower
hereby agrees to accept Advances in respect of the Project Loan as more
particularly set forth in Section 2.10.
 
2.1.2             No Reborrowings.  Any amount borrowed and repaid hereunder in
respect of the Building Loan may not be reborrowed.
 
2.1.3             The Note, Mortgage and Loan Documents.  The Project Loan shall
be evidenced by the Project Loan Note and secured by the Project Loan Mortgage,
the Project Loan Assignment of Leases and the other Project Loan Documents.
 
2.1.4             Use of Proceeds.  Borrower hereby agrees that Borrower shall
use the proceeds of the Project Loan to pay or reimburse itself for
Project-Loan  Costs actually incurred in connection with the construction of the
Project Improvements if and to the extent that such Project-Loan Costs are
reflected in the Project Loan Budget, subject to reallocation pursuant to
Sections 2.1.6 and 2.1.7 hereof, and 5.1.33  of the Building Loan Agreement (or
other reallocations approved by Lender in its sole discretion).
 
 
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2.1.5             Advances.  The Project Loan Budget shall reflect, by category
and line item, the purposes and amounts for which funds to be advanced by Lender
under this Agreement are to be used.  Lender shall not be required to Advance
funds hereunder for any category or line item of Project Loan Costs in excess of
the amount specified for such line item or category in the Project Loan Budget,
subject to Sections 2.1.6 and 2.1.7 hereof and 5.1.33 of the Building
Loan  Agreement (or other reallocations approved by Lender in its sole
discretion).  No Advances shall be made to pay for Affiliate Fees.
 
2.1.6             Cost Overruns.  If Borrower becomes aware of any change in
actual or projected Project Loan Costs which will increase any one or more
category or line item of costs reflected in the Project Loan Budget, Borrower
shall immediately notify Lender in writing and promptly submit to Lender for its
approval a revised Project Loan Budget.  Any reallocation of any category or
line items in the Project Loan Budget in connection with cost overruns shall be
subject to Lender’s approval in Lender’s sole discretion except as set forth in
Sections 2.1.7  hereof and 5.1.33 of the Building Loan Agreement, provided,
however, under no circumstances shall Borrower be permitted, or Lender obligated
to approve, the reallocation of line items from the Building Loan Budget to the
Project Loan Budget.  Lender shall have no obligation to make any further
Advances unless and until the revised Project Loan Budget so submitted by
Borrower is approved by Lender and Borrower has satisfied its obligations with
respect to any resulting Shortfall under Section 2.1.10. Lender reserves the
right to approve or disapprove any revised Project Loan Budget in its sole and
absolute discretion (except with respect to reallocations in accordance with
Sections 2.1.7 and 5.1.33).
 
2.1.7             Contingency Reserve.
 
(a)           Following the satisfaction of the Initial Advance Conditions, and
subject to the prior approval of Lender in its sole discretion, Borrower may
revise the Project Loan Budget to move amounts available under any Line Item
that are designated to “Contingency” to other Line Items in the Project Loan
Budget.  In no event may the Contingency Line Item of the Building Loan Budget
be reallocated to any Line Item in the Project Loan Budget.  Provided no Event
of Default exists and with Lender’s consent (which shall not be unreasonably
withheld), after Completion of the Improvements, Borrower may draw amounts
available under the Contingency Line Item of the Project Loan Budget to fund
Shortfalls in monthly interest due, which amounts shall be deposited in the
Interest Reserve.  Such drawing shall be in addition to any Interest Reserve
Line Item advanced under the Project Loan pursuant to Section 2.14.10 hereof.
 
(b)           Following the occurrence of Final Completion, Lender shall
reasonably cooperate with Borrower to amend the Project Loan Budget, Building
Loan Budget, Project Loan Documents and Building Loan Documents such that: (x)
the Building Loan Budget is amended to remove the amounts then available under
the Building Loan Budget either in the contingency Line Item or as cost savings
from other Line Items (the “Contingency Excess”) and the Building Loan Amount is
reduced by the Contingency Excess; and (y) the contingency line item of the
Project Loan Budget and the Project Loan Amount are increased by the Contingency
Excess. Borrower and Lender shall execute and deliver such documents,
certificates and instruments as may be reasonably required to effect the above
described re-allocation, including, without limitation, the filing of an amended
Section 22 Affidavit and the modification of the Project Loan Documents and
Building Loan Documents to reflect the respective changes in the Project Loan
Amount and the Building Loan Amount and Borrower shall obtain such other
evidence as Lender may reasonably request to confirm that none of the foregoing
shall adversely impact the validity or priority of its security interests in the
Property or otherwise adversely impact its rights and remedies under the Loan
Documents including, without limitation, appropriate endorsements to the title
insurance policy.  Borrower shall pay any and all title insurance, recording and
other charges and all reasonable costs and expenses (including legal fees)
incurred by Lender in connection with the foregoing.
 
 
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2.1.8             Intentionally Omitted.  
 
2.1.9             Amount of Advances.  In no event shall any Advance exceed the
full amount of Project Loan Costs theretofore paid or to be paid with the
proceeds of such Advance plus any Project Loan Costs incurred by Borrower
through the date of the Draw Request for such Advance minus (i) the applicable
Retainage for each Contract and Subcontract, and (ii) the aggregate amount of
any Advances previously made by Lender.  It is further understood that the
Retainage described above is intended to provide a contingency fund protecting
Lender against failure of Borrower or Guarantor to fulfill any obligations under
the Loan Documents, and that Lender may charge amounts to pay for Project Loan
Costs against such Retainage in the event Lender is required or elects to expend
funds to cure any Default or Event of Default, in either instance, in accordance
with the terms of this Agreement.  No Advance of the Loan by Lender shall be
deemed to be an approval or acceptance by the Lender of any work performed
thereon or the materials furnished with respect thereto.
 
2.1.10             Loan-In-Balance. As used herein, a “Shortfall” shall mean, as
to any Line Item in the Development Budget as of any date,  the amount
determined by Lender,  in Lender’s sole but reasonable judgment,  by which (A)
the cost of completing or satisfying such Line Item,  exceeds (B) the remaining
undisbursed portion of the Loan allocated to such Line Item in the Development
Budget plus any sums deposited with Lender pursuant to this Section 2.1.10 to
pay for such Line Item and not previously disbursed plus any Reserve Funds to
the extent such Reserve Funds are available hereunder for the payment of such
Line Item.  From time to time and at any time during the Construction Period,
Lender shall have the right, but not the obligation, to notify Borrower that it
has determined a Shortfall exists as to any one or more Line Items. If Lender at
any time shall so notify Borrower, Borrower shall, at its option within five (5)
days of Lender’s notification as aforesaid, either: (i) deposit with Lender an
amount equal to such Shortfall, which Lender disburse to Borrower to the
satisfaction of the costs of such Line Item prior to advancing any further Loan
proceeds on account of such costs; (ii) post an irrevocable standby Letter of
Credit in the amount of such Shortfall, in favor of Lender; (iii) to the extent
permitted under Sections 2.1.7 hereof and 5.1.33 of the Building Loan Agreement,
and following the satisfaction of the Initial Advance Conditions allocate the
Contingency Reserve, with respect to the Line Item(s) in question, to the
Shortfall, and provided, further that the amount of the remaining Contingency
Reserve for such Line Item(s) (following the allocation to the Shortfall) is
sufficient for such Line Item(s), as determined by Lender in its sole
discretion; and (iv) to the extent permitted under Section 5.1.33 of the
Building Loan Agreement, and then only following the satisfaction of the Initial
Advance Conditions, reallocate cost savings from the Development Budget in
respect of the Loan (or other reallocations which are approved by Lender, in its
sole discretion) in accordance with the terms of this Agreement, but only to the
extent such cost savings can be allocated to the related Line Items.  Borrower
hereby agrees that Lender shall have a lien on and security interest in, for the
benefit of Lender, any sums deposited pursuant to clause (i) above and that
Borrower shall have no right to withdraw any such sums except for the payment of
the aforesaid costs as approved by Lender.  Lender shall have no obligation to
make any further Advances of proceeds of the Loan as to any Line Item until the
sums required to be deposited pursuant to clause (i) above as to such Line Item
have been exhausted, or until Borrower has posted an irrevocable standby Letter
of Credit pursuant to clause (iii) above, as the case may be, and, in any such
case, the Loan is back “in balance”.  Any such sums not used as provided in said
clause (i) shall be released to Borrower when and to the extent that Lender
reasonably determines that the amount thereof is more than the excess, if any,
of the remaining Project-Related Costs over the undisbursed balance of the Loan,
provided, however, that should an Event of Default occur, Lender, in its sole
discretion, may apply such amounts either to the remaining Project-Related Costs
or to the immediate reduction of outstanding principal and/or interest under the
Note.
 
 
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2.1.11             Quality of Work.  No Advance or any portion thereof shall be
made with respect to defective work or to any contractor that has performed work
that is defective and that has not been cured, as confirmed by the report of the
Construction Consultant, but Lender may disburse all or part of any Advance
before the sum shall become due if Lender believes it advisable to do so, and
all such Advances or parts thereof shall be deemed to have been made pursuant to
this Agreement.
 
2.1.12             Required Equity Funds.  All Required Equity Funds shall be
contributed (i.e., expended by Borrower and invested by Borrower in the
Property, for Project Related Costs set forth on the approved Development
Budget) before the Closing Date.
 
2.1.13             Trust Fund.  Pursuant to Section 13 of the New York Lien Law,
Borrower shall receive the Advances hereunder and shall hold the right to
receive the Advances as a trust fund to be applied first for the purpose of
paying the Costs of the Improvements and shall apply the Advances first to the
payment of the Cost of the Improvements on the Property before using any part of
the total of the same for any other purpose.
 
2.1.14             Final Project Report and Development Budget.  The provisions
of Section 2.1.14 of the Building Loan Agreement are incorporated herein by
reference as if fully set forth herein.
 
2.1.15             Miscellaneous.
 
(a)           The making of an Advance by Lender shall not constitute Lender’s
approval or acceptance of the construction theretofore completed.  Lender’s
inspection and approval of the Plans and Specifications, the construction of the
Project Improvements, or the workmanship and materials used therein, shall
impose no liability of any kind on Lender, the sole obligation of Lender as the
result of such inspection and approval being to make the Advances if and to the
extent, required by this Agreement.
 
(b)           ALL POTENTIAL LIENORS ARE HEREBY CAUTIONED TO EXERCISE SOUND
BUSINESS JUDGMENT IN THE EXTENSION OF CREDIT TO BORROWER.  NO POTENTIAL LIENOR
SHOULD EXPECT LENDER TO MAKE ADVANCES OF THE LOAN IN AMOUNTS AND AT TIMES SUCH
THAT IT WILL NOT BE NECESSARY FOR EACH SUCH POTENTIAL LIENOR TO EXERCISE SOUND
BUSINESS JUDGMENT IN THE EXTENSION OF CREDIT TO BORROWER.  MOREOVER, ALL
POTENTIAL LIENORS ARE REMINDED THAT SUBDIVISION (3) OF SECTION 13 OF THE NEW
YORK LIEN LAW PROVIDES THAT “NOTHING IN THIS SUBDIVISION SHALL BE CONSIDERED AS
IMPOSING UPON THE LENDER ANY OBLIGATION TO SEE THE PROPER APPLICATION OF SUCH
ADVANCES BY THE OWNER,” AND LENDER DOES NOT IMPOSE SUCH AN OBLIGATION ON ITSELF.
 
