Document:

exv10w72

 

Exhibit 10.72

BUILDING 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

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION	 	 	1	 
	 

	 	Section 1.1
	 	 Definitions
	 	 	1	 
	 

	 	Section 1.2
	 	 Principles of Construction
	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II. GENERAL TERMS	 	 	36	 
	 

	 	Section 2.1
	 	 Loan Commitment; Disbursement to Borrower
	 	 	36	 
	 

	 	Section 2.2
	 	 Interest Rate
	 	 	40	 
	 

	 	Section 2.3
	 	 Loan Payment
	 	 	41	 
	 

	 	Section 2.4
	 	 Prepayments
	 	 	42	 
	 

	 	Section 2.5
	 	 Defeasance
	 	 	43	 
	 

	 	Section 2.6
	 	 Release of Property
	 	 	46	 
	 

	 	Section 2.7
	 	 Clearing Account/Cash Management
	 	 	46	 
	 

	 	Section 2.8
	 	 Intentionally Omitted
	 	 	49	 
	 

	 	Section 2.9
	 	 Payments Not Conditional
	 	 	49	 
	 

	 	Section 2.10
	 	 Initial Advance
	 	 	49	 
	 

	 	Section 2.11
	 	 Construction Advances
	 	 	53	 
	 

	 	Section 2.12
	 	 Final Advance
	 	 	56	 
	 

	 	Section 2.13
	 	 No Reliance
	 	 	59	 
	 

	 	Section 2.14
	 	 Method of Disbursement of Loan Proceeds
	 	 	59	 
	 

	 	Section 2.15
	 	 Plan Review Process
	 	 	61	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III. CONDITIONS PRECEDENT	 	 	62	 
	 

	 	Section 3.1
	 	 Conditions Precedent to Closing
	 	 	62	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES	 	 	66	 
	 

	 	Section 4.1
	 	 Borrower Representations
	 	 	66	 
	 

	 	Section 4.2
	 	 Survival of Representations
	 	 	78	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V. BORROWER COVENANTS	 	 	79	 
	 

	 	Section 5.1
	 	 Affirmative Covenants
	 	 	79	 
	 

	 	Section 5.2
	 	 Negative Covenants
	 	 	100	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS	 	 	112	 
	 

	 	Section 6.1
	 	 Insurance
	 	 	112	 
	 

	 	Section 6.2
	 	 Casualty and Condemnation
	 	 	118	 
	 

	 	Section 6.3
	 	 Application of Net Proceeds
	 	 	124	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII. RESERVE FUNDS	 	 	124	 
	 

	 	Section 7.1
	 	 Tax and Insurance Escrow Fund
	 	 	124	 
	 

	 	Section 7.2
	 	 Interest Reserve
	 	 	125	 
	 

	 	Section 7.3
	 	 Replacements and Replacement Reserve
	 	 	126	 
	 

	 	Section 7.4
	 	 Punch List and Deferred Maintenance Reserve
	 	 	130	 
	 

	 	Section 7.5
	 	 Intentionally Omitted
	 	 	131	 
	 

	 	Section 7.6
	 	 Excess Cash Flow
	 	 	131	 

 

 

	 	 	 	 	 	 	 	 	 
	 

	 	Section 7.7
	 	 Operating Reserve
	 	 	132	 
	 

	 	Section 7.8
	 	 Rollover Reserve
	 	 	132	 
	 

	 	Section 7.9
	 	 Ground Lease Reserve Fund
	 	 	133	 
	 

	 	Section 7.10
	 	Storage Facility Master Lease Reserve
	 	 	133	 
	 

	 	Section 7.11
	 	 Reserve Funds, Generally
	 	 	134	 
	 

	 	Section 7.12
	 	 Letter of Credit Rights
	 	 	135	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII. DEFAULTS	 	 	135	 
	 

	 	Section 8.1
	 	 Event of Default
	 	 	135	 
	 

	 	Section 8.2
	 	 Remedies
	 	 	139	 
	 

	 	Section 8.3
	 	 Remedies Cumulative; Waivers
	 	 	140	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX. SPECIAL PROVISIONS	 	 	140	 
	 

	 	Section 9.1
	 	 Sale of Notes and Securitization
	 	 	140	 
	 

	 	Section 9.2
	 	 Securitization Indemnification
	 	 	143	 
	 

	 	Section 9.3
	 	 Exculpation
	 	 	146	 
	 

	 	Section 9.4
	 	 Intentionally Omitted
	 	 	148	 
	 

	 	Section 9.5
	 	 Servicer
	 	 	148	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X. MISCELLANEOUS	 	 	148	 
	 

	 	Section 10.1
	 	 Survival
	 	 	148	 
	 

	 	Section 10.2
	 	 Lender’s Discretion
	 	 	149	 
	 

	 	Section 10.3
	 	 Governing Law
	 	 	149	 
	 

	 	Section 10.4
	 	 Modification, Waiver in Writing
	 	 	150	 
	 

	 	Section 10.5
	 	 Delay Not a Waiver
	 	 	150	 
	 

	 	Section 10.6
	 	 Notices
	 	 	151	 
	 

	 	Section 10.7
	 	 Trial by Jury
	 	 	151	 
	 

	 	Section 10.8
	 	 Headings
	 	 	152	 
	 

	 	Section 10.9
	 	 Severability
	 	 	152	 
	 

	 	Section 10.10
	 	 Preferences
	 	 	152	 
	 

	 	Section 10.11
	 	 Waiver of Notice
	 	 	152	 
	 

	 	Section 10.12
	 	 Remedies of Borrower
	 	 	152	 
	 

	 	Section 10.13
	 	 Expenses; Indemnity
	 	 	152	 
	 

	 	Section 10.14
	 	 Schedules and Exhibits Incorporated
	 	 	154	 
	 

	 	Section 10.15
	 	 Offsets, Counterclaims and Defenses
	 	 	154	 
	 

	 	Section 10.16
	 	 No Joint Venture or Partnership; No Third Party Beneficiaries
	 	 	154	 
	 

	 	Section 10.17
	 	 Publicity
	 	 	154	 
	 

	 	Section 10.18
	 	 Waiver of Marshalling of Assets
	 	 	155	 
	 

	 	Section 10.19
	 	 Waiver of Counterclaim
	 	 	155	 
	 

	 	Section 10.20
	 	 Conflict; Construction of Documents; Reliance
	 	 	155	 
	 

	 	Section 10.21
	 	 Brokers and Financial Advisors
	 	 	155	 
	 

	 	Section 10.22
	 	 Prior Agreements
	 	 	155	 
	 

	 	Section 10.23
	 	 Joint and Several Liability
	 	 	156	 
	 

	 	Section 10.24
	 	 Certain Additional Rights of Lender (VCOC)
	 	 	156	 
	 

	 	Section 10.25
	 	 MERS
	 	 	156	 

ii

 

SCHEDULES

	 	 	 	 	 
	Schedule I

	 	—
	 	Organizational Chart of Borrower
	Schedule II

	 	—
	 	Development Budget
	Schedule III

	 	—
	 	Plans and Specifications
	Schedule IV

	 	—
	 	Construction Schedule
	Schedule V

	 	—
	 	Rent Roll

EXHIBITS

	 	 	 
	Exhibit A

	 	Legal Description of the Land
	Exhibit B

	 	Intentionally Omitted
	Exhibit C

	 	Form of Datedown Endorsement
	Exhibit D

	 	Section 22 Affidavit
	Exhibit E

	 	Affirmation of Payment (AIA Form G706)
	Exhibit F

	 	Architect’s Certificate
	Exhibit G

	 	General Contractor’s Certificate
	Exhibit H

	 	Form of Performance Letter
	Exhibit I

	 	Anticipated Cost Report Form
	Exhibit J

	 	Form of Lien Waivers
	Exhibit K

	 	Form of Insolvency Opinion —To Be Delivered Upon Completion
	Exhibit L

	 	Form of Borrower’s Requisition
	Exhibit M

	 	Application and Certificate for Payment (AIA Form G702)

iii

 

BUILDING LOAN AGREEMENT

          THIS BUILDING 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 “Building
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 at c/o Acadia Realty Trust, 1311 Mamaroneck Avenue — Suite 260, White Plains, New York
10605, as Borrower (“Borrower”).

WITNESSETH :

          WHEREAS, Borrower desires to obtain the Building Loan (as hereinafter defined) from Lender;
and

          WHEREAS, Lender is willing to make the Building 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:

          “ADA” shall mean the Americans with Disabilities Act of 1992, as amended from time to time.

          “Additional Insolvency Opinion” shall have the meaning set forth in Section 4.1.30(c).

          “Additional Interest Reserve Deposit” shall have the meaning set forth in Section
5.1.28 hereof.

          “Additional Mezzanine Borrower” shall have the meaning set forth in Section 5.2.14(g)
hereof.

 

 

          “Additional Mezzanine Loan” shall have the meaning set forth in Section 5.2.14 hereof.

          “Additional Mezzanine Loan Documents” shall have the meaning set forth in Section
5.2.14(f) hereof.

          “Administration Fee” shall have the meaning set forth in the Administration Fee Agreement.

          “Administration Fee Agreement” shall mean that certain Administration Fee Agreement dated as
of the date hereof between Borrower and Lender.

          “Advance” or “Advances” shall mean any disbursement of the proceeds of the Building Loan by
Lender pursuant to the terms of this Agreement.

          “Affiliate” shall mean, as to any Person, any other Person that, directly or indirectly, is in
Control of, is Controlled by or is under common Control with such Person or is a director or
officer of such Person or of an Affiliate of such Person.

          “Affiliated Manager” shall mean any Manager in which Borrower or Guarantor has, directly or
indirectly, any legal, beneficial or economic interest.

          “Affiliate Fees” shall mean collectively, any development fee, management fee, brokerage fee,
commission, distribution, reimbursement, salary, consideration sum or amount, however
characterized, payable to any Restricted Party with respect to the Property and/or the Project.

          “Affirmation of Payment” shall have the meaning as set forth in Section 2.11.5(e).

          “Aggregate Debt Service Coverage Ratio” shall have the meaning set forth in Section
5.2.14 hereof.

          “Agreement” shall mean this Building Loan Agreement, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

          “ALTA” shall mean American Land Title Association, or any successor thereto.

          “Anchor Tenant” shall mean Home Depot, Inc. or any other tenant occupying 20,000 square feet
or more of space at the Property.

          “Annual Budget” shall mean the operating budget, including all planned Capital Expenditures,
for the Property prepared by Borrower in accordance with Section 5.1.11.(e) hereof for the
applicable Fiscal Year or other period.

          “Anticipated Costs Report” shall have the meaning as set forth in Section 2.11.5(a).

2

 

          “Approved Annual Budget” shall have the meaning set forth in Section 5.1.11(e) hereof.

          “Approved Bank” shall mean a bank or other financial institution which has a minimum long term
unsecured debt rating of at least “AA” by S&P and Fitch and “Aa2” by Moody’s.

          “Architect’s Certificate” shall have the meaning as set forth in Section 2.10.10.

          “Architect’s Contract” shall mean those certain executed proposals from Borrower’s Architect
to General Contractor dated September 1, 2005 (revised September 21, 2005) and November 3, 2005,
and accepted by Borrower, as the same may be amended from time to time in compliance with the terms
hereof.

          “Assignment of Contracts” shall mean that certain Assignment of Contracts, Licenses and
Permits dated as of the date hereof from Borrower, as assignor, to Lender, as assignee.

          “Assignment of Leases” shall mean, collectively, the Building Loan Assignment of Leases and
the Project Loan Assignment of Leases.

          “Assignment of Management Agreement” shall mean, with respect to each Manager, that certain
Assignment of Management Agreement and Subordination of Management Fees, dated as of the date
hereof, among Lender, Borrower and the applicable Manager, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

          “Award” shall mean any compensation paid by any Governmental Authority in connection with a
Condemnation in respect of all or any part of the Property.