 
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Section 2.2                      Interest Rate.
 
2.2.1             Interest Rate. Interest on the outstanding principal balance
of the Loan shall accrue from (and include) the Closing Date to but excluding
the Maturity Date at the Interest Rate calculated as set forth in Section 2.2.2
below.
 
2.2.2             Interest Calculation. Interest on the outstanding principal
balance of the Loan shall be calculated by multiplying (a) the actual number of
days elapsed in the period for which the calculation is being made by (b) a
daily rate based on the Interest Rate and a three hundred sixty (360) day year
by (c) the outstanding principal balance.
 
2.2.3             Default Rate. In the event that, and for so long as, any Event
of Default shall have occurred and be continuing, the outstanding principal
balance of the Loan and, to the extent permitted by law, all accrued and unpaid
interest in respect of the Loan and any other amounts due pursuant to the Loan
Documents, shall accrue interest at the Default Rate, calculated from the date
such payment was due without regard to any grace or cure periods contained
herein.
 
2.2.4             Usury Savings. This Agreement, the Note and the other Loan
Documents are subject to the express condition that at no time shall Borrower be
obligated or required to pay interest on the principal balance of the Loan at a
rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate.  If, by the terms of this
Agreement or the other Loan Documents, Borrower is at any time required or
obligated to pay interest on the principal balance due hereunder at a rate in
excess of the Maximum Legal Rate, the Interest Rate or the Default Rate, as the
case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate
and all previous payments in excess of the Maximum Legal Rate shall be deemed to
have been payments in reduction of principal and not on account of the interest
due hereunder.  All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
 
 
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Section 2.3                      Loan Payment.
 
2.3.1             Monthly Debt Service Payments.  Borrower shall pay to Lender
(a) on the Closing Date, an amount equal to interest only on the outstanding
principal balance of the Loan from and including the Closing Date up to and
including December 31, 2007, which interest shall be calculated in accordance
with the provisions of Section 2.2 hereof, and (b) on each Payment Date
commencing on the Payment Date occurring in February, 2008, and thereafter up to
and including the Maturity Date, Borrower shall make a payment to Lender equal
to the Monthly Debt Service Payment Amount, which payments shall be applied
first to interest due for the related Interest Period at the Interest Rate, for
such related Interest Period and then to the principal amount of the Loan due in
accordance with this Agreement, and lastly, to any other amounts due and unpaid
pursuant to the Loan Documents hereto.  Borrower and Lender acknowledge and
agree that, on the 15th calendar day of the month preceding each Payment Date
during the Construction Term: (a) if and to the extent undrawn funds remain
available for Advance under the Project Loan from the Interest Reserve Line Item
of the Project Loan Budget, and provided that that no Event of Default or
monetary Default then exists under any of the Loan Documents or would occur as a
result of such Advance, the Monthly Debt Service Amount then due and owing shall
be advanced by Lender by a Advance under Interest Reserve Line Item of the
Project Loan Budget; and (b) if no amount remains available under the Interest
Reserve Line Item but and to the extent Interest Reserve Funds are on deposit in
the Interest Reserve Account,  and no Event of Default or monetary Default then
exists under any of the Loan Documents, the Monthly Debt Service Payment Amount
then due and payable shall be paid by application of funds from the Interest
Reserve Account.  Borrower and Lender acknowledge and agree that Lender may
automatically make an Advance or apply Interest Reserve Funds on deposit in the
Interest Reserve Account on each Payment Date occurring during the Construction
Term, in either instance, in accordance with this Section 2.3.1, without the
need for Borrower to submit a Draw Request or otherwise request such an Advance
or application.
 
2.3.2             Payments Generally.  The first Interest Period hereunder shall
commence on and include the Closing Date and shall end on and include December
31, 2007.  Thereafter each Interest Period shall commence on the first (1st) day
of each calendar month during the term of this Agreement and shall end on and
include the final calendar date of such calendar month.  For purposes of making
payments hereunder, but not for purposes of calculating Interest Periods, if the
day on which such payment is due is not a Business Day, then amounts due on such
date shall be due on the immediately preceding Business Day and with respect to
payments of principal due on the Maturity Date, interest shall be payable at the
Interest Rate or the Default Rate, as the case may be, through and including the
day immediately preceding such Maturity Date.  All amounts due under this
Agreement and the other Loan Documents shall be payable without setoff,
counterclaim, defense or any other deduction whatsoever.
 
2.3.3             Payment on Maturity Date.  Borrower shall pay to Lender on the
Maturity Date the outstanding principal balance of the Loan, all accrued and
unpaid interest and all other amounts due hereunder and under the Note, the
Mortgage and the other Loan Documents.
 
2.3.4             Late Payment Charge.  If any principal, interest or any other
sums due under the Loan Documents (including the amounts due on the Maturity
Date) are not paid by Borrower on or prior to the date on which it is due,
Borrower shall pay to Lender upon demand an amount equal to the lesser of five
percent (5%) of such unpaid sum or the Maximum Legal Rate in order to defray the
expense incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent
payment.  Any such amount shall be secured by the Mortgage and the other Loan
Documents to the extent permitted by applicable law.
 
 
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2.3.5             Method and Place of Payment.  Except as otherwise specifically
provided herein, all payments and prepayments under this Agreement and the Note
shall be made to Lender not later than 11:00 A.M., New York City time, on the
date when due and shall be made in lawful money of the United States of America
in immediately available funds at Lender’s office or as otherwise directed by
Lender, and any funds received by Lender after such time shall, for all purposes
hereof, be deemed to have been paid on the next succeeding Business Day.
 
Section 2.4                      Prepayments.
 
2.4.1             Voluntary Prepayments.  Except as otherwise provided in this
Section 2.4.1 and  Section 2.4.2, Borrower shall not have the right to prepay
the Loan in whole or in part prior to the Maturity Date.  If for any reason
Borrower prepays the Loan on a date other than a Payment Date, Borrower shall
pay Lender, in addition to the Debt, all interest which would have accrued on
the amount of the Loan through and including the Payment Date next occurring
following the date of such prepayment. Notwithstanding anything to the contrary
contained herein, commencing after the Payment Date three (3) months prior to
the Maturity Date (the "Open Period Date"), or on any Payment Date thereafter
(or on any date thereafter, provided that interest is paid through the next
Payment Date), Borrower may, at its option, prepay the Debt in whole, but not in
part, without payment of the Yield Maintenance Premium.
 
2.4.2             Mandatory Prepayments.  On the next occurring Payment Date
following the date on which Lender actually receives any Net Proceeds, if Lender
is not obligated to make such Net Proceeds available to Borrower for the
Restoration of the Property or otherwise remit such Net Proceeds to Borrower
pursuant to Section 6.4 of the Building Loan Agreement, Borrower shall prepay or
authorize Lender to apply Net Proceeds as a prepayment of all or a portion of
the outstanding principal balance of the Loan together with accrued interest
through the end of the related Interest Period and any other sums due hereunder
in an amount equal to one hundred percent (100%) of such Net Proceeds; provided,
however, if an Event of Default has occurred and is continuing, Lender may apply
such Net Proceeds to the Debt (until paid in full) in any order or priority in
its sole discretion.  Other than following an Event of Default, no Yield
Maintenance Premium shall be due in connection with any prepayment made pursuant
to this Section 2.4.2.
 
2.4.3             Prepayments After Default.  If following an Event of Default,
payment of all or any part of the Debt is tendered by Borrower or otherwise
recovered by Lender, such tender or recovery shall be (a) made on the next
occurring Payment Date together with the Monthly Debt Service Payment and (b)
deemed a voluntary prepayment by Borrower in violation of the prohibition
against prepayment set forth in Section 2.4.1 hereof and Borrower shall pay, in
addition to the Debt, an amount equal to the Yield Maintenance Default Premium.
 
 
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2.4.4           Prepayment Prior to Defeasance Expiration Date. If the Permitted
Release Date has occurred but the Defeasance Expiration Date has not occurred,
the Debt may be prepaid in whole (but not in part) prior to the date permitted
under Section 2.4.1 hereof upon not less than thirty (30) days prior written
notice to Lender specifying the Payment Date on which prepayment is to be made
(a “Prepayment Date”) provided no Event of Default exists and upon payment of an
amount equal to the Yield Maintenance Premium.  Lender shall notify Borrower of
the amount and the basis of determination of the required prepayment
consideration.  If any notice of prepayment is given, the Debt shall be due and
payable on the Prepayment Date.  Lender shall not be obligated to accept any
prepayment of the Debt unless it is accompanied by the prepayment consideration
due in connection therewith.  If for any reason Borrower prepays the Loan on a
date other than a Payment Date, Borrower shall pay Lender, in addition to the
Debt, all interest which would have accrued on the amount of the Loan through
and including the Payment Date next occurring following the date of such
prepayment.
 
2.4.5           Application of Prepayments to Components.  Any prepayment of the
principal of the Loan, in whole or in part, voluntary or involuntary, shall be
applied (a) first, to the reduction of the outstanding principal balance of the
Project Loan until reduced to zero, and (b) second, to the reduction of the
outstanding principal balance of the Building Loan until reduced to
zero.  Subsequent to any Event of Default, any payment of principal from
whatever source may be applied by Lender between the various components of the
Loan in Lender’s sole discretion.
 
Section 2.5                      Defeasance.
 
2.5.1             Voluntary Defeasance
 
   (a)  Provided no Event of Default shall then exist, Borrower shall have the
right at any time after the Defeasance Expiration Date and prior to the date
voluntary prepayments are permitted under Section 2.4.1 hereof to voluntarily
defease all, but not part, of the Loan by and upon satisfaction of the following
conditions (such event being a “Defeasance Event”):
 
(i)           Borrower shall provide not less than thirty (30) days prior
written notice to Lender specifying the Payment Date (the “Defeasance Date”) on
which the Defeasance Event is to occur;
 
(ii)           Borrower shall pay to Lender all accrued and unpaid interest on
the principal balance of the Loan to and including the Defeasance Date.  If for
any reason the Defeasance Date is not a Payment Date, the Borrower shall also
pay interest that would have accrued on the Note through and including the
Payment Date immediately preceding the next Payment Date, provided, however, if
the Defeasance Deposit shall include short-term interest computed from the date
of such prepayment through to the next succeeding Payment Date, Borrower shall
not be required to pay such short term interest pursuant to this sentence;
 
(iii)           Borrower shall pay to Lender all other sums, not including
scheduled interest or principal payments, then due under the Note, this
Agreement, the Mortgage and the other Loan Documents;
 
 
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(iv)           Borrower shall use the Defeasance Deposit to purchase U.S.
Obligations in accordance with Section 2.5.1(b) below;
 
(v)           Borrower shall execute and deliver a pledge and security
agreement, in form and substance that would be reasonably satisfactory to a
prudent lender creating a first priority lien on the Defeasance Deposit and the
U.S. Obligations purchased with the Defeasance Deposit in accordance with the
provisions of this Section 2.5 (the “Security Agreement”);
 
(vi)           Borrower shall deliver an opinion of counsel for Borrower that is
standard in commercial lending transactions and subject only to customary
qualifications, assumptions and exceptions opining, among other things, that
Borrower has legally and validly transferred and assigned the U.S. Obligations
and all obligations, rights and duties under and to the Note to the Successor
Borrower, that Lender has a perfected first priority security interest in the
Defeasance Deposit and the U.S. Obligations delivered by Borrower and that any
REMIC Trust formed pursuant to a Securitization will not fail to maintain its
status as a “real estate mortgage investment conduit” within the meaning of
Section 860D of the Code as a result of such Defeasance Event;
 
(vii)           Borrower shall deliver confirmation in writing from each of the
applicable Rating Agencies to the effect that such release will not result in a
downgrade, withdrawal or qualification of the respective ratings in effect
immediately prior to such Defeasance Event for the Securities issued in
connection with the Securitization which are then outstanding.  If required by
the applicable Rating Agencies, Borrower shall also deliver or cause to be
delivered an Additional Insolvency Opinion with respect to the Successor
Borrower in form and substance satisfactory to Lender and the applicable Rating
Agencies;
 
(viii)           Borrower shall deliver an Officer’s Certificate certifying that
the requirements set forth in this Section 2.5.1(a) have been satisfied;
 
(ix)           Borrower shall deliver a certificate of Borrower’s independent
certified public accountant certifying that the U.S. Obligations purchased with
the Defeasance Deposit generate monthly amounts equal to or greater than the
Scheduled Defeasance Payments;
 
(x)           Borrower shall deliver such other certificates, documents or
instruments as Lender may reasonably request; and
 
(xi)           Borrower shall pay all costs and expenses of Lender incurred in
connection with the Defeasance Event, including (A) any costs and expenses
associated with a release of the Lien of the Mortgage as provided in Section 2.6
hereof, (B) reasonable attorneys’ fees and expenses incurred in connection with
the Defeasance Event, (C) the costs and expenses of the Rating Agencies, (D) any
revenue, documentary stamp or intangible taxes or any other tax or charge due in
connection with the transfer of the Note, or otherwise required to accomplish
the defeasance and (E) the costs and expenses of Servicer and any trustee,
including reasonable attorneys’ fees.
 
 
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(b)           In connection with the Defeasance Event, Borrower shall use the
Defeasance Deposit to purchase U.S. Obligations which provide payments on or
prior to, but as close as possible to, all successive scheduled Payment Dates
after the Defeasance Date upon which interest and principal payments are
required under this Agreement and the Note, and in amounts equal to the
scheduled payments due on such Payment Dates under this Agreement and the Note
(including, without limitation, scheduled payments of principal, interest,
servicing fees (if any), and any other amounts due under the Loan Documents on
such Payment Dates) and assuming the Note is prepaid in full on the Open Period
Date (the “Scheduled Defeasance Payments”).  Borrower, pursuant to the Security
Agreement or other appropriate document, shall authorize and direct that the
payments received from the U.S. Obligations may be made directly to the Clearing
Account (unless otherwise directed by Lender) and applied to satisfy the Debt
Service obligations of Borrower under this Agreement and the Note.  Any portion
of the Defeasance Deposit in excess of the amount necessary to purchase the U.S.
Obligations required by this Section 2.5 and satisfy Borrower’s other
obligations under this Section 2.5 and Section 2.6 shall be remitted to
Borrower.
 
2.5.2             Collateral.  Each of the U.S. Obligations that are part of the
defeasance collateral shall be duly endorsed by the holder thereof as directed
by Lender or accompanied by a written instrument of transfer in form and
substance that would be satisfactory to a prudent lender (including, without
limitation, such instruments as may be required by the depository institution
holding such securities or by the issuer thereof, as the case may be, to
effectuate book-entry transfers and pledges through the book-entry facilities of
such institution) in order to perfect upon the delivery of the defeasance
collateral a first priority security interest therein in favor of Lender in
conformity with all applicable state and federal laws governing the granting of
such security interests.
 
2.5.3             Successor Borrower.  In connection with any Defeasance Event,
Borrower shall establish a successor entity (the “Successor Borrower”), which
shall be a Special Purpose Entity, which shall not own any other assets or have
any other liabilities or operate other property (except in connection with other
defeased loans held in the same securitized loan pool with the Loan).  Borrower
shall transfer and assign all obligations, rights and duties under and to the
Note, together with the pledged U.S. Obligations to such Successor
Borrower.  Such Successor Borrower shall assume the obligations under the Note
and the Security Agreement and Borrower shall be relieved of its obligations
under such documents.  Borrower shall pay One Thousand and 00/100 Dollars
($1,000) to any such Successor Borrower as consideration for assuming the
obligations under the Note and the Security Agreement.  Notwithstanding anything
in this Agreement to the contrary, no other assumption fee shall be payable upon
a transfer of the Note in accordance with this Section 2.5.3, but Borrower shall
pay all costs and expenses incurred by Lender, including Lender’s attorneys’
fees and expenses and any fees and expenses of any Rating Agencies, incurred in
connection therewith.
 
Section 2.6                      Release of Property.  Except as set forth in
this Section 2.6, no repayment, prepayment or defeasance of all or any portion
of the Loan shall cause, give rise to a right to require, or otherwise result
in, the release of the Lien of the Mortgage on the Property.
 
 
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2.6.1             Release of Property.
 
(a)           If Borrower has elected to defease the Loan and the requirements
of Section 2.5 and this Section 2.6 have been satisfied, all of the Property
shall be released from the Lien of the Mortgage and the U.S. Obligations,
pledged pursuant to the Security Agreement, shall be the sole source of
collateral securing the Note.
 
(b)           In connection with the release of the Mortgage, Borrower shall
submit to Lender, not less than thirty (30) days prior to the Defeasance Date, a
release of Lien (and related Loan Documents) for the Property for execution by
Lender.  Such release shall be in a form appropriate in the jurisdiction in
which the Property is located and that would be satisfactory to a prudent lender
and contains standard provisions, if any, protecting the rights of the releasing
lender.  In addition, Borrower shall provide all other documentation Lender
reasonably requires to be delivered by Borrower in connection with such release,
together with an Officer’s Certificate certifying that such documentation (i) is
in compliance with all Legal Requirements, and (ii) will effect such releases in
accordance with the terms of this Agreement.
 
2.6.2             Release on Payment in Full.  Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of all principal
and interest due on the Loan and all other amounts due and payable under the
Loan Documents in accordance with the terms and provisions of the Note and this
Agreement, release the Lien of the Mortgage on the Property.
 
Section 2.7                      Clearing Account/Cash Management.  The
provisions of Section 2.7 of the Building Loan Agreement are incorporated herein
by reference as if fully set forth herein
 
Section 2.8                      Intentionally Omitted.
 
Section 2.9                      Payments Not Conditional.  All payments
required to be made by Borrower hereunder or under the Note or the other Loan
Documents shall be made irrespective of, and without deduction for, any setoff,
claim or counterclaim and shall be made irrespective of any defense thereto.
 
Section 2.10                      Initial AdvanceThe obligation of Lender to
make the initial Advance of the Project  Loan (the “Initial Advance”) shall be
subject to the following conditions precedent (collectively, the “Initial
Advance Conditions”) on or prior to the Required Initial Advance Date, all of
which conditions precedent must be satisfied prior to Lender making any such
Initial Advance:
 
2.10.1             Prior Conditions Satisfied.  All conditions precedent to
closing shall continue to be satisfied as of the date of the Initial Advance (in
the same manner in which they were satisfied for the closing without reimposing
any one-time condition).
 
2.10.2             Performance; No Default.  Borrower shall have performed and
complied with all terms and conditions herein required to be performed or
complied with by it at or prior to the date of such Initial Advance, and on the
date of such Initial Advance there shall exist no Default or Event of Default.
 
 
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2.10.3             Representations and Warranties.  The representations and
warranties made by Borrower or Guarantor in the Loan Documents or otherwise made
by or on behalf of Borrower or Guarantor in connection therewith after the date
thereof shall have been true and correct in all material respects on the date on
which made and shall also be true and correct in all material respects on the
date of the Initial Advance.
 
2.10.4             No Damage.  The Project Improvements shall not have been
injured or damaged by fire, explosion, accident, flood or other casualty, unless
Lender shall be satisfied that sufficient insurance proceeds will be available
in the reasonable judgment of Lender to effect the satisfactory restoration of
the Project Improvements and to permit the Completion of the Improvements prior
to the Required Completion Date.
 
2.10.5             Deliveries.  Lender shall have received:
 
(a)           Draw Request.  A Draw Request complying with the requirements
hereof;
 
(b)           Intentionally Omitted;
 
(c)           Title Insurance Policy.  A Title Insurance Policy for the full
amount of the Loan, which includes a pending disbursement clause to increase the
coverage of the Title Insurance Policy by the amount of the any Advance,
insuring the lien of the Mortgage subject to no liens or encumbrances other than
the Permitted Encumbrances;
 
(d)           Lien Waivers.  Duly executed lien waivers, which shall be
conditional lien waivers or unconditional lien waivers, as determined by Lender
in its sole discretion, and otherwise substantially in the form set forth in
Exhibit J to the Building Loan Agreement from the General Contractor and all
Contractors and Subcontractors who have performed work, for the work so
performed, and/or who have supplied labor and/or materials, for the labor and/or
materials so supplied, except for such work or labor and/or materials for which
payment thereof is requested, as to which duly executed lien waivers shall be
delivered to Lender with the next request for an Advance;
 
(e)           Ratios.  Evidence satisfactory to Lender that following the
Initial Advance, the Loan-to-Cost Ratio shall be no greater than 80%.
 
(f)           Evidence of Sufficiency of Funds.  Evidence satisfactory to Lender
that the proceeds of the Loan plus the Required Equity Funds will be sufficient
to cover all Project-Related Costs reasonably anticipated to be incurred and to
satisfy the Obligations of Borrower to Lender and under this Agreement and the
other Loan Documents;
 
(g)           Anticipated Costs Report.  An Anticipated Costs Report; and
 
(h)           Other Documents.  Such other documents and certificates as Lender
or its counsel may reasonably require.
 
2.10.6             Initial Building Loan Advance.  All conditions to the initial
advance of the Building Loan set forth in Section 2.10 of the Building Loan
Agreement shall have been satisfied.
 
 
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2.10.7             Rate Lock Agreement.  Simultaneously with the Initial
Advance, Lender shall return to Borrower, a pro-rata portion of the deposit held
by Lender pursuant to the Rate Lock Agreement in such proportion as the amount
of the Initial Advance bears to the Total Loan Amount.
 
2.10.8             Home Depot Estoppel Certificate.  Borrower shall have
delivered to Lender estoppel certificates from Home Depot certifying to Lender
that the Home Depot Lease is in full force and effect and that there are no
defaults by Borrower or Home Depot thereunder, and otherwise in form and
substance satisfactory to Lender in Lender's sole discretion (the “Home Depot
Estoppel Certificate”).
 