          “Bankruptcy Action” shall mean with respect to any Person (a) such Person filing a voluntary
petition under the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law; (b)
the filing of an involuntary petition against such Person under the Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, in which such Person colludes with, or otherwise
assists such Person, or causes to be solicited petitioning creditors for any involuntary petition
against such Person; (c) such Person filing an answer consenting to or otherwise acquiescing in or
joining in any involuntary petition filed against it, by any other Person under the Bankruptcy Code
or any other Federal or state bankruptcy or insolvency law; (d) such Person consenting to or
acquiescing in or joining in an application for the appointment of a custodian, receiver, trustee,
or examiner for such Person or any portion of the Property; (e) such Person making an assignment
for the benefit of creditors, or admitting, in writing or in any legal proceeding, its insolvency
or inability to pay its debts as they become due.

          “Bankruptcy
Code” shall mean Title 11 of the United States Code, 11
U.S.C. §101, et seq., as the same may be amended from time to time, and any successor statute or statutes
and all rules and regulations from time to time promulgated thereunder, and any comparable foreign
laws relating to bankruptcy, insolvency or creditors’ rights or any other Federal or state
bankruptcy or insolvency law.

3

 

          “Borrower” shall have the meaning set forth in the introductory paragraph hereto, together
with its successors and permitted assigns.

          “Borrower’s Architect” shall mean Greenberg Farrow Architects.

          “Borrower’s Requisition” shall have the meaning set forth in Section 2.14.1 hereof.

          “BSCMI” shall mean Bear Stearns Commercial Mortgage, Inc., a New York corporation, and its
successors in interest.

          “Budget Line” shall have the meaning set forth in Section 2.1.14 hereof.

          “Building Loan” shall mean the loan made by Lender to Borrower pursuant to this Agreement in
the principal amount of up to the Building Loan Amount.

          “Building Loan Amount” shall mean Twenty-Three Million Twenty-Six Thousand Nine Hundred Six
and 60/100 Dollars ($23,026,906.60).

          “Building Loan Assignment of Leases” shall mean that certain Building Loan Assignment of
Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to Lender, as assignee.

          “Building Loan Budget” shall have the meaning set forth in Section 2.1.14 hereof.

          “Building Loan Costs” shall mean all Project-Related Costs (including Hard Costs and Soft
Costs) that are Costs of the Improvements.

          “Building Loan Documents” shall mean, collectively, this Agreement, the Building Loan Note,
the Building Loan Mortgage, the Building Loan Assignment of Leases, as well as all other documents
now or hereafter executed and/or delivered with respect to the Building Loan.

          “Building Loan Earn Out Advance” shall have the meaning set forth in Section 2.12.2
hereof.

          “Building Loan Mortgage” shall mean that certain Building Loan Fee and Leasehold Mortgage,
Assignment of Leases and Rents and Security Agreement dated the date hereof, executed and delivered
by Borrower to Lender as security for the Building Loan and encumbering the Property.

          “Building Loan Note” shall mean that certain Building Loan Promissory Note, dated the date
hereof, in the principal amount of up to the Building 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.

4

 

          “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which
national banks in New York, New York, or the place of business of any Servicer are not open for
business.

          “Capital Expenditures” shall mean, for any period, the amount expended for items capitalized
under GAAP (including expenditures for building improvements or major repairs).

          “Carrying Costs” shall mean, the sum of the following costs associated with the Property for
any specified period: (a) Taxes, (b) Other Charges, (c) Insurance Premiums and (d) Operating
Expenses.

          “Cash” shall mean the legal tender of the United States of America.

          “Cash and Cash Equivalents” shall mean any one or a combination of the following: (i) Cash,
and (ii) U.S. Obligations, and (iii) an irrevocable standby Letter of Credit.

          “Cash Management Account” shall have the meaning set forth in Section 2.7.2(a) hereof.

          “Cash Management Agreement” shall mean that certain Cash Management Agreement, dated as of the
date hereof, by and among Borrower, Manager, Cash Management Bank and Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to time.

          “Cash Management Bank” shall mean Wells Fargo Bank, N.A., a national banking association, or
any successor Eligible Institution acting as Agent under the Cash Management Agreement.

          “Cash Management Conditions” shall have the meaning set forth in Section 2.7 hereof.

          “Cash Trap Event” shall mean the occurrence of any of the following: (a) an Event of Default;
(b) any Bankruptcy Action of Borrower or Mezzanine Borrower; (c) any Bankruptcy Action of Manager;
(d) on or after the last day of the Construction Term, a DSCR Trigger, or (e) on or after the
earlier of that date that an Anchor Tenant opens for business or the last day of the Construction
Term, a Go Dark Trigger .

          “Cash Trap Event Cure” shall mean:

          (a) if the Cash Trap Event is caused solely by the occurrence of:

               (i) clause (a) in the definition of “Cash Trap Event”, a cure of the Event of Default
which gave rise to the Cash Trap Event which is accepted or waived in writing by Lender, in its
sole discretion, prior to Lender exercising any of its rights, to accelerate the Loan, move to
appoint a receiver, or commence a foreclosure action;

5

 

               (ii) clause (c) in the definition of “Cash Trap Event”, either (A) if such Cash Trap
Event is as a result of the filing of an involuntary petition against Manager and not consented to
by Manager, upon the same being discharged, stayed or dismissed within thirty (30) days of such
filing and such filing (after dismissal or discharge), provided, that such dismissal or
discharge in Lender’s reasonable opinion does not adversely impact the Loan or the Property, or (B)
if Borrower replaces the Manager with a Qualified Manager pursuant to a Replacement Management
Agreement approved by Lender;

               (iii) a DSCR Trigger Event, if the Debt Service Coverage Ratio is greater than 1.05 to 1:00
based upon the trailing six (6) month period annualized as of two (2) consecutive Debt Service
Coverage Ratio Determination Dates occurring thereafter;

               (iv) a Go Dark Trigger, if the relevant Anchor Tenant subsequently is in occupancy, open for
business for one hundred twenty (120) days, and paying full contractual rent with no free rent,
credit or right of offset during the term of its Lease, as evidenced by an estoppel letter from
such Anchor Tenant in form acceptable to Lender.

          (b) provided, that, each such Cash Trap Event Cure set forth in this definition shall be
subject to the following conditions, (i) no Event of Default (other than that giving rise to the
Cash Trap Event) shall have occurred and be continuing under this Agreement or any of the other
Loan Documents, (ii) Borrower shall have notified Lender in writing of its election to cure the
respective Cash Trap Event, (iii) a Cash Trap Event Cure under clauses (a)(i) and
(a)(ii) may occur no more than 3 times during the term of the Loan, (iv) Borrower shall
have paid all of Lender’s reasonable expenses incurred in connection with such cure including,
reasonable attorney’s fees and costs; and (v) in no event shall Borrower have the right to “cure” a
Cash Trap Event occurring by reason of a Bankruptcy Action of Borrower or Mezzanine Borrower.

          “Cash Trap Period” shall mean each period commencing on the occurrence of a Cash Trap Event
and continuing until the earlier of (a) the Payment Date next occurring following the related Cash
Trap Event Cure, or (b) until payment in full of all principal and interest on the Loan and all
other amounts payable under the Loan Documents in accordance with the terms and provisions of the
Loan Documents.

          “Casualty” shall have the meaning set forth in Section 6.2 hereof.

          “Casualty Consultant” shall have the meaning set forth in Section 6.2.4(d) hereof.

          “Casualty Retainage” shall have the meaning set forth in Section 6.2.4(e) hereof.

          “Clearing Account” shall have the meaning set forth in Section 2.7 hereof.

          “Clearing Account Agreement” shall have the meaning set forth in Section 2.7.1 hereof.

          “Clearing Bank” shall have the meaning set forth in Section 2.7 hereof.

          “Closing Date” shall mean the date of this Agreement.

6

 

          “Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be further amended
from time to time, and any successor statutes thereto, and applicable U.S. Department of Treasury
regulations issued pursuant thereto in temporary or final form.

          “Completion of the Improvements” shall mean the substantial completion (i.e., completion of
the Project Improvements other than Punch List Items) of the construction and renovation of the
Project Improvements substantially in accordance with all Plans and Specifications, all Legal
Requirements, all Permitted Encumbrances and this Agreement, and that all utilities necessary to
service the Project Improvements have been connected and are in operation, such completion to be
evidenced to the reasonable satisfaction of Lender and the Construction Consultant; together with
the delivery to Lender of:

               (i) a permanent or temporary certificate(s) of occupancy for the Project Improvements and
evidence that all other Governmental Approvals have been issued and all other Legal Requirements
have been satisfied so as to allow the Project Improvements to be used and operated in accordance
with the Loan Documents and the Plans and Specifications; and

               (ii) AIA Form G704 (Certificate of Substantial Completion) completed and executed by
Borrower’s Architect certifying the substantial completion of the Project Improvements in
accordance with the Plans and Specifications.

          “Condemnation” shall mean a temporary or permanent taking by any Governmental Authority as the
result or in lieu or in anticipation of the exercise of the right of condemnation or eminent
domain, of all or any part of the Property, or any interest therein or right accruing thereto,
including any right of access thereto or any change of grade affecting the Property or any part
thereof.

          “Condemnation Proceeds” shall have the meaning set forth in Section 6.2.1 hereof.

          “Construction Advance Conditions” shall have the meaning set forth in Section 2.11
hereof.

          “Construction Consultant” shall mean Valcon Construction Consultants, Inc., or such other
Person as Lender may designate and engage as a replacement to inspect the Project Improvements and
the Property as construction progresses and consult with and to provide advice to and to render
reports to Lender, which Person may be, at Lender’s option upon notice to Borrower, either an
officer or employee of Lender or consulting architects, engineers or inspectors appointed by
Lender.

          “Construction Schedule” shall mean the construction schedule attached hereto as Schedule
IV, broken down by trade, of Borrower’s best good faith estimate of the dates of commencement
and completion of the Project Improvements certified by Borrower to Lender in final form approved
by Lender and the Construction Consultant prior to the Closing.

          “Construction Term” shall mean the period commencing on the date hereof and ending on the
first to occur of (i) the Maturity Date, whether by acceleration or otherwise, (ii) the
24th Payment Date, and (iii) the Final Advance.

7

 

          “Contingency” shall mean the contingency Line Item in the Building Loan Budget and/or Project
Loan Budget.

          “Contract” shall mean shall mean any agreement (including the General Contractor’s Agreement)
entered into by Borrower or by General Contractor, in which the Contractor or Subcontractor
thereunder agrees to provide services, labor and/or materials in connection with the Project
Improvements. All Contracts shall require that the Contractor or Subcontractor thereunder use
union labor.

          “Contractor” shall mean any contractor hired by Borrower, including, without limitation, the
General Contractor (including subsidiaries and affiliates), supplying services, labor and/or
materials in connection with the Project.

          “Control” shall mean the possession, directly or indirectly, of the power to direct or cause
the direction of management, policies or activities of a Person, whether through ownership of
voting securities, by contract or otherwise. “Controlled” and “Controlling” shall have correlative
meanings.

          “Costs of the Improvement” shall mean those items defined as an “improvement” and/or a “cost
of improvement” under Section 2 of Article 1 the Lien Law.

          “Covered Disclosure Information” shall have the meaning set forth in Section 9.2(b)
hereof.

          “Debt” shall mean the outstanding principal amount of the Building Loan set forth in, and
evidenced by, this Agreement, the Building Loan Documents and the Building Loan Note, together with
all interest accrued and unpaid thereon and all other sums due to Lender in respect of the Building
Loan under the Building Loan Note, this Agreement, the Building Loan Mortgage or any other Building
Loan Document.

          “Debt Service” shall mean, with respect to any particular period of time, the aggregate
scheduled principal and interest payments due under this Building Loan Agreement and the Building
Loan Note.