2.10.9             Initial Reserve DepositsBorrower shall have deposited the
Initial Tax and Insurance Escrow Deposit and the Initial Interest Reserve
Deposit with Lender. The Initial Tax and Insurance Escrow Deposit and the
Initial Interest Reserve Deposit shall be funded on the date of the Initial
Advance with a portion of the Initial Advance under the Project Loan.
 
2.10.10             Retaining Wall Letter.  Borrower shall have delivered to
Lender a letter from the Village of Pelham Manor evidencing resolution of the
retaining wall issue in form and substance satisfactory to Lender in Lender's
sole discretion (the “Retaining Wall Letter”).
 
2.10.11             Satisfaction of Initial Advance Conditions.  Borrower
covenants and agrees that, prior to the Required Initial Advance Date, time
being of the essence, it shall cause all of the Initial Advance Conditions to be
satisfied.  Borrower shall not perform any work at the Property, including,
without limitation, any demolition of the existing improvements, until all of
the Initial Advance Conditions have been satisfied.  Borrower’s failure to
satisfy, or cause the satisfaction of, any of the Initial Advance Conditions on
or prior to the Required Initial Advance Date shall, at Lender’s election,
constitute an Event of Default.  In addition to any and all other remedies that
may be available to Lender hereunder, under the other Loan Documents, at law or
in equity, upon the occurrence of an Event of Default resulting from the failure
of any Initial Advance Condition to have been satisfied, Borrower hereby
irrevocably empowers Lender, in the name of Borrower as its true and lawful
attorney-in-fact, with full power of substitution to complete or undertake such
steps as may be necessary, in Lender’s sole determination, to satisfy the
Initial Advance Condition in  the name of Borrower.  Such power of attorney
shall be deemed to be a power coupled with an interest and cannot be
revoked.  Borrower empowers said attorney-in-fact as follows: (i) to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for such purposes; (iii) to pay, settle or compromise all existing
bills and claims which are or may become Liens against the Property, or as may
be necessary or desirable for the completion of such Initial Advance Conditions,
or for clearance of title; (v) to execute all applications and certificates in
the name of Borrower which may be required by any of the contract documents;
(vi) to prosecute and defend all actions or proceedings in connection with the
Property or the Project; and (vii) to do any and every act which Borrower might
do in its own behalf to fulfill the terms of this Agreement and the other Loan
Documents.  In addition, upon such Event of Default,. Lender shall have the
right to unwind any interest rate hedge entered into by Lender and apply any
deposits or other amounts held by Lender pursuant to the Rate Lock Agreement to
costs and expenses incurred by Lender under this Agreement, the Rate Lock
Agreement or any of the other Loan Documents.
 
 
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Section 2.11                      Project Loan Advances.  The obligation of
Lender to make the Advances of the Project Loan after the Initial Advance shall
be subject to the following conditions precedent, all of which conditions
precedent must be satisfied prior to Lender making any such Advance:
 
2.11.1             Prior Conditions Satisfied.  All conditions precedent to any
prior Advance (in the same manner in which they were satisfied for the Initial
Advance or prior Advance, as applicable, and without reimposing any one-time
requirement) shall continue to be satisfied as of the date of such subsequent
Advance.
 
2.11.2             Performance; No Default.  Borrower shall have performed and
complied with all terms and conditions herein required to be performed or
complied with by it at or prior to the date of such Advance, and on the date of
such Advance there shall exist no Default or Event of Default or Shortfall.
 
2.11.3             Representations and Warranties.  The representations and
warranties made by Borrower and Guarantor in the Loan Documents or otherwise
made by or on behalf of Borrower or Guarantor in connection therewith after the
date thereof shall have been true and correct in all material respects on the
date on which made and shall also be true and correct in all material respects
on the date of such Advance.
 
2.11.4             No Damage
 
.  The Improvements shall not have been injured or damaged by fire, explosion,
accident, flood or other casualty, unless Lender shall have received insurance
proceeds sufficient in the reasonable judgment of Lender to effect the
satisfactory restoration of the Improvements and to permit the Completion of the
Improvements prior to the Required Completion Date.
 
2.11.5             Deliveries.  The following items or documents shall have been
delivered to Lender:
 
(a)           Anticipated Costs Report.  An Anticipated Costs Report in the form
set forth in Exhibit I to the Building Loan Agreement executed by the General
Contractor which sets forth the anticipated costs to complete construction of
the Project Improvements, after giving effect to costs incurred during the
previous month and any anticipated change orders;
 
(b)           Endorsement to Title Insurance Policy.  A “datedown” endorsement
to Lender’s title insurance policy as described in the form set forth in Exhibit
C to the Building Loan Agreement which continuation or endorsement shall
increase the coverage of the Title Insurance Policy by the amount of the Advance
through the pending disbursement clause (but not the overall policy amount which
shall be for the full amount of the Loan), amend the effective date of the Title
Insurance Policy to the date of such Advance, continue to insure the lien of the
Mortgage subject to no liens or encumbrances other than the Permitted
Encumbrances and which shall state that since the last disbursement of the Loan
there have been no changes in the state of title to the Property (other than
Permitted Encumbrances) and that there are no additional survey exceptions not
previously approved by Lender;
 
(c)           Evidence of Sufficiency of Funds.  Evidence satisfactory to Lender
that the proceeds of the Loan plus the Required Equity Funds will be sufficient
to cover all Project-Related Costs reasonably anticipated to be incurred and to
satisfy the Obligations of Borrower to Lender and under this Agreement and the
other Loan Documents.
 
 
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(d)           Draw Request. A Draw Request complying with the provisions of this
Agreement which shall constitute Borrower’s representation and warranty to
Lender that:  (a) any completed construction is substantially in accordance with
the Plans and Specifications, (b) all costs for the payment of which Lender have
previously advanced funds have in fact been paid, (c) all the representations
and warranties contained in Article IV of this Agreement continue to be true and
correct in all material respects, (d) no Event of Default shall have occurred
and be continuing hereunder, and (e) Borrower continues to be in compliance in
all respects with all of the other terms, covenants and conditions contained in
this Agreement.
 
(e)           Affirmation of Payment.  General Contractor’s Affirmation of
Payment (AIA Form G706) in the form attached as Exhibit E to the Building Loan
Agreement.
 
(f)           Other Documents.  Such other documents and certificates as Lender
or its counsel may reasonably require.
 
2.11.6             Construction Consultant Certificate.  Each draw request
relating to Hard Costs shall be accompanied by a certificate or report of the
Construction Consultant to Lender based upon a site observation of the Property
made by the Construction Consultant not more than thirty (30) days prior to the
date of such draw, in which the Construction Consultant shall in substance:  (i)
verify that the portion of the Project Improvements completed as of the date of
such site observation has been completed substantially in accordance with the
Plans and Specifications; and (ii) state its estimate of (1) the percentages of
the construction of the Project Improvements completed as of the date of such
site observation on the basis of work in place as part of the Project
Improvements and the Building Loan Budget, (2) the Hard Costs actually incurred
for work in place as part of the Improvements as of the date of such site
observation, (3) the sum necessary to complete construction of the Project
Improvements in accordance with the Plans and Specifications, and (4) the amount
of time from the date of such inspection that will be required to achieve
Completion of the Improvements.
 
2.11.7             Intentionally Omitted.
 
2.11.8             Certification Regarding Chattels.  Lender shall have received
a certification from the Title Company or other service satisfactory to Lender
or counsel satisfactory to Lender (which shall be updated from time to time at
Borrower’s expense upon request by Lender in connection with future Advances)
that a search of the public records disclosed no significant or material changes
since the Closing Date including no judgment or tax liens affecting Borrower or
Guarantor, the Property or the Personal Property, and no conditional sales
contracts, chattel mortgages, leases of personalty, financing statements (other
than those in favor of Lender) or title retention agreements which affect the
Property.
 
2.11.9             Lien Waivers.  Borrower shall have delivered duly executed
lien waivers, which shall be conditional lien waivers or unconditional lien
waivers, as applicable, and otherwise substantially in the form set forth as
Exhibit J to the Building Loan Agreement, from the General Contractor, all Major
Contractors and Major Subcontractors for all work performed, and all labor or
material supplied for which payment thereof has been made prior to the date of
the Advance.
 
 
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2.11.10             Construction Consultant Approval.  Lender has received
advice from the Construction Consultant, satisfactory to Lender, as to
Construction Consultant’s determination, acting seasonably, based on on-site
inspections of the Improvements and the data submitted to and reviewed by it as
part of Borrower’s Requisition of the value of the labor and materials in place,
that the construction of the Project Improvements is proceeding satisfactorily
and according to schedule and that the work on account of which the Advance is
sought has been completed in a good and workmanlike manner to such Construction
Consultant’s satisfaction and substantially in accordance with the Plans and
Specifications.
 
2.11.11             Ratios.  Following such Advance (and any Building Loan
Advance being made on such date), the Loan-to-Cost Ratio shall be no greater
than 80%.
 
2.11.12             Administration Fee.  Borrower shall have paid the
Administration Fee in accordance with the provisions of the Administration Fee
Agreement.
 
2.11.13             Required Equity Funds.  Borrower shall furnish Lender with
evidence in form and content satisfactory to Lender that, as of the date of each
Advance,  Borrower has invested Cash equity in an amount equal to or greater
than (a) $8,916,000 or (b) 20% of the Total Project Costs or (c) the difference
between the Development Budget and the maximum Loan amount of $35,664,000 for
approved Project-Related Costs (the “Required Equity Funds”).  Notwithstanding
the foregoing, if the Borrower realizes cost savings from the development of the
Project, either in the form of Hard Costs or Soft Costs, Advances may be
advanced to Borrower provided that (i) the Borrower would not have less than
$8,916,000 of cash equity in the Project through such Advance and (ii) the Debt
Service Coverage Ratio shall be equal to or greater than 1.15 to 1.0 assuming a
fully advanced Loan using a debt service constant of 7.31%, and (iii) the
loan-to-value ratio for the Property is greater than 80% assuming a fully
advanced Loan.  If Borrower is in non-compliance solely with respect to
condition (i) above, at Borrower's option, either (A) any excess cost savings
(funds in excess of the amount so that the Required Equity Funds shall continue
to be satisfied) shall be deposited as follows: (1) 100% into the Replacement
Reserve Account until the amount on deposit in such account equals the
Replacement Reserve Cap, and then (2) 100% of any excess into the Rollover
Reserve Account until the amount on deposit in such account equals the Rollover
Reserve Cap, and then (3) 100% of any excess into any other Reserves required by
Lender pursuant to this Agreement, or (B) Borrower shall release Lender from its
obligation to fund the remaining amounts of the Loan and Borrower and any
guarantor under the Rate Lock Agreement pays for the breakage costs, if any, on
the unfunded portion of the Loan payable pursuant to the Rate Lock
Agreement.  If Borrower is in compliance with respect to condition (i) above but
is not in compliance with conditions (ii) and (iii) above, any excess cost
savings shall, at Borrower's option, (A) be held back by Lender as additional
collateral for the Loan until satisfaction of each of the requirements are
satisfied, or (B) be deposited as follows:  (1) 100% into the Replacement
Reserve Account until the amount on deposit in such account equals the
Replacement Reserve Cap, and then (2) 100% of any excess into the Rollover
Reserve Account until the amount on deposit in such account equals the Rollover
Reserve Cap, and then (3) 100% of any excess into any other Reserves required by
Lender pursuant to this Agreement, or (C) Borrower shall release Lender from its
obligation to fund the remaining amounts of the Loan and Borrower and any
guarantor under the Rate Lock Agreement pays for the breakage costs, if any, on
the unfunded portion of the Loan payable pursuant to the Rate Lock Agreement.
 
 
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2.11.14             Rate Lock Agreement.  Simultaneously with each Construction
Advance, Lender shall return to Borrower, a pro-rata portion of the deposit held
by Lender pursuant to the Rate Lock Agreement in such proportion as the amount
of the Construction Advance bears to the Total Loan Amount, provided, however,
that in the event that any of the conditions of Section 2.11.13 are not
satisfied, Lender shall have the right to apply the portion of the deposit under
the Rate Lock Agreement to be returned to Borrower to satisfy the conditions of
Section 2.11.13.
 
2.11.15             Home Depot Contribution.  In the event that Borrower
receives any portion of the Tenant Contribution (as defined in the Home Depot
Lease) payable to Borrower pursuant to that certain Sublease dated as of
December 21, 2006 (the "Home Depot Lease"), with Home Depot U.S.A., Inc. ("Home
Depot") or the proceeds of any letter of credit delivered by Home Depot pursuant
to the Home Depot Lease as security for Home Depot's obligation to pay the
Tenant Contribution, Borrower shall apply such Tenant Contribution or the
proceeds of such letter of credit, as applicable, to the payment of Project
Related Costs and shall provide Lender with evidence that such Tenant
Contribution or proceeds, as applicable, have been applied to the payment of
Project Related Costs prior to Lender making any further Advances under this
Agreement.
 
Section 2.12                      Final Advance.
 
2.12.1             Conditions to Release of Final Advance.  In addition to the
conditions set forth in Section 2.10 and Section 2.11, above, Lender’s
obligation to make the final Advance in the amount calculated pursuant to
Section 2.12.2 of this Agreement (the “Final Advance”) shall be subject to
receipt by Lender of the following:
 
(a)           Completion of Improvements. Evidence satisfactory to Lender and
the Construction Consultant that the Completion of the Improvements has
occurred.
 
(b)           Final Building Loan Advance.  All conditions to the Final Building
Loan Advance have been satisfied and the Final Building Loan Advance shall have
been made or will be made simultaneously therewith.
 
(c)           Lien Waivers.  Duly executed final lien waivers, which shall be
conditional lien waivers or unconditional lien waivers, as determined by Lender
in its sole discretion, and otherwise substantially in the form as Exhibit J to
the Building Loan Agreement from the General Contractor and Major Contractors
and Major Subcontractors who have performed work for the work so performed,
and/or who have supplied labor and/or materials for the labor and/or materials
so supplied.
 
(d)           “As-Built” Plans and Specifications.  A full and complete set of
“as built” Plans and Specifications certified to by Borrower’s Architect.
 
(e)           Administration Fee.  Borrower shall have paid the Administration
Fee in accordance with the provisions of the Administration Fee Agreement.
 
 
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(f)           Certificates.  Completed AIA Form G704 (Certificate of Substantial
Completion) and completed AIA Form G707 (Consent of Surety to Final Payments)
shall have been executed and delivered by Borrower’s Architect, General
Contractor and each surety issuing any of the Required Construction Bonds. .
 
(g)           Deposits to Reserves.  All deposits to the Reserve Funds required
under the Building Loan Agreement have been made.
 
(h)           Other Documents.  Such documents, letters, affidavits, reports and
assurances, as Lender, Lender’s counsel and the Construction Consultant may
reasonably require.
 
(i)           Required Ratios at Completion. Lender shall have determined that,
following the Final Advance (and taking into consideration the Final Building
Loan Advance to be made simultaneously under the Building Loan) the Required
Ratios at Completion have been satisfied, or Borrower shall have deposited with
Lender Cash or a Letter of Credit to satisfy the Required Ratios at Completion
in accordance with Section 2.12.2.
 
(j)           Tenant Estoppel Certificates.  Borrower shall have delivered to
Lender estoppel certificates from all of the tenants at the Property in form and
substance satisfactory to Lender.
 
(k)           Required Equity Funds.  Borrower shall furnish Lender with
evidence in form and content satisfactory to Lender that, as of the date of the
Final Advance, Borrower has invested Cash equity in an amount equal to or
greater than the Required Equity Funds or has otherwise complied with the
provisions of Section 2.11.13 with respect thereto.
 
(l)           Insolvency Opinion.  The issuance of and delivery to Lender of six
(6) original counterparty Insolvency Opinions in the form attached hereto as
Exhibit K to the Building Loan Agreement from Wachtel & Masyr, LLP or another
law firm reasonably acceptable to Lender.
 
2.12.2             Amount of Final Advance.  Except as expressly provided for
below, the amount of the Final Advance shall be equal to the sum of: (a) any
Retainage not previously released and advanced to Borrower; plus (b) the amount
of any Punch List and Deferred Maintenance Reserve Deposit not funded pursuant
to the Building Loan Agreement; plus (c) the positive difference, if any,
between, (i) the Building Loan Amount and (ii) all amounts previously Advanced
under the Building Loan (including the amounts described in clauses (a) and (b)
of the sentence). The portion of the Final Advance described in clause (c) of
the foregoing sentence is referred to herein as the “Project Loan Earn Out
Advance” and the corresponding portion of the Final Building Loan Advance is
referred to herein as the “Building Loan Earn Out Advance” and together with the
Project Loan Earn Out Advance, the “Earn Out Advances”.  Notwithstanding
anything to the contrary provided for herein, the Earn Out Advances shall be
reduced, pro rata, but not below $0.00, if and to the extent necessary for the
Required Ratios at Completion to be achieved following the Final Advances.  In
addition, if the Required Ratios at Completion cannot be achieved even if the
Earn Out Advances are reduced to $0.00, Lender shall have the right, but not the
obligation, to apply any deposits held by Lender pursuant to the Rate Lock
Agreement and any Interest Reserve Funds to the payment of the Building Loan and
the Project Loan in such order and priority as Lender shall determine in its
sole discretion.  If the Required Ratios at Completion cannot be achieved even
if the Earn Out Advances are reduced to $0.00 and the deposits, if any under the
Rate Lock Agreement and the Interest Reserve Funds are applied to the payment of
the Loan, Borrower shall deposit with Lender Cash or a Letter of Credit
satisfactory to Lender in an amount equal to the amount which, if used to pay
down the Loan, would result in Stabilized Loan-to-Value Ratio of 80% and a Debt
Service Coverage Ratio of 1.15 to 1.00, calculated based upon Lender’s
determination on a pro-forma basis of Lender’s Stabilized Net Cash Flow for the
12 months immediately following and assuming a thirty (30) year amortization
schedule based upon a debt service constant equal to the greater of  the actual
debt service constant and 7.31%.
 
 
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2.12.3             Rate Lock Agreement.  Upon satisfaction of all of the
conditions to the Final Advance set forth in Section 2.12.1, and subject to the
provisions of Section 2.12.2, Lender shall return to Borrower, the remaining
deposits, if any, held by Lender under the Rate Lock Agreement and not applied
by Lender in accordance with the provisions of the Rate Lock Agreement and any
Interest Reserve Funds held by Lender pursuant to the Building Loan Agreement.
 
Section 2.13                      No Reliance.  All conditions and requirements
of this Agreement are for the sole benefit of Lender and no other person or
party (including, without limitation, the Construction Consultant, the General
Contractor and subcontractors (including, without limitation, Major Contractors
and Major Subcontractors) and materialmen engaged in the construction of the
Improvements) shall have the right to rely on the satisfaction of such
conditions and requirements by Borrower.  Lender shall have the right, in its
sole and absolute discretion, to waive any such condition or requirement.
 
Section 2.14                      Method of Disbursement of Loan Proceeds.
 
2.14.1             Draw Request to Be Submitted to Lender.  At such time as
Borrower shall desire to obtain an Advance, Borrower shall complete, execute and
deliver to Lender a Borrower’s Requisition in the form attached as Exhibit L to
the Building Loan Agreement.
 
(a)           Borrower’s Requisition shall be accompanied by a completed and
itemized Application and Certificate for Payment (AIA Document No. G702)
attached as Exhibit M to the Building Loan Agreement or similar form approved by
Lender, containing the certification of the General Contractor or contractor or
subcontractor to whom such payment is made, as applicable, and Borrower’s
Architect as to the accuracy of same, together with invoices relating to all
items of Hard Costs covered thereby and accompanied by a cost breakdown showing
the cost of work on, and the cost of materials incorporated into, the
Improvements to the date of the requisition.  The cost breakdown shall also show
the percentage of completion of each line item on the Project Loan Budget, and
the accuracy of the cost breakdown shall be certified by Borrower and by
Borrower’s Architect.  All such applications for payment shall also show all
contractors and subcontractors, including Major Contractors and Major
Subcontractors, by name and trade, the total amount of each contract or
subcontract, the amount theretofore paid to each subcontractor as of the date of
such application, and the amount to be paid from the proceeds of the Advance to
each contractor and subcontractor;
 
 
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(b)           the completed construction will be reviewed by the Construction
Consultant who will certify to Lender as to the value of completed construction,
percentage of completion and compliance with Plans and Specifications;
 
(c)           lien waivers from each other Major Contractor and Major
Subcontractors for work done and materials supplied by them which were paid for
pursuant to any prior Draw Request;
 
(d)           a written request of Borrower for any necessary changes in the
Plans and Specifications, the Project Loan Budget, the Disbursement Schedule or
the Construction Schedule;
 
(e)           copies of all executed change orders, contracts and subcontracts,
and, to the extent requested by Lender, of all inspection or test reports and
other documents relating to the construction of the Project Improvements not
previously delivered to Lender; and
 
(f)           such other information, documentation and certification as Lender
shall reasonably request.
 
2.14.2             Procedure of Advances.
 
(a)           Each Draw Request shall be submitted to Lender and Construction
Consultant at least ten (10) Business Days prior to the Requested Advance Date,
and no more frequently than monthly.  Lender shall make the requested Advance on
the Requested Advance Date so long as all conditions to such Advance are
satisfied or waived.
 
(b)           Not later than 11:00 A.M. New York City time, on the Requested
Advance Date, Lender shall make such Advance available to Borrower in accordance
with the terms of this Section 2.14.
 
(c)           Each Advance (other than the Final Advance) shall be in an amount
of not less than $500,000.00.
 
(d)           Each Advance shall be made on a Payment Date.
 
2.14.3             Funds Advanced.  Each Advance shall be made by Lender by wire
transfer to such checking account of Borrower as specified to Lender in writing
or as provided in Section 2.14.4 below.  All proceeds of all Advances shall be
used by Borrower only for the purposes for which such Advances were
made.  Borrower shall not commingle such funds with other funds of Borrower.
 