          “Debt Service Coverage Ratio” shall mean a ratio for the applicable period in which:

	 	(a)	 	the numerator is the Net Operating Income (excluding interest
on credit accounts and using annualized operating expenses for any recurring
expenses not paid monthly (e.g., Taxes and Insurance Premiums)) for such period
as set forth in the statements required hereunder, adjusted for a vacancy rate
equal to the greater of the actual vacancy rate, the market vacancy rate and an
assumed vacancy rate equal to five percent (5%), without deduction for (i)
actual management fees incurred in connection with the operation of the
Property less (A) management fees equal to the greater of (1) assumed
management fees of four percent (4%) of Gross Income from Operations or (2) the
actual management fees incurred, (B) Replacement Reserve Fund contributions
equal to $47,544 per annum; and

8

 

(C) Rollover Reserve Fund contributions equal to $187,744 per annum, and

	 	(b)	 	the denominator is the Total Debt Service for such period
assuming a thirty (30) year amortization schedule.

          “Debt Service Coverage Ratio Determination Date” shall mean the earlier of the Required
Completion Date and the date of the Final Advance and the first day of each calendar month
thereafter.

          “Default” shall mean the occurrence of any event hereunder or under any other Loan Document
which, but for the giving of notice or passage of time, or both, would be an Event of Default.

          “Default Rate” shall mean, with respect to the Loan, a rate per annum equal to the lesser of
(a) the maximum rate permitted by applicable law or (b) five percent (5%) above the Interest Rate.

          “Defeasance Date” shall have the meaning set forth in Section 2.5.1(a)(i) hereof.

          “Defeasance Deposit” shall mean an amount equal to the remaining principal amount of the Note,
the Defeasance Payment Amount, any costs and expenses incurred or to be incurred in the purchase of
U.S. Obligations necessary to meet the Scheduled Defeasance Payments and 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 agreements of Section 2.5 hereof (including,
without limitation, any fees and expenses of accountants, attorneys and the Rating Agencies
incurred in connection therewith).

          “Defeasance Event” shall have the meaning set forth in Section 2.5.1(a) hereof.

          “Defeasance Expiration Date” shall mean the date that is two (2) years from the “startup day”
within the meaning of Section 860G(a)(9) of the Code for the REMIC Trust.

          “Defeasance Payment Amount” shall mean the amount (if any) which, when added to the remaining
principal amount of the Note, will be sufficient to purchase U.S. Obligations providing the
required Scheduled Defeasance Payments.

          “Deferred Maintenance Condition” shall have the meaning set forth in Section 7.4.1.

          “Development Budget” shall have the meaning set forth in Section 2.1.14 hereof.

          “Disbursement Schedule” shall mean the schedule of the amounts of Advances hereunder and
Project Loan Advances under the Project Loan anticipated to be requisitioned by Borrower each month
during the term of the Loan, attached hereto as part of the Development Budget and in final form
approved by Lender and the Construction Consultant prior to the Closing Date.

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          “Disclosure Document” shall mean a prospectus, prospectus supplement, private placement
memorandum, or similar offering memorandum or offering circular, or such other information
reasonably requested by Lender, in each case in preliminary or final form, used to offer Securities
in connection with a Securitization.

          “Dollars” or “$” shall mean lawful money of the United States of America.

          “Draw Request” shall mean, with respect to each Advance, Borrower’s Requisition for such
Advance, along with such other documents required by this Agreement to be furnished to Lender as a
condition to such Advance.

          “DSCR Trigger Event” shall mean, that as of any Debt Service Coverage Ratio Determination
Date, the Debt Service Coverage Ratio as determined by Lender based on the trailing six (6) month
period (annualized) immediately preceding the date of such determination is less than 1.00 to 1.00.

          “Earn Out Advance” shall have the meaning set forth in Section 2.12.2 hereof.

          “Eligible Account” shall mean a separate and identifiable account from all other funds held by
the holding institution that is either (a) an account or accounts maintained with a federal or
state-chartered depository institution or trust company which complies with the definition of
Eligible Institution or (b) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary capacity which, in
the case of a state chartered depository institution or trust company, is subject to regulations
substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus
of at least Fifty Million and 00/100 Dollars ($50,000,000.00) and subject to supervision or
examination by federal and state authority. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.

          “Eligible Institution” shall mean a depository institution or trust company, the short term
unsecured debt obligations or commercial paper of which are rated at least “A-1+” by S&P, “P-1” by
Moody’s and “F-1+” by Fitch in the case of accounts in which funds are held for thirty (30) days or
less (or, in the case of accounts in which funds are held for more than thirty (30) days, the
long-term unsecured debt obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by
Moody’s).

          “Embargoed Person” shall have the meaning set forth in Section 5.1.42 hereof.

          “Environmental Engineer” shall mean such environmental engineering or similar inspection firms
approved by Lender.

          “Environmental Indemnity” shall mean that certain Environmental Indemnification Agreement,
dated as of the date hereof, executed by Borrower and Guarantor in connection with the Loan for the
benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

          “Equipment” shall have the meaning as set forth in the granting clause of the Building Loan
Mortgage.

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          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time
to time, and the regulations promulgated and the rulings issued thereunder.

          “Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.

          “Excess Cash Flow” shall have the meaning set forth in Section 3.4(i) of the Cash Management
Agreement.

          “Excess Cash Flow Funds” shall have the meaning set forth in Section 7.6 hereof.

          “Excess Cash Flow Reserve” shall have the meaning set forth in Section 7.6 hereof.

          “Exchange Act” shall have the meaning set forth in Section 9.2(a) hereof.

          “Extraordinary Expense” shall have the meaning set forth in Section 5.1.11(f) hereof.

          “Final Advance” shall have the meaning set forth in Section 2.12.1.

          “Final Project Loan Advance” shall mean the Final Advance as defined in the Project Loan
Agreement.

          “Final Project Report” shall mean the report to be prepared by the Construction Consultant of
its review of the Development Budget, Building Loan Budget, Project Loan Budget, the Plans and
Specifications, the Construction Schedule in final form, the Disbursement Schedule, all in final
form, the General Contractor’s Agreement, the Contracts, the Major Contracts and such other
documents and information reasonably required by the Construction Consultant.

          “FIRREA” shall mean the Financial Institutions Reform, Recovery and Enforcement Act of 1989,
as amended from time to time, and the regulations promulgated and rulings issued thereunder.

          “Fiscal Year” shall mean each twelve (12) month period commencing on January 1 and ending on
December 31 during each year of the term of the Loan.

          “Fitch” shall mean Fitch, Inc.

          “Fixtures” shall have the meaning set forth in the Mortgage.

          “Force Majeure” shall mean, with respect to the obligations of any Person, actual delay beyond
the reasonable control of such Person, which is due to any of the following (a) natural disaster,
fire or other casualty, earthquake, flood, explosion, abnormally inclement weather for the season
in question (as reported by an appropriate authority) or any other act of God, (b) declared or
undeclared war, acts of domestic or international terrorism, riot, mob violence, insurrection or
sabotage, (c) the inability to procure labor, equipment, facilities, energy,

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materials or supplies, the failure of transportation, any other labor disturbance, strikes,
lockouts or actions of labor unions, in each such case, so long as such cause is not within the
reasonable control of such Person, (d) condemnation, temporary restraining orders or injunctions,
changes after the date hereof in the requirements or interpretations of relevant laws, in each such
case, so long as such cause is not within the reasonable control of such Person, or (e) any other
cause not within the reasonable control of such Person; provided that, with respect to any
of the circumstances described in the foregoing clauses (a) through (e) inclusive:
(i) for the purposes of this Agreement, any period of Force Majeure shall apply only to such
person’s performance of the obligations necessarily affected by such circumstance and shall
continue only so long as such person is continuously and diligently using all reasonable efforts to
minimize the effect and duration thereof; and (ii) notwithstanding the foregoing, Force Majeure
shall not include (A) the unavailability or insufficiency of funds as a result of the insolvency of
such Person or any of its Affiliates, (B) any breach of contract or default by Borrower’s
Architect, the General Contractor or any Major Contractor under their respective contracts and
agreements concerning the Project Improvements.

          “GAAP” shall mean generally accepted accounting principles in the United States of America as
of the date of the applicable financial report.

          “General Contractor” shall mean ACRS, Inc. or any other general contractor or construction
manager, as applicable, approved by Lender and the Construction Consultant in accordance with the
terms of this Agreement.

          “General Contractor’s Agreement” shall have the meaning set forth in Section 2.10.9.

          “General Contractor’s Certificate” shall have the meaning set forth in Section
2.10.10.

          “Go Dark Trigger” shall mean that an Anchor Tenant Goes Dark.

          “Goes Dark” shall mean with respect to any tenant, that the relevant tenant ceases to
continuously occupy and operate is business at its premises on the Property in a manner similar to
which it operates its business as of the date that such tenant opens for business at the Property.

          “Governmental Approvals” shall mean all approvals, consents, waivers, orders, acknowledgments,
authorizations, permits and licenses required under applicable Legal Requirements to be obtained
from any Governmental Authority for the performance of the demolition work and construction of the
Project Improvements and/or the use, occupancy and operation of the Project Improvements before the
commencement, during and following completion of construction and Building Loan, as the context
requires, including, without limitation, all land use, building, subdivision, zoning and similar
ordinances and regulations promulgated by any Governmental Authority.

          “Governmental Authority” shall mean any court, board, agency, commission, office or other
authority of any nature whatsoever for any governmental unit (foreign, federal, state, county,
district, municipal, city or otherwise) whether now or hereafter in existence.

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          “Gross Income from Operations” shall mean, for any period, all sustainable income, computed in
accordance with GAAP, derived from the ownership and operation of the Property from whatever source
during such period, including, but not limited to, Rents under the Storage Facility Master
Lease and Rents from tenants in occupancy, open for business and paying full contractual rent
without right of offset or credit, utility charges, escalations, forfeited security deposits,
interest on credit accounts, service fees or charges, license fees, parking fees, rent concessions
or credits, business interruption or other loss of income or rental insurance proceeds or other
required pass-throughs and interest on Reserves, if any, but excluding Rents from
month-to-month tenants, or tenants that are included in any Bankruptcy Action, sales, use and
occupancy or other taxes on receipts required to be accounted for by Borrower to any Governmental
Authority, refunds and uncollectible accounts, sales of furniture, fixtures and equipment,
Insurance Proceeds (other than business interruption or other loss of income or rental insurance),
Awards, unforfeited security deposits, utility and other similar deposits and any disbursements to
Borrower from the Reserve Funds, if any.

          “Ground Lease” shall mean that certain Ground Lease dated as of October 1, 2004 between
Ground Lessor as lessor and Borrower, as lessee, as the same has been amended and may hereafter be
amended, restated, replaced, supplemented or otherwise modified from time to time in accordance
with the terms hereof.

          “Ground Lease Reserve Account” shall have the meaning set forth in Section 7.9.1
hereof.

          “Ground Lease Reserve Fund” shall have the meaning set forth in Section 7.9.1 hereof.

          “Ground Lessor” shall mean Rusciano & Son Corp. and Secor Lane Corp., and any successor lessor
under the Ground Lease.

          “Ground Rent” shall have the meaning set forth in Section 7.9.1 hereof.

          “Guarantor” shall mean Acadia Strategic Opportunity Fund II, LLC, a Delaware limited liability
company.

          “Guaranty of Completion” shall mean that certain Guaranty of Completion, dated as of the date
hereof, executed and delivered by Guarantor in connection with the Loan to and for the benefit of
Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

          “Guaranty of Recourse Carveouts” shall mean that certain Guaranty of Recourse Carveouts, dated
as of the date hereof, executed and delivered by Guarantor in connection with the Loan to and for
the benefit of Lender, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

          “Hard Costs” shall mean those Building Loan Costs which are for labor, materials, equipment
and fixtures.

          “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 2.10.19
hereof.

          “Home Depot Lease” shall have the meaning set forth in Section 2.11.15 hereof.

          “Improvements” shall have the meaning set forth in the granting clause of the Mortgage

          “Indebtedness” of a Person, at a particular date, means the sum (without duplication) at such
date of (a) all indebtedness or liability of such Person (including, without limitation, amounts
for borrowed money and indebtedness in the form of mezzanine debt or preferred equity); (b)
obligations evidenced by bonds, debentures, notes, or other similar instruments; (c) obligations
for the deferred purchase price of property or services (including trade obligations); (d)
obligations under letters of credit; (e) obligations under acceptance facilities; (f) all
guaranties, endorsements (other than for collection or deposit in the ordinary course of business)
and other contingent obligations to purchase, to provide funds for payment, to supply funds, to
invest in any Person or entity, or otherwise to assure a creditor against loss; and (g) obligations
secured by any Liens, whether or not the obligations have been assumed (other than the Permitted
Encumbrances).

          “Indemnified Liabilities” shall have the meaning set forth in Section 10.13(a) hereof.

          “Indemnified Persons” shall have the meaning set forth in Section 9.2(b) hereof.

          “Indemnifying Person” shall mean Borrower and Guarantor.

          “Independent Director” shall mean a director of a corporation or a limited liability company
that is a Special Purpose Entity and “Independent Manager” shall mean a manager of a limited
liability company that is a Special Purpose Entity, in either case, who is not at the time of
initial appointment, or at any time while serving as an Independent Director or Independent
Manager, as applicable, and has not been at any time during the preceding five (5) years: (a) a
stockholder, director (with the exception of serving as the Independent Director or Independent
Manager of a Special Purpose Entity), officer, employee, partner, member, attorney or counsel of
Guarantor, Borrower, or any Affiliate of any of them (unless such natural person is an Independent
Director or Independent Manager provided by a nationally recognized company that provides
professional independent managers and which also provides other corporate services in the ordinary
course of business, in which case such Person may receive reasonable fees for servicing as
Independent Director or Independent Manager of a Special Purpose Entity); (b) a creditor, customer,
supplier or other Person who derives any of its purchases or revenues from its activities with
Guarantor, Borrower or any Affiliate of any of them; (c) a Person controlling or under common
control with any such stockholder, director, officer, employee, partner, member, creditor,
customer, supplier or other Person; or (d) a member of the immediate family of any such
stockholder, director, officer, employee, partner, member, creditor, customer, supplier or other
person. As used in this definition, the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of management, policies or activities of
a Person, whether through ownership of voting securities, by contract or otherwise.

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          “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.

          “Initial Interest Reserve Deposit” shall have the meaning set forth in Section 7.2.1.

          “Initial Tax and Insurance Escrow Deposit” shall have the meaning set forth in Section
7.1 hereof.

          “Insolvency Opinion” shall mean that certain non-consolidation opinion letter dated the date
hereof delivered by Wachtel & Masyr, LLP in connection with the Loan.

          “Insurance Premiums” shall have the meaning set forth in Section 6.1.1(e) hereof.

          “Insurance Proceeds” shall have the meaning set forth in Section 6.2.1.

          “Intellectual Property” shall have the meaning set forth in Section 4.1.44 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

15

 

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%).

          “Interest Reserve Account” shall have the meaning set forth in Section 7.2.1.

          “Interest Reserve Deposit” shall have the meaning set forth in Section 7.2.1.

          “Interest Reserve Fund” shall have the meaning set forth in Section 7.2.1.

          “Interest Reserve Line Item” shall mean the interest reserve Line Item of the Project Loan
Budget.

          “Land” shall mean the land described on Exhibit “A” attached hereto.

          “Lease” shall mean any lease, sublease or subsublease, letting, license, concession or other
agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any
Person is granted a possessory interest in, or right to use or occupy all or any portion of any
space in the Property, and every modification, amendment or other agreement relating to such lease,
sublease, subsublease, or other agreement entered into in connection with such lease, sublease,
subsublease, or other agreement and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other party thereto.

          “Legal Requirements” shall mean, all federal, state, county, municipal and other governmental
statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of
Governmental Authorities affecting the Property or any part thereof, or the construction, use,
alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in
force, and all permits, licenses and authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any instruments, either of record
or known to Borrower, at any time in force affecting the Property or any part thereof, including,
without limitation, any which may (a) require repairs, modifications or alterations in or to the
Property or any part thereof, or (b) in any way limit the use and enjoyment thereof.

          “Lender” shall have the meaning set forth in the introductory paragraph hereto, together with
its successors and assigns.

          “Letter of Credit” shall mean an irrevocable, unconditional, transferable, clean sight draft
letter of credit, as the same may be replaced, split, substituted, modified, amended, supplemented,
assigned or otherwise restated from time to time, (either an evergreen letter of credit or a letter
of credit which does not expire until at least two (2) Business Days after the Maturity Date or
such earlier date as such Letter of Credit is no longer required pursuant to the

16

 

terms of this Agreement) in favor of Lender and entitling Lender to draw thereon based solely
on a statement purportedly executed by an officer of Lender stating that it has the right to draw
thereon, and issued by a domestic Approved Bank or the U.S. agency or branch of a foreign Approved
Bank, or if there are no domestic Approved Banks or U.S. agencies or branches of a foreign Approved
Bank then issuing letters of credit, then such letter of credit may be issued by a domestic bank,
the long term unsecured debt rating of which is the highest such rating then given by the Rating
Agency or Rating Agencies, as applicable, to a domestic commercial bank.

          “Liabilities” shall have the meaning set forth in Section 9.2(b) hereof.

          “Lien” shall mean, any mortgage, deed of trust, lien, pledge, hypothecation, assignment,
security interest, or any other encumbrance, charge or transfer of, on or affecting Borrower, the
Property, any portion thereof or any interest therein, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing statement, and
mechanic’s, materialmen’s and other similar liens and encumbrances.

          “Lien Law” shall mean the Lien Law of the State of New York.

          “Line Item” shall have the meaning set forth in Section 2.1.14 hereof.

          “Liquidity” means unrestricted and unencumbered Cash and Cash Equivalents acceptable to
Lender.

          “Loan” shall mean collectively, the Building Loan and the Project Loan.

          “Loan Agreement” shall mean collectively, this Building Loan Agreement, and the Project 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 Assignment of
Contracts, the Administration Fee Agreement, the Rate Lock Agreement, and all other documents
executed and/or delivered in connection with the Loan.

          “Loan-to-Cost Ratio” shall mean, as of any date, the ratio of (i) the Total Loan Amount to
(ii) the aggregate amount of Project-Related Costs (excluding any Affiliate Fees) actually paid as
of such date plus Project-Related Costs to be paid with the proceeds of the Advance(s)
being requested by Borrower on such date hereunder and under the Project Loan Agreement.

          “Major Contractor” shall mean any contractor hired by Borrower, including, without limitation,
the General Contractor (including subsidiaries and affiliates), supplying services, labor and/or
materials in connection with the Project which is for an aggregate contract price equal to or
greater than $500,000, whether pursuant to one contract or agreement or multiple contracts or
agreements, after taking into account all change orders, or which relates to major project elements
such as steel, concrete, HVAC systems, windows, doors and other similar items.

17

 

          “Major Contracts” shall mean any Contract with a Major Contractor or Major Subcontractor.

          “Major Subcontractor” shall mean any subcontractor supplying services, labor and/or materials
in connection with the Project which is for an aggregate contract price equal to or greater than
$500,000, whether pursuant to one contract or agreement or multiple contracts or agreements, after
taking into account all change orders, or which relates major project elements such as steel,
concrete, HVAC systems, windows, doors and other similar items.

          “Management Agreement” shall mean, collectively, the Management Agreement dated as of August
23, 2007 by and between Borrower and Acadia—P/A Management Services, LLC and the Management
Agreement dated as of December 4, 2007 by and between Borrower and Post Management, L.L.C. pursuant
to which Manager is to provide management and other services with respect to the Property, or, if
the context requires, the Replacement Management Agreement.

          “Manager” shall mean Acadia—P/A Management Services, LLC, a Delaware limited liability
company, and Post Management, L.L.C., a Delaware limited liability company, or, if the context
requires, a Qualified Manager who is managing the Property in accordance with the terms and
provisions of this Agreement pursuant to a Replacement Management Agreement.

          “Material Action” means, with respect to any Person, to file any insolvency or reorganization
case or proceeding, to institute proceedings to have such Person be adjudicated bankrupt or
insolvent, to institute proceedings under any applicable insolvency law, to seek any relief under
any law relating to relief from debts or the protection of debtors, to consent to the filing or
institution of bankruptcy or insolvency proceedings against such Person, to file a petition
seeking, or consent to, reorganization or relief with respect to such Person under any applicable
federal or state law relating to bankruptcy or insolvency, to seek or consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator, custodian, or any similar official of or
for such Person or a substantial part of its property, to make any assignment for the benefit of
creditors of such Person, to admit in writing such Person’s inability to pay its debts generally as
they become due, or to take action in furtherance of any of the foregoing.

          “Maturity Date” shall mean January 1, 2020 or such earlier date on which the final payment of
principal of the Building Loan Note becomes due and payable as therein or herein provided, whether
at such stated maturity date, by declaration of acceleration, or otherwise.

          “Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any, that at any
time or from time to time may be contracted for, taken, reserved, charged or received on the
indebtedness evidenced by the Note and as provided for herein or the other Loan Documents, under
the laws of such state or states whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.

          “MERS” shall have the meaning set forth in Section 10.25 hereof.

          “Mezzanine Borrower” shall have the meaning set forth in Section 9.1.

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          “Mezzanine Loan Documents” shall have the meaning set forth in Section 9.1.

          “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 $[___]156,023.44 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.

          “Moody’s” shall mean Moody’s Investors Service, Inc.

          “Mortgage” shall mean, collectively, the Building Loan Mortgage and the Project Loan Mortgage,
as the same may be amended, restated, supplemented or otherwise modified from time to time.

          “Net Cash Flow” shall mean, for any period, the amount obtained by subtracting Operating
Expenses and Capital Expenditures for such period from Gross Income from Operations for such
period.

          “Net Operating Income” shall mean the amount obtained by subtracting Operating Expenses from
Gross Income from Operations.

          “Net Proceeds” shall have the meaning set forth in Section 6.2.1 hereof.

          “Net Proceeds Deficiency” shall have the meaning set forth in Section 6.2.4(g) hereof.

          “Net Worth” means with respect to any Person for any period, assets less liabilities of such
Person, determined in accordance with GAAP.

          “Note” shall mean, collectively, the Building Loan Note and the Project Loan Note.

          “Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower that is
signed by an authorized officer of the general partner or managing member of Borrower.

          “Open Period Date” shall have the meaning set forth in Section 2.4.1 hereof.

          “Operating Expenses” shall mean the total of all expenditures, computed in accordance with
GAAP, of whatever kind relating to the operation, maintenance and management of the Property that
are incurred on a regular monthly or other periodic basis, including without limitation, utilities,
ordinary repairs and maintenance, insurance, license fees, property taxes and assessments,
advertising expenses, management fees, payroll and related

19

 

taxes, computer processing charges, operational equipment or other lease payments as approved
by Lender, and other similar costs, but excluding depreciation, Debt Service, Capital Expenditures
and contributions to the Reserve Funds.

          “Operating Reserve Account” shall have the meaning set forth in Section 7.7.1 hereof.

          “Operating Reserve Deposit” shall have the meaning set forth in Section 7.7.1 hereof.

          “Operating Reserve Funds” shall have the meaning set forth in Section 7.7.1 hereof.

          “Other Charges” shall mean all maintenance charges, impositions other than Taxes, and any
other charges, including, without limitation, vault charges and license fees for the use of vaults,
chutes and similar areas adjoining the Property, now or hereafter levied or assessed or imposed
against the Property or any part thereof.

          “Other Debt” shall mean the “Debt” as defined in both the Project Loan Agreement, and the
Mezzanine Loan Documents, if applicable.

          “Other Design Professionals” shall mean all architects (other than Borrower’s Architect) and
engineers engaged by Borrower and/or Borrower’s agent to work on the Project Improvements.

          “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.

          “Performance Letter” shall have the meaning set forth in Section 2.10.11(a) hereof.