2.14.4             Direct Advances to Third Parties.  Lender may make, at
Lender’s option, any or all Advances directly or through the Title Company to
(i) any Contractor, as applicable, for construction expenses which shall
theretofore have been approved by Lender and for which Borrower shall have
failed to make payment after receipt by Borrower of such applicable Advance,
(ii) Borrower’s Architect to pay its fees to the extent funds are allocated
thereto in the Building Loan Budget if Borrower shall have failed to do so,
(iii) the Construction Consultant to pay its fees, (iv) Lender’s counsel to pay
its fees, (v) to pay (x) any installment of interest due under the Note, (y) any
expenses incurred by Lender which are reimbursable by Borrower under the Loan
Documents (including, without limiting the generality of the foregoing,
reasonable attorneys’ fees and expenses and other fees and expenses incurred by
Lender), provided that Borrower shall theretofore have received notice from
Lender that such expenses have been incurred and Borrower shall have failed to
reimburse Lender for said expenses beyond any grace periods provided for said
reimbursement under the Note, this Agreement or any of the other Loan Documents,
or (z) following the occurrence and continuation of an Event of Default, any
other sums due to Lender under the Note, this Agreement or any of the other Loan
Documents, all to the extent that the same are not paid by the respective due
dates thereof, and (vi) any other Person to whom Lender in good faith determines
payment is due and any portion of the Loan so disbursed by Lender shall be
deemed disbursed as of the date on which the Person to whom payment is made
receives the same.  The execution of this Agreement by Borrower shall, and
hereby does, constitute an irrevocable authorization so to advance the proceeds
of the Loan directly to any such Person or through the Title Company to such
Persons in accordance with this Section 2.14.4 as amounts become due and payable
to them hereunder and any portion of the Loan so disbursed by Lender shall be
deemed disbursed as of the date on which the Person to whom payment is made
receives the same.  No further authorization from Borrower shall be necessary to
warrant such direct Advances to such relevant Person, and all such Advances
shall satisfy pro tanto the obligations of Lender hereunder and shall be secured
by the Mortgage and the other Loan Documents as fully as if made directly to
Borrower.
 
 
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2.14.5             One Advance Per Month.  Lender shall have no obligation to
make Advances of the Loan more often than once in each calendar month except
that Lender, in its sole discretion, shall have the right but not the
obligation, to make additional advances per month for interest, fees and
expenses due under the Loan Documents.
 
2.14.6             Advances Do Not Constitute a Waiver.  No Advance shall
constitute a waiver of any of the conditions of Lender’s obligation to make
further Advances nor, in the event Borrower is unable to satisfy any such
condition, shall any Advance have the effect of precluding Lender from
thereafter declaring such inability to be an Event of Default hereunder.
 
2.14.7             Trust Fund Provisions.  All proceeds advanced hereunder shall
be subject to the trust fund provisions of Section 13 of the Lien Law.  Nothing
contained in this Agreement is intended to constitute a promise by Borrower,
express or implied, or to create any obligation, express or implied, on the part
of Borrower, to make an “improvement,” as such term is defined in the Lien Law
of the State of New York, and no advance of proceeds of the Loan shall at any
time be conditioned, directly or indirectly, upon the making of any such
“improvement”.
 
2.14.8             Advances and Disbursements Under Completion
Guaranty.  Notwithstanding anything to the contrary contained in this Agreement
or in any other Loan Document, Borrower hereby irrevocably and unconditionally
authorizes Lender to make any disbursements of proceeds of the Loan or of any
Reserve Funds held by Lender to Guarantor in accordance with the Guaranty of
Completion.
 
Section 2.15                      Interest Advances.  Notwithstanding the
requirements contained in Section 2.10, Section 2.11 and Section 2.12, and
provided that no Event of Default shall have occurred, Lender shall make an
Advance on each Payment Date during the Construction Term from the Interest
Reserve Line Item, if and to the extent funds remain available under such line
item, to pay interest then due under the Note.  Notwithstanding the foregoing,
if and to the extent that funds are available in the Additional Interest Reserve
Deposit, Lender shall first apply funds available in the Additional Interest
Reserve Deposit to the payment of interest due, prior to making an Advance for
such purpose.  Nothing contained in this Section 2.15 shall limit or derogate
from Borrower’s absolute and unconditional obligation to pay interest due under
the Note.
 
 
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ARTICLE III.

 
CONDITIONS PRECEDENT
 
Section 3.1                      Conditions Precedent to Closing.  The
obligation of Lender to make the Loan hereunder is subject to the fulfillment by
Borrower or waiver by Lender of the conditions precedent set forth in Section
3.1 of the Building Loan Agreement no later than the Closing Date.
 
ARTICLE IV.
 
REPRESENTATIONS AND WARRANTIES
 
Section 4.1                      Borrower Representations. The representations
and warranties of Borrower set forth in Section 4.1 of the Building Loan
Agreement are incorporated herein by reference as if fully set forth herein and
remade by Borrower.
 
Section 4.2                      Survival of Representations.  Borrower agrees
that all of the representations and warranties of Borrower set forth in Section
4.1 hereof and elsewhere in this Agreement and in the other Loan Documents shall
survive for so long as any amount remains owing to Lender under this Agreement
or any of the other Loan Documents by Borrower.  All representations,
warranties, covenants and agreements made in this Agreement or in the other Loan
Documents by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.
 
ARTICLE V.
 
BORROWER COVENANTS
 
Section 5.1                      Affirmative Covenants.  The affirmative
covenants of Borrower set forth in Section 5.1 of the Building Loan Agreement
are incorporated herein by reference as if fully set forth herein and remade by
Borrower.
 
Section 5.2                      Negative Covenants.  The negative covenants of
Borrower set forth in Section 5.2 of the Building Loan Agreement are
incorporated herein by reference as if fully set forth herein and remade by
Borrower.
 
 
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ARTICLE VI.
 
INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS
 
Section 6.1                      Insurance.  Borrower, at its sole cost and
expense, shall obtain and maintain, or cause to be maintained, insurance
policies necessary to satisfy the requirements of Section 6.1 of the Building
Loan Agreement.
 
Section 6.2                      Casualty and Condemnation. Section 6.2 of the
Building Loan Agreement is incorporated herein by reference as if fully set
forth herein.
 
Section 6.3                      Application of Net Proceeds.  Section 6.3 of
the Building Loan Agreement is incorporated herein by reference as if fully set
forth herein.
 
ARTICLE VII.
 
RESERVE FUNDS
 
Section 7.1                      Reserve Funds.  Borrower shall establish such
accounts and make such deposits as are required by Article VII of the Building
Loan Agreement.  The provisions of Article VII of the Building Loan Agreement
are incorporated herein by reference as if fully set forth herein.
 
Section 7.2                      Other Loan Documents.  Borrower’s obligations
under this Article VII shall be suspended for so long as sufficient amounts are
on deposit and reserved as required by the Building Loan Agreement.
 
Section 7.3                      Reserve Funds, Generally.  Borrower grants to
Lender a first-priority perfected security interest in each of the Reserve Funds
and any and all monies now or hereafter deposited in each Reserve Fund as
additional security for payment of the Debt.  Until expended or applied in
accordance herewith, the Reserve Funds shall constitute additional security for
the Debt.  Upon the occurrence of an Event of Default, Lender may, in addition
to any and all other rights and remedies available to Lender, apply any sums
then present in any or all of the Reserve Funds to the payment of the Debt in
any order in its sole discretion.  The Reserve Funds shall not constitute trust
funds and may be commingled with other monies held by Lender.  All interest on a
Reserve Fund shall not be added to or become a part thereof and shall be the
sole property of and shall be paid to Lender.  Borrower shall be responsible for
payment of any federal, state or local income or other tax applicable to the
interest earned on the Reserve Funds credited or paid to Borrower.  Borrower
shall not, without obtaining the prior written consent of Lender, further
pledge, assign or grant any security interest in any Reserve Fund or the monies
deposited therein or permit any lien or encumbrance to attach thereto, or any
levy to be made thereon, or any UCC-1 Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto.  Lender shall not
be liable for any loss sustained on the investment of any funds constituting the
Reserve Funds.  Borrower shall indemnify Lender and hold Lender harmless from
and against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys fees and expenses) arising from or in any way connected
with the Reserve Funds or the performance of the obligations for which the
Reserve Funds were established.  Borrower shall assign to Lender all rights and
claims Borrower may have against all persons or entities supplying labor,
materials or other services which are to be paid from or secured by the Reserve
Funds; provided, however, that Lender may not pursue any such right or claim
unless an Event of Default has occurred and remains uncured.
 
 
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ARTICLE VIII.
 
DEFAULTS
 
Section 8.1                      Event of Default.  (a)  Each of the following
events shall constitute an event of default hereunder (an “Event of Default”):
 
(i)           if any portion of the Debt is not paid within five (5) days of the
date when due (except that Borrower shall not be afforded such 5-day cure period
for the portion of the Debt due and payable on the Maturity Date);
 
(ii)           if any of the Taxes (other than Taxes being contested pursuant to
Section 5.1.2 of this Agreement) are not paid when the same are due and payable
or Other Charges are not paid within five (5) days after Borrower receives
notice of same;
 
(iii)           if the Policies are not kept in full force and effect, or if
certified copies of the Policies are not delivered to Lender upon request;
 
(iv)           if Borrower Transfers or otherwise encumbers any portion of the
Property without Lender’s prior written consent in violation of the provisions
of this Agreement or the Mortgage;
 
(v)           if any material representation or warranty made by Borrower or
Guarantor herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished to
Lender shall have been false or misleading in any material respect as of the
date the representation or warranty was made;
 
(vi)           if Borrower, Mezzanine Borrower, Guarantor or any other guarantor
under any guaranty issued in connection with the Loan shall make an assignment
for the benefit of creditors;
 
(vii)           if a receiver, liquidator or trustee shall be appointed for
Borrower, Mezzanine Borrower, Guarantor or any other guarantor under any
guarantee issued in connection with the Loan or if Borrower, Mezzanine Borrower,
Guarantor or such other guarantor shall be adjudicated a bankrupt or insolvent,
or if any petition for bankruptcy, reorganization or arrangement pursuant to
federal bankruptcy law, or any similar federal or state law, shall be filed by
or against, consented to, or acquiesced in by, Borrower, Mezzanine Borrower,
Guarantor or such other guarantor, or if any proceeding for the dissolution or
liquidation of Borrower, Mezzanine Borrower, Guarantor or such other guarantor
shall be instituted; provided, however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by Borrower,
Mezzanine Borrower, Guarantor or such other guarantor, upon the same not being
discharged, stayed or dismissed within ninety (90) days;
 
 
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(viii)           if Borrower attempts to assign its rights under this Agreement
or any of the other Loan Documents or any interest herein or therein in
contravention of the Loan Documents;
 
(ix)           if Borrower breaches any covenant contained in Section 4.1.30;
 
(x)           with respect to any term, covenant or provision set forth herein
which specifically contains a notice requirement or grace period, if Borrower
shall be in default under such term, covenant or condition after the giving of
such notice or the expiration of such grace period;
 
(xi)           if any of the assumptions contained in the Insolvency Opinion
delivered to Lender in connection with the Loan, or in any Additional Insolvency
Opinion delivered subsequent to the closing of the Loan, is or shall become
untrue in any material respect;
 