          “Permitted Encumbrances” shall mean, with respect to the Property, collectively, (a) the Liens
and security interests created by the Loan Documents, (b) all Liens, encumbrances and other matters
disclosed in the Title Insurance Policy, (c) Liens, if any, for Taxes imposed by any Governmental
Authority not yet due or delinquent, unless and to the extent being contested by Borrower in
compliance with the terms of this Agreement, and (d) such other title and survey exceptions as
Lender has approved or may approve in writing in Lender’s sole discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or use of the Property
or Borrower’s ability to complete the Project or repay the Loan.

          “Permitted Investments” shall have the meaning set forth in the Cash Management Agreement.

20

 

          “Permitted Mezzanine Lender” shall have the meaning set forth in Section 5.2.14
hereof.

          “Permitted Release Date” shall mean the earlier of (i) the Defeasance Expiration Date or (ii)
the date that is the fourth (4th) anniversary of the Completion of the Improvements.

          “Permitted Transfer” means any of the following:

          (a) any transfer, directly as a result of the death of a natural Person, of stock, membership
interests, partnership interests or other ownership interests in any Restricted Party previously
held by the decedent in question to the spouse or any lineal descendant of such individual, or to a
trust for the benefit of any one or more of such individual, spouse or lineal descendant, so long
as Borrower delivers notice to Lender as soon as practicable thereafter and that such Restricted
Party is promptly reconstituted, if applicable, following the death of such member, partner or
shareholder and there is no change in Control of such Restricted Party as a result of such
transfer;

          (b) any transfer, directly as a result of the legal incapacity of a natural person, of stock,
membership interests, partnership interests or other ownership interests previously held by the
such natural Person to the spouse or any lineal descendant of such individual, or to a trust for
the benefit of any one or more of such individual, spouse or lineal descendant, so long as Borrower
delivers notice to Lender as soon as practicable thereafter and that such Restricted Party is
promptly reconstituted, if applicable, following the death of such member, partner or shareholder
and there is no change in Control of such Restricted Party as a result of such transfer,

          (c) transfers for estate planning purposes of a natural Person’s stock, membership interests,
partnership interests or other ownership interests in a Restricted Party by the current partner(s),
shareholder(s) or member(s), as applicable, to the spouse or any lineal descendant of such
individual, or to a trust for the benefit of any one or more of such individual, spouse or lineal
descendant, so long as such Restricted Party is reconstituted, if required, following such transfer
and there is no change in Control of such Restricted Party as a result of such transfer;

          (d) transfers permitted pursuant to Section 5.2.11(d) of this Agreement;

          (e) the sale, transfer, or issuance of stock in Acadia Realty Trust, in the ordinary course
of business, provided such stock is listed on the NYSE or other nationally recognized stock
exchange; and

          (f) a Transfer by P/A Associates, LLC of 100% of its membership interest in Acadia—P/A
Holding Company, LLC to Acadia Strategic Opportunity Fund II, LLC (“Fund II”) or an
Affiliate of Fund II Controlled by Acadia Realty Trust.

          “Person” shall mean any individual, corporation, partnership, joint venture, limited liability
company, estate, trust, unincorporated association, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting in such capacity on
behalf of any of the foregoing.

21

 

          “Personal Property” shall have the meaning set forth in the granting clause of the Mortgage.

          “Physical Conditions Report” shall mean, a structural engineering report prepared by a company
satisfactory to Lender regarding the physical condition of the Property, satisfactory in form and
substance to Lender in its sole discretion, which report shall, among other things, confirm that
the Property and its use complies, in all material respects, with all applicable Legal Requirements
(including, without limitation, zoning, subdivision and building laws).

          “Plans and Specifications” shall mean the final plans and specifications for the performance
of the Project Improvements prepared by Borrower’s Architect and the Other Design Professionals
listed on Schedule III attached hereto and approved by Lender, the Construction Consultant,
as the same may be amended and supplemented from time to time in accordance with the terms of this
Agreement.

          “Policies” shall have the meaning specified in Section 6.1.1(e) hereof.

          “Policy” shall have the meaning specified in Section 6.1.1(e) hereof.

          “Prepayment Date” shall have the meaning set forth in Section 2.4.4 hereof.

          “Prepayment Rate” shall mean the bond equivalent yield (in the secondary market) on the United
States Treasury Security that as of the Prepayment Rate Determination Date has a remaining term to
maturity closest to, but not exceeding, the remaining term to the Maturity Date as most recently
published in the “Treasury Bonds, Notes and Bills” section in The Wall Street Journal as of such
Prepayment Rate Determination Date. If more than one issue of United States Treasury Securities
has the same remaining term to the Maturity Date, the “Prepayment Rate” shall be the yield on such
United States Treasury Security most recently issued as of the Prepayment Rate Determination Date.
The rate so published shall control absent manifest error. If the publication of the Prepayment
Rate in The Wall Street Journal is discontinued, Lender shall determine the Prepayment Rate on the
basis of “Statistical Release H.15 (519), Selected Interest Rates,” or any successor publication,
published by the Board of Governors of the Federal Reserve System, or on the basis of such other
publication or statistical guide as Lender may reasonably select.

          “Prepayment Rate Determination Date” shall mean the date which is five (5) Business Days prior
to the date that such prepayment shall be applied in accordance with the terms and provisions of
Section 2.4.1 hereof.

          “Prescribed Laws” shall mean, collectively, (a) the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law
107-56) (The USA PATRIOT Act), (b) Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism, (c) the International Emergency Economic Power
Act, 50 U.S.C. §1701 et. seq. and (d) all other Legal Requirements relating to money laundering or
terrorism.

22

 

          “Principal” shall mean the Special Purpose Entity that is the general partner of Borrower, if
Borrower is a limited partnership, or member of Borrower, if Borrower is a limited liability
company.

          “Proceeds” shall mean Insurance Proceeds or Condemnation Proceeds.

          “Project” shall mean the development and construction of Project Improvements, all in
accordance with the Plans and Specifications, all Legal Requirements, this Agreement and the other
Loan Documents.

          “Project Improvements” shall mean the demolition of all existing improvements located on the
Land and the development and construction thereon by Borrower of a multi-anchor community shopping
center with a gross leaseable area of approximately 228,862 square feet of floor area and
self-storage space of approximately 88,127 square feet of floor area, substantially as depicted on
the Plans and Specifications, as the same will be developed, renovated and constructed in
accordance with the Plans and Specifications and all Legal Requirements.

          “Project Loan” shall mean the loan being made by Lender to Borrower pursuant to the Project
Loan Agreement in the principal amount of up to the Project Loan Amount.

          “Project Loan Advance” shall mean “Advance” as such term is defined in the Project Loan
Agreement.

          “Project Loan Agreement” shall mean that certain Project Loan Agreement dated the date hereof
among, Lender and Borrower.

          “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.

          “Project Loan Budget” shall have the meaning set forth in Section 2.1.14.

          “Project Loan Costs” shall mean all Projected Related Costs that are not Costs of the
Improvements.

          “Project Loan Documents” shall have the meaning as set forth in the Project Loan Agreement.

          “Project Loan Earn Out Advance” shall have the meaning set forth in Section 2.12.1
hereof.

          “Project Loan Mortgage” shall have the meaning as set forth in the Project Loan Agreement.

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          “Project Loan Note” shall have the meaning as set forth in the Project Loan Agreement.

          “Project-Related Costs” shall mean all direct and indirect costs and expenses of acquiring the
Property, demolishing the existing improvements on the Property, designing, inspecting, renovating,
constructing and developing the Project Improvements, including, without limitation, Hard Costs and
Soft Costs, along with all Carrying Costs, Debt Service, financing charges, Operating Expense and
other costs and expenses associated with the Property during the Construction Term.

          “Property” shall mean the Land, all Improvements now or hereafter located thereon, the
easements and other rights, licenses and privileges and appurtenance to the Land, and all personal
property owned by Borrower and encumbered by the Mortgage, together with all rights pertaining to
such property and Improvements, as more particularly described in the granting clauses of the
Mortgage and referred to therein as the “Mortgaged Property”.

          “Provided Information” shall mean any and all financial and other information provided at any
time prepared by, or on behalf of, any Indemnifying Person with respect to the Property, Borrower,
Principal, Guarantor and/or Manager, including, without limitation, any financial data or financial
statements required under Section 5.1.11.

          “Punch List and Deferred Maintenance Reserve Deposit” shall have the meaning set forth in
Section 7.4.1.

          “Punch List and Deferred Maintenance Reserve Funds” shall have the meaning set forth in
Section 7.4.1.

          “Punch List Items” shall mean, collectively, any Punch List items identified by the
Construction Consultant and other minor or insubstantial details of construction, decoration,
mechanical adjustment or installation, which do not hinder or impede the use, operation, or
maintenance of the Property or the ability to obtain a permanent certificate of occupancy with
respect thereto.

          “Qualified Manager” shall mean in the reasonable judgment of Lender, a reputable and
experienced management organization (which may be an Affiliate of Borrower) possessing experience
in managing properties similar in size, scope, use and value as the Property, provided, that
Borrower shall have obtained (i) prior written confirmation from the applicable Rating Agencies
that management of the Property by such Person will not cause a downgrade, withdrawal or
qualification of the then current ratings of the Securities or any class thereof and (ii) if such
Person is an Affiliate of Borrower, an Additional Insolvency Opinion.

          “Rate Lock Agreement” shall mean that certain Extended Rate Lock Agreement-Application Stage
dated May 9, 2007 between Borrower and Lender, as amended by that certain First Amendment to
Extended Rate Lock Agreement-Application Stage dated as of the date hereof.

          “Rating Agencies” shall mean each of S&P, Moody’s and Fitch, or any other nationally
recognized statistical rating agency which has been approved by Lender.

24

 

          “Related Entities” shall have the meaning set forth in Section 5.2.11(e).

          “REMIC Trust” shall mean a “real estate mortgage investment conduit” within the meaning of
Section 860D of the Code that holds any portion of the Note.

          “Rentable Space Percentage” shall have the meaning set forth in Section 6.2.4(a)
(B)(iii).

          “Rents” shall mean, all rents (including percentage rents), rent equivalents, moneys payable
as damages or in lieu of rent or rent equivalents, royalties (including, without limitation, all
oil and gas or other mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits (including, without limitation, security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, all other amounts payable as rent under any Lease
or other agreement relating to the Property, including, without limitation, charges for
electricity, oil, gas, water, steam, heat, ventilation, air-conditioning and any other energy,
telecommunication, telephone, utility or similar items or time use charges, HVAC equipment charges,
sprinkler charges, escalation charges, license fees, maintenance fees, charges for Taxes, Operating
Expenses or other reimbursables payable to Borrower (or to the Manager, for the account of
Borrower) under any Lease, and other consideration of whatever form or nature received by or paid
to or for the account of or benefit of Borrower or its agents or employees from any and all sources
arising from or attributable to the Property, and proceeds, if any, from business interruption or
other loss of income or insurance.

          “Replacements” shall have the meaning set forth in Section 7.3.1.

          “Replacement Management Agreement” shall mean, collectively, (a) either (i) a management
agreement with a Qualified Manager substantially in the same form and substance as the Management
Agreement, or (ii) a management agreement with a Qualified Manager, which management agreement
shall be reasonably acceptable to Lender in form and substance, provided, with respect to this
subclause (ii), Lender, at its option, may require that Borrower shall have obtained prior
written confirmation from the applicable Rating Agencies that such management agreement will not
cause a downgrade, withdrawal or qualification of the then current rating of the Securities or any
class thereof and (b) an assignment of management agreement and subordination of management fees
substantially in the form then used by Lender (or of such other form and substance reasonably
acceptable to Lender), executed and delivered to Lender by Borrower and such Qualified Manager at
Borrower’s expense.

          “Replacement Reserve Account” shall have the meaning set forth in Section 7.3.1.

          “Replacement Reserve Cap” shall have the meaning set forth in Section 7.3.1.

          “Replacement Reserve Fund” shall have the meaning set forth in Section 7.3.1.

          “Replacement Reserve Monthly Deposit” shall have the meaning set forth in Section
7.3.1.

25

 

          “Requested Advance Date” shall have the meaning set forth in Section 2.14.2(a).
hereof.

          “Required Completion Date” shall mean June 1, 2009, provided, however, that the Required
Completion Date may be extended by Lender to December 1, 2009 in Lender’s sole discretion.

          “Required Equity Funds” shall have the meaning set forth in Section 2.11.13.

          “Required Initial Advance Date” shall mean January 10, 2008, provided, however, that Borrower
shall have the right to extend the Required CompletionInitial Advance Date to February 10,
2008, provided that Lender is satisfied that prior to January 10, 2008, Borrower has used
commercially reasonable efforts to obtain the Home Depot Estoppel Certificate and the Retaining
Wall Letter, and further provided that Lender shall have the right to further extend the Required
Initial Advance Date in Lender’s sole discretion.

          “Required Ratios at Completion” shall have the meaning set forth in Section 2.12(j)
hereof.

          “Reserve” or “Reserve Funds” shall mean, collectively, the Tax and Insurance Escrow Fund, the
Interest Reserve Funds, the Excess Cash Flow Reserve Funds, the Replacement Reserve Fund, the Punch
List and Deferred Maintenance Fund, the Operating Reserve Fund, the Ground Lease Reserve Fund, the
Rollover Reserve Fund, the Storage Facility Master Lease Reserve Fund and any other escrow fund
established by the Loan Documents.

          “Restoration” shall mean the repair and restoration of the Property after a Casualty or
Condemnation to substantially the condition the Property was in immediately prior to such Casualty
or Condemnation, with such alterations as may be reasonably approved by Lender.

          “Restoration Threshold” shall have the meaning set forth in Section 6.2.3(a) hereof.

          “Restricted Party” shall mean collectively, (a) Borrower, any Guarantor, and any Affiliated
Manager and (b) any shareholder, partner, member, non-member manager, any direct or indirect legal
or beneficial owner of, Borrower, any Guarantor, any Affiliated Manager or any non-member manager.

          “Retainage” shall mean, for each Contract and Subcontract, the greater of (a) ten percent
(10%) of all costs funded to the Contractor or Subcontractor under the Contract or Subcontract, or
(b) the actual retainage required under such Contract or Subcontract.

          “Retaining Wall Letter” shall have the meaning set forth in Section 2.10.21 hereof.

          “Rollover Reserve Account shall have the meaning set forth in Section 7.8.1.

          “Rollover Reserve Cap” shall have the meaning set forth in Section 7.8.1.

26

 

          “Rollover Reserve Fund” shall have the meaning set forth in Section 7.8.1.

          “Rollover Reserve Monthly Deposit” shall have the meaning set forth in Section 7.8.1.

          “S&P” shall mean Standard & Poor’s Ratings Group, a division of the McGraw-Hill Companies.

          “Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance, assignment, transfer,
encumbrance, pledge, grant of option or other transfer or disposal of a legal or beneficial
interest, whether direct or indirect.

          “Scheduled Defeasance Payments” shall have the meaning set forth in Section 2.5.1(b)

          “Second Tax and Insurance Escrow Deposit” shall have the meaning set forth in Section
7.1 hereof.

          “Securities” shall have the meaning set forth in Section 9.1 hereof.

          “Securities Act” shall have the meaning set forth in Section 9.2(a) hereof.

          “Securitization” shall have the meaning set forth in Section 9.1 hereof.

          “Self Storage Facility” shall have the meaning set forth in Section 5.1.44 hereof.

          “Servicer” shall have the meaning set forth in Section 9.5 hereof.

          “Servicing Agreement” shall have the meaning set forth in Section 9.5 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.

          “Soft Costs” shall mean those Building Loan Costs which are not Hard Costs, including but not
limited to, architect’s, engineer’s and general contractor’s fees, interest on the Building Loan,
recording taxes and title charges in respect of the Building Loan Mortgage and such other
non-construction costs as are part of the Cost of the Improvements.

          “Special Purpose Entity” shall mean a corporation, limited partnership or limited liability
company that, since the date of its formation and at all times on and after the date thereof, has
complied with and shall at all times comply with the following requirements unless it has received
either prior consent to do otherwise from Lender or a permitted administrative agent thereof, or,
while the Loan is securitized, confirmation from each of the applicable Rating Agencies that such
noncompliance would not result in the requalification, withdrawal, or downgrade of the ratings of
any Securities or any class thereof:

27

 

     (i) is and shall be organized solely for the purpose of (A) in the case of Borrower,
leasing pursuant to the Ground Lease, holding, selling, leasing, transferring, exchanging,
managing and operating the Property, entering into and performing its obligations under the
Loan Documents with Lender, refinancing the Property in connection with a permitted
repayment of the Loan, and transacting lawful business that is incident, necessary and
appropriate to accomplish the foregoing; or (B) in the case of a Principal, acting as a
general partner of the limited partnership that owns the Property or as member of the
limited liability company that owns the Property and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing;

     (ii) has not engaged and shall not engage in any business unrelated to (A) the
acquisition, development, ownership, management or operation of the Property, or (B) in the
case of a Principal, acting as general partner of the limited partnership that owns the
Property or acting as a member of the limited liability company that owns the Property, as
applicable;

     (iii) has not owned and shall not own any real property other than, in the case of
Borrower, a fee or leasehold interest in the Property;

     (iv) does not have, shall not have and at no time had any assets other than (A) in the
case of Borrower, the Property and personal property necessary or incidental to its
ownership and operation of the Property or (B) in the case of a Principal, its partnership
interest in the limited partnership or the member interest in the limited liability company
that owns the Property and personal property necessary or incidental to its ownership of
such interests;

     (v) has not engaged in, sought, consented or permitted to and shall not engage in,
seek, consent to or permit (A) any dissolution, winding up, liquidation, consolidation or
merger, (B) any sale or other transfer of all or substantially all of its assets or any sale
of assets outside the ordinary course of its business, except as permitted by the Loan
Documents, or (C) in the case of a Principal, any transfer of its partnership or membership
interests;

     (vi) shall not cause, consent to or permit any amendment of its limited partnership
agreement, articles of incorporation, articles of organization, certificate of formation,
operating agreement or other formation document or organizational document (as applicable)
with respect to the matters set forth in this definition;

     (vii) if such entity is a limited partnership, has and shall have at least one general
partner and has and shall have, as its only general partners, Special Purpose Entities each
of which (A) is a corporation or single-member Delaware limited liability company, (B) has
two (2) Independent Directors, and (C) holds a direct interest as general partner in the
limited partnership of not less than 0.5% (or 0.1%, if the limited partnership is a Delaware
entity);

     (viii) if such entity is a corporation, has and shall have at least two (2) Independent
Director, and shall not cause or permit the board of directors of such entity

28

 

to take any Material Action either with respect to itself or, if the corporation is a
Principal, with respect to Borrower or any action requiring the unanimous affirmative vote
of one hundred percent (100%) of the members of its board of directors unless two
Independent Directors shall have participated in such vote and shall have voted in favor of
such action;

     (ix) if such entity is a limited liability company (other than limited liability
company meeting all of the requirements applicable to a single-member limited liability
company set forth in this definition of “Special Purpose Entity”), has and shall have at
least one (1) member that is a Special Purpose Entity, that is a corporation, that has at
least two (2) Independent Directors and that directly owns at least one-half-of-one percent
(0.5%) of the equity of the limited liability company (or 0.1% if the limited liability
company is a Delaware entity);

     (x) if such entity is a single-member limited liability company, (A) is and shall be a
Delaware limited liability company, (B) has and shall have at least two (2) Independent
Directors serving as a manager of such company, (C) shall not take any Material Action and
shall not cause or permit the members or managers of such entity to take any Material
Action, either with respect to itself or, if the company is a Principal, with respect to
Borrower, in each case unless one Independent Director then serving as a manager of the
company shall have participated and consented in writing to such action, and (D) has and
shall have either (1) a member which owns no economic interest in the company, has signed
the company’s limited liability company agreement and has no obligation to make capital
contributions to the company, or (2) two natural persons or one entity that is not a member
of the company, that has signed its limited liability company agreement and that, under the
terms of such limited liability company agreement becomes a member of the company
immediately prior to the withdrawal or dissolution of the last remaining member of the
company;

     (xi) has not and shall not (and, if such entity is (a) a limited liability company, has
and shall have a limited liability agreement or an operating agreement, as applicable, (b) a
limited partnership, has a limited partnership agreement, or (c) a corporation, has a
certificate of incorporation or articles that, in each case, provide that such entity shall
not) (1) dissolve, merge, liquidate, consolidate; (2) sell all or substantially all of its
assets; (3) amend its organizational documents with respect to the matters set forth in this
definition without the consent of Lender; or (4) without the affirmative vote of two (2)
Independent Directors or Independent Managers of itself or the consent of a Principal that
is a member or general partner in it: (A) file or consent to the filing of any bankruptcy,
insolvency or reorganization case or proceeding, institute any proceedings under any
applicable insolvency law or otherwise seek relief under any laws relating to the relief
from debts or the protection of debtors generally, file a bankruptcy or insolvency petition
or otherwise institute insolvency proceedings; (B) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for
the entity or a substantial portion of its property; (C) make an assignment for the benefit
of the creditors of the entity; or (D) take any action in furtherance of any of the
foregoing;

29

 

     (xii) has at all times been and shall at all times remain solvent and has paid and
shall pay its debts and liabilities (including, a fairly-allocated portion of any personnel
and overhead expenses that it shares with any Affiliate) from its assets as the same shall
become due, and has maintained and shall maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;

     (xiii) has not failed and shall not fail to correct any known misunderstanding
regarding the separate identity of such entity and has not identified and shall not identify
itself as a division of any other Person;

     (xiv) has maintained and shall maintain its bank accounts, books of account, books and
records separate from those of any other Person and, to the extent that it is required to
file tax returns under applicable law, has filed and shall file its own tax returns, except
to the extent that it is required by law to file consolidated tax returns and, if it is a
corporation, has not filed and shall not file a consolidated federal income tax return with
any other corporation, except to the extent that it is required by law to file consolidated
tax returns;

     (xv) has maintained and shall maintain its own records, books, resolutions and
agreements;

     (xvi) has not commingled and shall not commingle its funds or assets with those of any
other Person and has not participated and shall not participate in any cash management
system with any other Person;

     (xvii) has held and shall hold its assets in its own name;

     (xviii) has conducted and shall conduct its business in its name or in a name
franchised or licensed to it by an entity other than an Affiliate of itself or of Borrower,
except for business conducted on behalf of itself by another Person under a business
management services agreement that is on commercially-reasonable terms, so long as the
manager, or equivalent thereof, under such business management services agreement holds
itself out as an agent of Borrower;

     (xix) (A) has maintained and shall maintain its financial statements, accounting
records and other entity documents separate from those of any other Person; (B) has shown
and shall show, in its financial statements, its asset and liabilities separate and apart
from those of any other Person; and (C) has not permitted and shall not permit its assets to
be listed as assets on the financial statement of any of its Affiliates except as required
by GAAP; provided, however, that any such consolidated financial statement contains a note
indicating that the Special Purpose Entity’s separate assets and credit are not available to
pay the debts of such Affiliate and that the Special Purpose Entity’s liabilities do not
constitute obligations of the consolidated entity;

     (xx) has paid and shall pay its own liabilities and expenses, including the salaries of
its own employees, out of its own funds and assets, and has maintained and

30

 

shall maintain a sufficient number of employees in light of its contemplated business
operations;

     (xxi) has observed and shall observe all partnership, corporate or limited liability
company formalities, as applicable;

     (xxii) has not incurred any Indebtedness other than (i) acquisition financing with
respect to the Property; construction financing with respect to the Improvements and certain
off-site improvements required by municipal and other authorities as conditions to the
construction of the Improvements; and first mortgage financings secured by the Property; and
Indebtedness pursuant to letters of credit, guaranties, interest rate protection agreements
and other similar instruments executed and delivered in connection with such financings,
(ii) unsecured trade payables and operational debt not evidenced by a note, and (iii)
Indebtedness incurred in the financing of equipment and other personal property used on the
Property;