(xii)           if Borrower fails to pay the Administration Fee, or any portion
or installment thereof, within five (5) days of the date when due;
 
(xiii)           If Borrower fails to deposit with Lender the cash deposit or
Letter of Credit required in accordance with Section 2.12.2 hereof;
 
(xiv)           if Borrower fails to materially comply with the Construction
Schedule;
 
(xv)           if the Completion of the Improvements has not occurred on or
prior to the Required Completion Date, subject to Force Majeure or if Lender or
the Construction Consultant determines that Completion of the Improvements
cannot occur on or prior to the Required Completion Date;
 
(xvi)           if any voucher or invoice is fraudulently submitted by Borrower
or in connection with any Advance for services performed or for materials used
in or furnished for the Property;
 
(xvii)           if there is any cessation at any time in construction of the
Project Improvements for more than twenty (20) consecutive Business Days, other
than as a result of Force Majeure;
 
(xviii)           if Borrower expressly confesses in writing to Lender its
inability to continue or complete construction of the Project Improvements in
accordance with this Agreement;
 
 
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(xix)           if Lender, the Construction Consultant or their representatives
are not permitted at all reasonable times upon not less than three (3) Business
Days notice to enter upon the Property, inspect the Improvements and the
construction thereof and all materials, fixtures and articles used or to be used
in the construction and to examine all the Plans and Specifications, or if
Borrower shall fail to furnish to Lender or its authorized representative, when
requested upon not less than five (5) Business Days notice, copies of the Plans
and Specifications;
 
(xx)           if a material adverse change in Borrower’s financial condition
shall occur which would, in Lender’s reasonable determination, materially and
adversely affect Borrower’s ability to perform its obligations under this
Agreement or any other document evidencing or securing the Loan beyond any
applicable notice and grace periods expressly set forth in the Loan Documents;
 
(xxi)           if the conditions precedent to the Final Advance have not been
satisfied on or prior to the Required Completion Date;
 
(xxii)           If the Guarantor fails to maintain the Required Liquidity and
the Required Net Worth covenants specified in the Guaranty of Completion or if
the Guarantor shall default under the Guaranty of Completion or the Guaranty of
Recourse Carveouts;
 
(xxiii)           if a material default has occurred and continues beyond any
applicable cure period under the Management Agreement (or any Replacement
Management Agreement) and if such default permits the Manager thereunder to
terminate or cancel the Management Agreement (or any Replacement Management
Agreement);
 
(xxiv)           if Borrower shall continue to be in Default under any of the
terms, covenants or conditions of Section 9.1 hereof, or fails to cooperate with
Lender in connection with a Securitization pursuant to the provisions of Section
9.1 hereof, in either case for three (3) Business Days after notice to Borrower
from Lender;
 
(xxv)           if an Event of Default (as defined in the Building Loan
Agreement) shall have occurred;
 
(xxvi)           if there shall be default by Borrower or Guarantor under any of
the other Loan Documents, beyond applicable cure periods, if any, contained in
such documents, whether as to Borrower, Guarantor or the Property, or if any
other such event shall occur or condition shall exist, if the effect of such
other default, event or condition is to accelerate the maturity of all or any
portion of the Debt or to permit Lender to accelerate the maturity of all or any
portion of the Debt;
 
(xxvii)             if (A) a breach or default by Borrower under any condition
or obligation contained in the Ground Lease shall occur, (B) there occurs any
event or condition that gives the Ground Lessor under the Ground Lease a right
to terminate or cancel the Ground Lease, (C) the Ground Lease shall be
surrendered or the Ground Lease shall be terminated or cancelled for any reason
or under any circumstances whatsoever, or (D) any of the terms, covenants or
conditions of the Ground Lease shall in any manner be modified, changed,
supplemented, altered, or amended without the prior written consent of Lender;
 
 
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(xxviii)             if (A) a breach or default by Borrower or Storage Facility
Tenant under any condition or obligation contained in the Storage Facility
Master Lease shall occur, (B) there occurs any event or condition that gives the
Borrower or the Storage Facility Tenant under the Storage Facility Master Lease
a right to terminate or cancel the Storage Facility Master Lease, (C) the
Storage Facility Master Lease shall be surrendered or the Storage Facility
Master Lease shall be terminated or cancelled for any reason or under any
circumstances whatsoever, except as specifically permitted herein, or (D) any of
the terms, covenants or conditions of the Storage Facility Master Lease shall in
any manner be modified, changed, supplemented, altered, or amended without the
prior written consent of Lender;
 
(xxix)           if Guarantor or Storage Facility Tenant shall dissolve or cease
to exist during the term of the Loan, except in compliance with the provisions
of Section 5.2.15 or Section 5.1,44(e) hereof, respectively;
 
(xxx)           if the Initial Advance Conditions are not satisfied by the
Required Initial Advance Date; or
 
(xxxi)           if Borrower shall continue to be in Default under any of the
other terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xxx) above, for twenty (20) days after notice to Borrower
from Lender, in the case of any Default which can be cured by the payment of a
sum of money, or for thirty (30) days after notice from Lender in the case of
any other Default; provided, however, that if such non-monetary Default is
susceptible of cure but cannot reasonably be cured within such thirty (30) day
period and provided further that Borrower shall have commenced to cure such
Default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for Borrower in the exercise
of due diligence to cure such Default, such additional period not to exceed
sixty (60) days.
 
(b)           Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vi), (vii) or (viii) above) and at any time
thereafter, in addition to any other rights or remedies available to it pursuant
to this Agreement and the other Loan Documents or at law or in equity, Lender
may take such action, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and the Property, including,
without limitation, declaring the Debt to be immediately due and payable, and
Lender may enforce or avail itself of any or all rights or remedies provided in
the Loan Documents against Borrower and any or all of the Property, including,
without limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in clauses (vi), (vii) or (viii) above, the
Debt and Other Obligations of Borrower hereunder and under the other Loan
Documents shall immediately and automatically become due and payable, without
notice or demand, and Borrower hereby expressly waives any such notice or
demand, anything contained herein or in any other Loan Document to the contrary
notwithstanding.
 
 
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Section 8.2                      Remedies.
 
(a)           Upon the occurrence of an Event of Default, all or any one or more
of the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time, whether or not all or any of the
Debt shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to all or any
part of the Property.  Any such actions taken by Lender shall be cumulative and
concurrent and may be pursued independently, singularly, successively, together
or otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan
Documents.  Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing (i) Lender is not subject to any “one
action” or “election of remedies” law or rule, and (ii) all liens and other
rights, remedies or privileges provided to Lender shall remain in full force and
effect until Lender has exhausted all of its remedies against the Property and
the Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
 
(b)           With respect to Borrower and the Property, nothing contained
herein or in any other Loan Document shall be construed as requiring Lender to
resort to the Property for the satisfaction of any of the Debt in any preference
or priority, and Lender may seek satisfaction out of the Property, or any part
thereof, in its absolute discretion in respect of the Debt.  In addition, Lender
shall have the right from time to time to partially foreclose the Mortgage in
any manner and for any amounts secured by the Mortgage then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following circumstances:  (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose the Mortgage to recover such
delinquent payments or (ii) in the event Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Lender may foreclose the
Mortgage to recover so much of the principal balance of the Loan as Lender may
accelerate and such other sums secured by the Mortgage as Lender may
elect.  Notwithstanding one or more partial foreclosures, the Property shall
remain subject to the Mortgage to secure payment of sums secured by the Mortgage
and not previously recovered.
 
(c)           Lender shall have the right from time to time to sever the Note
and the other Loan Documents into one or more separate notes, mortgages and
other security documents (the “Severed Loan Documents”) in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder.  Borrower shall execute
and deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender.  Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) Business
Days after notice has been given to Borrower by Lender of Lender’s intent to
exercise its rights under such power.  Borrower shall be obligated to pay any
costs or expenses incurred in connection with the preparation, execution,
recording or filing of the Severed Loan Documents and the Severed Loan Documents
shall not contain any representations, warranties or covenants not contained in
the Loan Documents and any such representations and warranties contained in the
Severed Loan Documents will be given by Borrower only as of the Closing Date.
 
 
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Section 8.3                      Remedies Cumulative; Waivers.  The rights,
powers and remedies of Lender under this Agreement shall be cumulative and not
exclusive of any other right, power or remedy which Lender may have against
Borrower pursuant to this Agreement or the other Loan Documents, or existing at
law or in equity or otherwise.  Lender’s rights, powers and remedies may be
pursued singularly, concurrently or otherwise, at such time and in such order as
Lender may determine in Lender’s sole discretion.  No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient.  A waiver of one Default or Event of
Default with respect to Borrower shall not be construed to be a waiver of any
subsequent Default or Event of Default by Borrower or to impair any remedy,
right or power consequent thereon.
 
ARTICLE IX.
 
SPECIAL PROVISIONS
 
Article 9 of the Building Loan Agreement is incorporated herein by reference as
if fully set forth herein.

ARTICLE X.
 
MISCELLANEOUS
 
Section 10.1                      Survival.  This Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Lender of the Loan and the
execution and delivery to Lender of the Note, and shall continue in full force
and effect so long as all or any of the Debt is outstanding and unpaid unless a
longer period is expressly set forth herein or in the other Loan
Documents.  Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the legal representatives, successors
and assigns of such party.  All covenants, promises and agreements in this
Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.
 
 
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Section 10.2                      Lender’s Discretion.  Whenever pursuant to
this Agreement, Lender exercises any right given to it to approve or disapprove,
or any arrangement or term is to be satisfactory to Lender, the decision of
Lender to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.
 
Section 10.3                      Governing Law.
 
(A)           THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN
WAS MADE BY LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER
LOAN DOCUMENTS AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,
AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER.  TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER
HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW
OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
 
 
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ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT LENDER’S OPTION
BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF
NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING.  BORROWER DOES HEREBY DESIGNATE AND APPOINT:
 

 
National Registered Agents, Inc.
   
875 Avenue of the Americas, Suite 501
   
New York, New York  10001
 

 
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
 
Section 10.4                      Modification, Waiver in Writing.  No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, or of the Note, or of any other Loan Document, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in a writing signed by the party against whom
enforcement is sought, and then such waiver or consent shall be effective only
in the specific instance, and for the purpose, for which given.  Except as
otherwise expressly provided herein, no notice to, or demand on Borrower, shall
entitle Borrower to any other or future notice or demand in the same, similar or
other circumstances.
 
Section 10.5                      Delay Not a Waiver.  Neither any failure nor
any delay on the part of Lender in insisting upon strict performance of any
term, condition, covenant or agreement, or exercising any right, power, remedy
or privilege hereunder, or under the Note or under any other Loan Document, or
any other instrument given as security therefor, shall operate as or constitute
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege.  In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement, the Note or any
other Loan Document, Lender shall not be deemed to have waived any right either
to require prompt payment when due of all other amounts due under this
Agreement, the Note or the other Loan Documents, or to declare a default for
failure to effect prompt payment of any such other amount.
 