     (xxiii) shall have no Indebtedness other than (i) the Loan, (ii) liabilities incurred
in the ordinary course of business relating to the ownership and operation of the Property
and the routine administration of Borrower, in amounts not to exceed $525,000, which
liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a
note and are paid when due, and which amounts are normal and reasonable under the
circumstances, and (iii) such other liabilities that are permitted pursuant to this
Agreement;

     (xxiv) has not assumed, guaranteed or become obligated and shall not assume or
guarantee or become obligated for the debts of any other Person, has not held out and shall
not hold out its credit as being available to satisfy the obligations of any other Person or
has not pledged and shall not pledge its assets for the benefit of any other Person, in each
case except as permitted pursuant to this Agreement;

     (xxv) has not acquired and shall not acquire obligations or securities of its partners,
members or shareholders or any other owner or Affiliate;

     (xxvi) has allocated and shall allocate fairly and reasonably any overhead expenses
that are shared with any of its Affiliates, constituents, or owners, or any guarantors of
any of their respective obligations, or any Affiliate of any of the foregoing (individually,
a “Related Party” and collectively, the “Related Parties”), including, but not limited to,
paying for shared office space and for services performed by any employee of an Affiliate;

     (xxvii) has maintained and used and shall maintain and use separate stationery,
invoices and checks bearing its name and not bearing the name of any other entity unless
such entity is clearly designated as being the Special Purpose Entity’s agent;

     (xxviii) has not pledged and shall not pledge its assets to or for the benefit of any
other Person other than with respect to loans secured by the Property and no such pledge
remains outstanding except to Lender to secure the Loan;

31

 

     (xxix) has held itself out and identified itself and shall hold itself out and identify
itself as a separate and distinct entity under its own name or in a name franchised or
licensed to it by an entity other than an Affiliate of Borrower and not as a division or
part of any other Person;

     (xxx) has maintained and shall maintain its assets in such a manner that it shall not
be costly or difficult to segregate, ascertain or identify its individual assets from those
of any other Person;

     (xxxi) has not made and shall not make loans to any Person and has not held and shall
not hold evidence of indebtedness issued by any other Person or entity (other than cash and
investment-grade securities issued by an entity that is not an Affiliate of or subject to
common ownership with such entity);

     (xxxii) has not identified and shall not identify its partners, members or
shareholders, or any Affiliate of any of them, as a division or part of it, and has not
identified itself and shall not identify itself as a division of any other Person;

     (xxxiii) other than capital contributions and distributions permitted under the terms
of its organizational documents, has not entered into or been a party to, and shall not
enter into or be a party to, any transaction with any of its partners, members, shareholders
or Affiliates except in the ordinary course of its business and on terms which are
commercially reasonable terms comparable to those of an arm’s-length transaction with an
unrelated third party;

     (xxxiv) has not had and shall not have any obligation to, and has not indemnified and
shall not indemnify its partners, officers, directors or members, as the case may be, in
each case unless such an obligation or indemnification is fully subordinated to the Debt and
shall not constitute a claim against it in the event that its cash flow is insufficient to
pay the Debt;

     (xxxv) if such entity is a corporation, has considered and shall consider the interests
of its creditors in connection with all corporate actions;

     (xxxvi) has not had and shall not have any of its obligations guaranteed by any
Affiliate except as provided by the Loan Documents;

     (xxxvii) has not formed, acquired or held and shall not form, acquire or hold any
subsidiary, except that a Principal may acquire and hold its interest in Borrower;

     (xxxviii) has complied and shall comply with all of the terms and provisions contained
in its organizational documents.

     (xxxix) has conducted and shall conduct its business so that each of the assumptions
made about it and each of the facts stated about it in the Insolvency Opinion are true;

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     (xl) has not permitted and shall not permit any Affiliate or constituent party
independent access to its bank accounts;

     (xli) is, has always been and shall continue to be duly formed, validly existing, and
in good standing in the state of its incorporation or formation and in all other
jurisdictions where it is qualified to do business;

     (xlii) has paid all taxes which it owes and is not currently involved in any dispute
with any taxing authority;

     (xliii) is not now, nor has ever been, party to any lawsuit, arbitration, summons, or
legal proceeding that resulted in a judgment against it that has not been paid in full;

     (xliv) has no judgments or Liens of any nature against it except for tax liens not yet
due and the Permitted Encumbrances;

     (xlv) has provided Lender with complete financial statements that reflect a fair and
accurate view of the entity’s financial condition; and

     (xlvi) has no material contingent or actual obligations not related to the Property.

          “Stabilized Net Cash Flow” shall mean underwritten Gross Income from Operations calculated
using an vacancy rate equal to the greater of five percent (5%), the actual vacancy rate for the
Property and the market vacancy rate (“Effective Gross Income”), less (i) Operating Expenses
including a management fee of not less than four percent (4%) of Effective Gross Income and (ii) an
adjustment for Replacement Reserves and normalized costs of tenant improvements and leasing
commissions of $235,000.00.

          “Stabilized Value” shall mean the value of the Property, determined following the Completion
of the Improvements. The Stabilized Value shall be determined based upon an 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 or the date of the Completion of the Improvement occurs 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.

          “Stabilized Loan-to-Value Ratio” shall mean the ratio of the Total Loan Amount to the
Stabilized Value.

          “State” shall mean, the State or Commonwealth in which the Property or any part thereof is
located.

          “Storage Facility Master Lease” shall have the meaning set forth in Section 5.1.44
hereof.

          “Storage Facility Master Lease Reserve Account” shall have the meaning set forth in
Section 7.10.1 hereof.

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          “Storage Facility Master Lease Reserve Fund” shall have the meaning set forth in Section
7.10.1 hereof.

          “Storage Facility Rent” shall have the meaning set forth in Section 5.1.44 hereof.

          “Storage Facility Tenant” shall have the meaning set forth in Section 5.1.44 hereof.

          “Stored Materials” shall have the meaning set forth in Section 2.1.8 hereof.

          “Subcontract” shall mean shall mean any agreement (other than the Architect’s Contract and the
General Contractor’s Agreement) entered into by Borrower or by General Contractor, in which the
Subcontractor thereunder agrees to provide services, labor and/or materials in connection with the
Project Improvements.

          “Subcontractor” shall mean any subcontractor supplying services, labor and/or materials in
connection with the Project Improvements.

          “Subordinate Financing” shall have the meaning set forth in Section 9.1.2(b).

          “Successor Borrower” shall have the meaning set forth in Section 2.5.3 hereof.

          “Survey” shall mean a survey of the Property prepared by a Surveyor licensed in the State and
satisfactory to Lender and the company or companies issuing the Title Insurance Policy, and
containing a certification of such surveyor satisfactory to Lender.

          “Surveyor” shall mean Control Point Associates, Inc., or such other land surveyor registered
as such in the State of New York.

          “Tax and Insurance Escrow Fund” shall have the meaning set forth in Section 7.1
hereof.

          “Taxes” shall mean all real estate and personal property taxes, assessments, water rates or
sewer rents, now or hereafter levied or assessed or imposed against the Property or part thereof.

          “Tenant” shall mean the tenant under any Lease.

          “Threshold Amount” shall have the meaning set forth in Section 5.1.21(a) hereof.

          “Title Company” shall have the meaning set forth in Section 3.1.3(b) hereof.

          “Title Insurance Policy” shall mean, an ALTA mortgagee title insurance policy in the form
acceptable to Lender (or, if the Property is in a State which does not permit the issuance of such
ALTA policy, such form as shall be permitted in such State and acceptable to Lender) issued with
respect to the Property and insuring the lien of the Mortgage.

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          “Total Debt” shall mean, collectively, the Debt and Other Debt.

          “Total Debt Service” shall mean, with respect to any particular period of time, scheduled
payments of principal, if any, and interest under the Building Loan, the Project Loan and, if
applicable, the Subordinate Financing.

          “Total Loan Amount” shall mean the sum of the Building Loan Amount, the Project Loan Amount
and the Subordinate Financing, if applicable.

          “Transfer” shall have the meaning set forth in Section 5.2.11(b) hereof.

          “Transferee” shall have the meaning set forth in Section 5.2.11(e).

          “Transferee’s Principals” shall mean collectively, (A) Transferee’s managing members, general
partners or principal shareholders and (B) such other members, partners or shareholders which
directly or indirectly shall own a fifty-one percent (51%) or greater economic and voting interest
in Transferee.

          “UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in the
State in which the Property is located.

          “U.S. Obligations” shall mean non-redeemable securities evidencing an obligation to timely pay
principal and/or interest in a full and timely manner that are (a) direct obligations of the United
States of America for the payment of which its full faith and credit is pledged, or (b) to the
extent acceptable to the Rating Agencies, other “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as amended.

          “Yield Maintenance Default Premium” shall mean an amount equal to the greater of (a) five
percent (5%) of the outstanding principal balance of the Loan to be prepaid or satisfied and (b)
the Defeasance Payment Amount that would be required if a Defeasance Event were to occur at such
time (whether or not then permitted) in an amount equal to the outstanding principal amount of the
Loan to be prepaid or satisfied.

          Yield Maintenance Premium” shall mean an amount equal to the greater of (a) one percent (1%)
of the outstanding principal of the Loan to be prepaid or satisfied and (b) the excess, if any, of
(i) the sum of the present values of all then-scheduled payments of principal and interest under
the Note assuming that all outstanding principal and interest on the Loan is paid on the Open
Period Date (with each such payment and assumed payment discounted to its present value at the date
of prepayment at the rate which, when compounded monthly, is equivalent to the Prepayment Rate when
compounded semi-annually and deducting from the sum of such present values any short-term interest
paid from the date of prepayment to the next succeeding Payment Date in the event such payment is
not made on a Payment Date), over (ii) the principal amount being prepaid.

     Section 1.2 Principles of Construction. 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

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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.

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 Building 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 Building Loan shall be evidenced by the Building Loan Note and secured by the Building
Loan Mortgage, the Building Loan Assignment of Leases and the other Building Loan Documents.

          2.1.4 Use of Proceeds. Borrower hereby agrees that Borrower shall use the proceeds of the Building Loan to pay or
reimburse itself for Building Loan Costs actually incurred in connection with demolition and the
construction of the Project Improvements if and to the extent that such Building Loan Costs are
reflected in the Building Loan Budget, subject to reallocation pursuant to Sections 2.1.6,
2.1.7 and 5.1.33 (or other reallocations approved by Lender in its sole
discretion).

          2.1.5 Advances. Lender shall not be required to Advance funds hereunder for any category or line item of
Building Loan Costs in excess of the amount specified for such line item or category in the
Building Loan Budget, subject to Sections 2.1.6, 2.1.7 and 5.1.33 (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-Related Costs which
will increase any one or more category or line item of costs reflected in the Development Budget,
Borrower shall immediately notify Lender in writing and promptly submit to Lender for its approval
a revised Development Budget. Any reallocation of any category or line items in the Development
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 and 5.1.33, 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

36

 

revised Development 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 Development 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. Following the satisfaction of the Initial Advance Conditions, and subject to the prior
approval of Lender in its sole discretion, Borrower may revise the Building Loan Budget to move (i)
amounts available under any Line Item for Hard Costs that are designated to “Contingency” to other
Line Items for Hard Costs in the Building Loan Budget, or (ii) amounts available under any Line
Item for Soft Costs that are designated “Contingency” to other Line Items for Soft Costs in the
Building Loan Budget. Any cost savings shall be allocated in accordance with Section
5.1.33 hereof. In no event may the Contingency Line Item of the Building Loan Budget be
reallocated to any Line Item in the Project Loan Budget. The Contingency Line Item in the Building
Loan Budget for Hard Costs shall contain at least five percent (5%) of the total projected Hard
Costs, separate from the Contingency Line Items in the Project Loan Budget.