 
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Section 10.6                      Notices.  All notices, consents, approvals and
requests required or permitted hereunder or under any other Loan Document shall
be given in writing and shall be effective for all purposes if hand delivered or
sent by (a) certified or registered United States mail, postage prepaid, return
receipt requested or (b) expedited prepaid delivery service, either commercial
or United States Postal Service, with proof of attempted delivery, and by
telecopier (with answer back acknowledged), addressed as follows (or at such
other address and Person as shall be designated from time to time by any party
hereto, as the case may be, in a written notice to the other parties hereto in
the manner provided for in this Section):
 
If to Lender:
Bear Stearns Commercial Mortgage, Inc.
 
383 Madison Avenue
 
New York, New York  10179
 
Attention:  J. Christopher Hoeffel
 
Facsimile No.:  (212) 272-7047
   
with a copy to:
Kelley Drye & Warren LLP
 
101 Park Avenue
 
New York, New York 10178
 
Attention:  Paul A. Keenan, Esq.
 
Facsimile No.: (212) 808-7897
   
If to Borrower:
P/A-Acadia Pelham Manor, LLC
 
c/o Acadia Realty Trust
 
1311 Mamaroneck Avenue, Suite 260
 
White Plains, New York  10605
 
Attention:  Robert Masters, Esq., General Counsel
 
Facsimile No.: (914) 288-2162
   
If to MERS:
MERS Commercial
 
P.O. Box 2300
 
Flint, Michigan 48501-2300

 
A notice shall be deemed to have been given:  in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
Business Day; or in the case of telecopy, upon sender’s receipt of a
machine-generated confirmation of successful transmission after advice by
telephone to recipient that a telecopy notice is forthcoming.
 
Section 10.7                      Trial by Jury.
 
BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS,
OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE.  LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
 
 
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Section 10.8                      Headings.  The Article and/or Section headings
and the Table of Contents in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose.
 
Section 10.9                      Severability.  Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
 
Section 10.10                                Preferences.  Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower
hereunder.  To the extent Borrower makes a payment or payments to Lender, which
payment or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.
 
Section 10.11                                Waiver of Notice.  Borrower shall
not be entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents
specifically and expressly provide for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not, pursuant
to applicable Legal Requirements, permitted to waive the giving of
notice.  Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.
 
Section 10.12                                Remedies of Borrower.  In the event
that a claim or adjudication is made that Lender or its agents have acted
unreasonably or unreasonably delayed acting in any case where by law or under
this Agreement or the other Loan Documents, Lender or such agent, as the case
may be, has an obligation to act reasonably or promptly, Borrower agrees that
neither Lender nor its agents shall be liable for any monetary damages, and
Borrower’s sole remedies shall be limited to commencing an action seeking
injunctive relief or declaratory judgment.  The parties hereto agree that any
action or proceeding to determine whether Lender has acted reasonably shall be
determined by an action seeking declaratory judgment.
 
 
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Section 10.13                                Expenses; Indemnity.  (1)  Borrower
covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender
upon receipt of written notice from Lender for all reasonable costs and expenses
(including reasonable attorneys’ fees and disbursements) incurred by Lender in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including without limitation any opinions requested by
Lender as to any legal matters arising under this Agreement or the other Loan
Documents with respect to the Property); (ii) Borrower’s ongoing performance of
and compliance with Borrower’s respective agreements and covenants contained in
this Agreement and the other Loan Documents on its part to be performed or
complied with after the Closing Date, including, without limitation, confirming
compliance with environmental and insurance requirements; (iii) Lender’s ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date; (iv) the negotiation, preparation, execution,
delivery and administration of any consents, amendments, waivers or other
modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Lender; (v) securing Borrower’s compliance
with any requests made pursuant to the provisions of this Agreement; (vi) the
filing and recording fees and expenses, title insurance and reasonable fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred in creating and perfecting the Lien in favor of
Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Property, or any other security given for the Loan; and (viii) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property (including
any fees incurred by Servicer in connection with the transfer of the Loan to a
special servicer prior to a Default or Event of Default) or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the
payment of any such costs and expenses to the extent the same arise by reason of
the gross negligence, illegal acts, fraud or willful misconduct of Lender.  Any
cost and expenses due and payable to Lender may be paid from any amounts in the
Clearing Account or Cash Management Account, as applicable.
 
(a)           Borrower shall indemnify, defend and hold harmless Lender from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified Liabilities”); provided, however, that Borrower
shall not have any obligation to Lender hereunder to the extent that such
Indemnified Liabilities arise from the gross negligence, illegal acts, fraud or
willful misconduct of Lender.  To the extent that the undertaking to indemnify,
defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.
 
 
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(b)           Borrower covenants and agrees to pay for or, if Borrower fails to
pay, to reimburse Lender for, any fees and expenses incurred by any Rating
Agency in connection with any consent, approval, waiver or confirmation obtained
from such Rating Agency pursuant to the terms and conditions of this Agreement
or any other Loan Document and Lender shall be entitled to require payment of
such fees and expenses as a condition precedent to the obtaining of any such
consent, approval, waiver or confirmation.
 
Section 10.14                                Schedules and Exhibits
Incorporated.  The Schedules and Exhibits annexed to the Building Loan Agreement
are hereby incorporated herein as a part of this Agreement with the same effect
as if set forth in the body hereof.
 
Section 10.15                                Offsets, Counterclaims and
Defenses.  Any assignee of Lender’s interest in and to this Agreement, the Note
and the other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.
 
Section 10.16                                No Joint Venture or Partnership; No
Third Party Beneficiaries.
 
(a)           Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender.  Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Property other than that of
mortgagee, beneficiary or lender.
 
(b)           This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein.  All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.
 
Section 10.17                                Publicity.  All news releases,
publicity or advertising by Borrower or its Affiliates through any media
intended to reach the general public which refers to the Loan Documents or the
financing evidenced by the Loan Documents, to Lender, BSCMI, or any of their
Affiliates shall be subject to the prior written approval of Lender.
 
 
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Section 10.18                                Waiver of Marshalling of Assets. 
To the fullest extent permitted by law, Borrower, for itself and its successors
and assigns, waives all rights to a marshalling of the assets of Borrower,
Borrower’s partners and others with interests in Borrower, and of the Property,
and agrees not to assert any right under any laws pertaining to the marshalling
of assets, the sale in inverse order of alienation, homestead exemption, the
administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a sale
of the Property for the collection of the Debt without any prior or different
resort for collection or of the right of Lender to the payment of the Debt out
of the net proceeds of the Property in preference to every other claimant
whatsoever.
 
Section 10.19                                Waiver of Counterclaim.  Borrower
hereby waives the right to assert a counterclaim, other than a compulsory
counterclaim, in any action or proceeding brought against it by Lender or its
agents.
 
Section 10.20                                Identical Obligations; Conflict;
Construction of Documents; Reliance.  To the extent that Borrower has identical
obligations under this Agreement and under any of the other Loan Agreements,
performance by Borrower of such obligations under this Agreement or any of the
other Loan Agreements shall be deemed performance by Borrower, as applicable,
under all such Loan Agreements and hereunder of such obligations.  In the event
of any conflict between the provisions of this Agreement and any of the other
Loan Documents, the provisions of this Agreement shall control.  The parties
hereto acknowledge that they were represented by competent counsel in connection
with the negotiation, drafting and execution of the Loan Documents and that such
Loan Documents shall not be subject to the principle of construing their meaning
against the party which drafted same.  Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender.  Lender shall not be subject to any limitation whatsoever
in the exercise of any rights or remedies available to it under any of the Loan
Documents or any other agreements or instruments which govern the Loan by virtue
of the ownership by it or any parent, subsidiary or Affiliate of Lender of any
equity interest any of them may acquire in Borrower, and Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Lender’s exercise of any such rights or
remedies.  Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.
 
Section 10.21                                Brokers and Financial Advisors. 
Borrower hereby represents that it has dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement.  Borrower hereby agrees to
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein.  The provisions of this Section 10.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.
 
 
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Section 10.22                                Prior Agreements.  This Agreement
and the other Loan Documents contain the entire agreement of the parties hereto
and thereto in respect of the transactions contemplated hereby and thereby, and
all prior agreements among or between such parties, whether oral or written,
including, without limitation, the Commitment Letter dated August 9, 2007
between Borrower and Lender are superseded by the terms of this Agreement and
the other Loan Documents.
 
Section 10.23                                Joint and Several Liability.  If
Borrower consists of more than one (1) Person the obligations and liabilities of
each Person shall be joint and several.
 
Section 10.24                                Certain Additional Rights of Lender
(VCOC).  Notwithstanding anything to the contrary contained in this Agreement,
Lender shall have:
 
(a)           the right to routinely consult with and advise Borrower’s
management regarding the significant business activities and business and
financial developments of Borrower; provided, however, that such consultations
shall not include discussions of environmental compliance programs or disposal
of hazardous substances.  Consultation meetings should occur on a regular basis
(no less frequently than quarterly) with Lender having the right to call special
meetings at any reasonable times and upon reasonable advance notice;
 
(b)           the right, in accordance with the terms of this Agreement, to
examine the books and records of Borrower at any reasonable times upon
reasonable notice;
 
(c)           the right, in accordance with the terms of this Agreement,
including, without limitation, Section 5.1.11 hereof, to receive monthly,
quarterly and year end financial reports, including balance sheets, statements
of income, shareholder’s equity and cash flow, a management report and schedules
of outstanding indebtedness; and
 
(d)           the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to approve any acquisition by
Borrower of any other significant property (other than personal property
required for the day to day operation of the Property and/or construction of the
Project Improvements).
 
The rights described above in this Section 10.24 may be exercised by any entity
which owns and controls, directly or indirectly, substantially all of the
interests in Lender.
 
Section 10.25                                MERS.  Mortgage Electronic
Registration Systems, Inc., a Delaware corporation (“MERS”), serves as mortgagee
of record and secured party solely as nominee, in an administrative capacity,
for Lender and only holds legal title to the interests granted, assigned, and
transferred in the Mortgage and the Assignments of Leases.  MERS shall at all
times comply with the instructions of Lender.  If necessary to comply with law
or custom, MERS (for the benefit of Lender) may be directed by Lender to
exercise any or all of those interests, including without limitation, the right
to foreclose and sell the Property, and take any action required of Lender,
including without limitation, a release, discharge or reconveyance of the
Mortgage.  Subject to the foregoing, all references in the Loan Documents to
“Mortgagee” shall include Lender and its successors and assigns.  The
relationship of Mortgagor and Lender under the Mortgage and the other Loan
Documents is, and shall at all times remain, solely that of borrower and lender
(the role of MERS thereunder being solely that of nominee as set forth above and
not that of a lender); and Mortgagee neither undertakes nor assumes any
responsibility or duty to Borrower or to any other Person with respect to the
Property.
 
 
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[SIGNATURE PAGE TO PROJECT LOAN AGREEMENT]

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

 
BORROWER
         
P/A-ACADIA PELHAM MANOR, LLC,
 
a Delaware limited liability company
         
By: /s/ Robert Masters
 
Name: Robert Masters
 
Title:    Senior Vice President
         
LENDER
         
BEAR STEARNS COMMERCIAL
MORTGAGE, INC., a New York corporation
         
By: /s/ Michael A. Forastiere
 
Name: Michael A. Forastiere
 
Title:   Authorized Signatory Managing Director