          2.1.8 Stored Materials. Lender shall not be required to disburse any funds for any materials, machinery or other
Personal Property not yet incorporated into the Project Improvements (the “Stored Materials”),
unless the following conditions are satisfied:

          (a) Borrower shall deliver to Lender bills of sale or other evidence reasonably satisfactory
to Lender of the cost of, and, subject to the payment therefor, Borrower’s title in and to such
Stored Materials;

          (b) The Stored Materials are identified to the Property and Borrower, are segregated so as to
adequately give notice to all third parties of Borrower’s title in and to such materials, and are
components in substantially final form ready for incorporation into the Project Improvements;

          (c) The Stored Materials are stored at the Property or at such other third-party owned and
operated site as Lender shall reasonably approve, and are protected against theft and damage in a
manner satisfactory to Lender, including, if requested by Lender, storage in a bonded warehouse in
the greater metropolitan area in which the Property is located;

          (d) The Stored Materials will be paid for in full with the funds to be disbursed, and all lien
rights or claims of the supplier will be released upon full payment;

          (e) Lender has or will have upon payment with disbursed funds a perfected, first priority
security interest in the Stored Materials;

          (f) The Stored Materials are insured for an amount equal to their replacement costs in
accordance with Section 6.1 of this Agreement;

          (g) The aggregate cost of Stored Materials stored at the Property is approved by the
Construction Consultant and, if required by Lender, the Construction Consultant shall

37

 

certify that
it has inspected such Stored Materials and they are in good condition and suitable for use in
connection with the Project Improvements; and

          (h) The aggregate cost of Stored Materials stored on the Property at any one time shall not
exceed ten percent (10%) of the maximum amount of the Loan and the aggregate cost of Stored
Materials stored off the Property at any one time shall not exceed five percent (5%) of the maximum
amount of the Loan.

          2.1.9 Amount of Advances. In no event shall any Advance exceed the full amount of Building Loan Costs theretofore
paid or to be paid with the proceeds of such Advance plus any Building 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 Building
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 and 5.1.33, 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, 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

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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.

          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. Attached hereto as Schedule II is Borrower’s detailed and definitive budget of all
Project-Related Costs to be incurred by Borrower during the Construction Term and that will be
disbursed out of Loan proceeds subject to availability and satisfaction of all applicable
conditions to Advances hereunder and under the Project Loan Agreement, being so indicated,
delineated by each category of Project-Related Costs (each a “Line Item” or “Budget Line”) and
further broken down to segregate Building Loan Costs and Project Loan Costs, which budget has been
approved by Lender and Construction Consultant (the “Development Budget”). The portion of the
Development Budget that includes only Building Loan Costs is referred to herein as the “Building
Loan Budget” and the portion of the Development Budget that includes only Project Loan Costs is
referred to herein as the “Project Loan Budget.”

          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

39

 

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.

     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

40

 

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.

     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 Project Loan Advance, the
Monthly Debt Service Amount then due and owing shall be advanced by Lender by a Project Loan
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 a Project Loan 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

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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.

          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 hereof, 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.

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          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.

          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

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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;

     (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

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     (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.

          (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

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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.

          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. On or prior to the Closing Date, Borrower shall, at its sole cost and expense, cause each
of the following to occur to the satisfaction of Lender (collectively, the “Cash Management
Conditions”): (a) Borrower shall establish an Eligible Account (the “Clearing Account”) with an
Eligible Institution selected by Borrower and approved by Lender (the “Clearing Bank”); (b)
Borrower shall cause the Clearing Bank to execute and deliver the Clearing Account Agreement in
accordance with Section 2.7.1(b); (c) Borrower shall establish an Eligible Account (the
“Cash Management Account”) with an the Cash Management Bank designated by Lender pursuant to and
in accordance with the Cash Management Agreement and Section 2.7.2 hereof; (d) Borrower
shall deliver a Payment Direction Letter to the Tenant under any Lease then or thereafter in effect
and provide Lender with reasonably satisfactory evidence that the Tenant under such Lease has
confirmed that it shall comply with the terms thereof; (e) Borrower will take all actions necessary
to establish and maintain in favor of Lender a perfected first priority security interest in the
Clearing Account and Cash Management Account and all deposits at any time contained in either such
account and the proceeds thereof, including, without limitation, executing and filing UCC-1
Financing Statements; (f) Borrower shall deliver to Lender an opinion of Borrower’s counsel with
respect to the due execution, authority, enforceability of the Cash Management Agreement

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and
Clearing Account Agreement and confirming that Lender has first priority perfected security
interest in the Cash Management Account and Clearing Account and such other matters as Lender may
reasonably require, all such opinions in form, scope and substance satisfactory to Lender and
Lender’s counsel; and (g) Borrower shall reimburse Lender
for any and all cost and expenses, including reasonable attorney’s fees and disbursements,
resulting form the foregoing.

          2.7.1 Clearing Account.

          (a) Borrower shall establish and maintain the Clearing Account with the Clearing Bank on or
prior to the Closing Date, and thereafter Borrower shall maintain the Clearing Account at all times
during the remainder of the term of the Loan. The Clearing Account shall be entitled “P/A-Acadia
Pelham Manor, LLC, as Borrower and Bear Stearns Commercial Mortgage, Inc., as Lender, pursuant to
Loan Agreement dated as of December 10, 2007 — Clearing Account”. Borrower hereby grants to Lender
a first-priority security interest in the Clearing Account and all deposits at any time contained
therein and the proceeds thereof. All monies now or hereafter deposited into the Clearing Account
shall be deemed additional security for the Debt.

          (b) Borrower shall obtain from the Clearing Bank and deliver to Lender an agreement, in form
and substance satisfactory to Lender (the “Clearing Account Agreement”), pursuant to which: (i)
Borrower and Clearing Bank acknowledge and agree that during a Cash Trap Period, Lender shall have
the sole right to make withdrawals from the Clearing Account and all costs and expenses for
establishing and maintaining the Clearing Account shall be paid by Borrower; (ii) upon notice from
Lender that a Cash Trap Period exists, the Clearing Bank agrees to transfer to the Cash Management
Account in immediately available funds by federal wire transfer all amounts on deposit in the
Clearing Account once every Business Day during the term of the Loan.

          (c) Borrower shall (i) deliver irrevocable written instructions to all tenants under Leases to
deliver all Rents (including additional rent, payable thereunder directly to the Clearing Account,
and (ii) deliver irrevocable written instructions to each of the credit card companies or credit
card clearing banks with which Borrower or Manager has entered into merchant’s agreements to
deliver all receipts payable with respect to the Property directly to the Clearing Account
(collectively, the “Payment Direction Letters.”). Borrower and Manager shall deposit all amounts
received by Borrower or Manager constituting Rents into the Clearing Account within one (1)
Business Day after receipt thereof.

          (d) 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 the Clearing Account to the
payment of the Debt in any order in its sole discretion.

          (e) The Clearing Account shall be an Eligible Account and shall not be commingled with other
monies held by Borrower or Clearing Bank.

          (f) Borrower shall not further pledge, assign or grant any security interest in the Clearing
Account or the monies deposited therein or permit any lien or encumbrance to

47

 

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.

          (g) 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 Clearing Account and/or the Clearing Account Agreement (unless arising from the
gross negligence or willful misconduct of Lender) or the performance of the obligations for which
the Clearing Account was established.

          2.7.2 Cash Management Account.

          (a) Pursuant to and in accordance with the Cash Management Agreement, Borrower shall establish
and maintain a segregated Eligible Account (the “Cash Management Account”) to be held by an
Eligible Institution selected by Lender (the “Cash Management Bank”) in trust and for the benefit
of Lender, which Cash Management Account shall be under the sole dominion and control of Lender.
The Cash Management Account shall be entitled “P/A-Acadia Pelham Manor, LLC as Borrower and Bear
Stearns Commercial Mortgage, Inc., as Lender, pursuant to Loan Agreement dated as of December 10,
2007 — Cash Management Account.” Borrower hereby grants to Lender a first priority security
interest in the Cash Management Account and all deposits at any time contained therein and the
proceeds thereof and will take all actions necessary to maintain in favor of Lender a perfected
first priority security interest in the Cash Management Account, including, without limitation,
executing and filing UCC-1 Financing Statements and continuations thereof. Borrower will not in
any way alter or modify the Cash Management Account and will notify Lender of the account number
thereof. Lender and Servicer shall have the sole right to make withdrawals from the Cash
Management Account and all costs and expenses for establishing and maintaining the Cash Management
Account shall be paid by Borrower.

          (b) During a Cash Trap Period, and provided no Event of Default shall have occurred, on each
Payment Date (or, if such Payment Date is not a Business Day, on the immediately preceding Business
Day), all funds on deposit in the Cash Management Account shall be applied as set forth in the Cash
Management Agreement

          (c) The insufficiency of funds on deposit in the Cash Management Account shall not relieve
Borrower from the obligation to make any payments, as and when due pursuant to this Agreement and
the other Loan Documents, and such obligations shall be separate and independent, and not
conditioned on any event or circumstance whatsoever.

          (d) Borrower hereby agrees that Lender may modify the Cash Management Agreement for the
purpose of establishing additional sub-accounts in connection with any payments otherwise required
under this Agreement and the other Loan Documents and Lender shall provide notice thereof to
Borrower.

          (e) All funds on deposit in the Cash Management Account following the occurrence of an Event
of Default may be applied by Lender in such order and priority as Lender shall determine.

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          (f) Notwithstanding anything to the contrary herein, all transfers of Borrower’s funds from
the Cash Management Account or other sources to or for the benefit of
any mezzanine lender under any Subordinate Financing pursuant to this Agreement or any of the
other Loan Documents shall constitute distributions from Borrower to the Mezzanine Borrower and
must comply with the requirements as to distributions of the Delaware Limited Liability Company
Act. No provision of any of the Loan Documents shall create a debtor-creditor relationship between
Borrower and any mezzanine or subordinate lender.

          2.7.3 Payments Received Under the Cash Management Agreement. Notwithstanding anything to the contrary contained in this Agreement or the other Loan
Documents, and provided no Event of Default has occurred and is continuing, Borrower’s obligations
with respect to the payment of the Monthly Debt Service Payment Amount and amounts required to be
deposited on a monthly basis into the Reserve Funds, if any, shall be deemed satisfied to the
extent sufficient amounts are deposited in the Cash Management Account to satisfy such obligations
pursuant to the Cash Management Agreement on the dates each such payment is required, regardless of
whether any of such amounts are so applied by Lender.

     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 Advance. The obligation of Lender to make the initial Advance of the Building 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.

          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

49

 

satisfactory restoration of the Project Improvements and to permit the Completion of the Improvements prior to
the Required Completion Date.

          2.10.5 Government Approvals. Borrower shall have delivered to Lender evidence satisfactory to Lender that all
Governmental Approvals necessary for the construction of the Project Improvements as contemplated
by the Plans and Specifications, have been obtained and are in full force and effect, including,
without limitation, the final approval of the Plans and Specifications by the all applicable
Governmental Authorities for the Project Improvements and building permit(s) covering the entire
scope of work contemplated by the Project Improvements in accordance with the approved Plans and
Specification lawfully issued to Borrower.

          2.10.6 Final Project Report. The Final Project Report shall have been delivered to Lender by the Construction
Consultant.

          2.10.7 Development Budget. Borrower shall have prepared and Lender and Construction Consultant shall have approved
the Development Budget (including both the Building Loan Budget and the Project Loan Budget) and
the Disbursement Schedule. 

          2.10.8 Plans and Specifications. Two (2) complete sets of the Plans and Specifications and any and all modifications and
amendments made thereto which have been reviewed and approved by (A) Lender, and (B) the
Construction Consultant. Borrower shall deliver to Lender a list identifying the Plans and
Specifications and any and all modifications and amendments made thereto.

          2.10.9 General Contractor’s Agreement. Borrower and the General Contractor have entered into a Standard Form of Agreement between
Owner and Construction Manager where Construction Manager is NOT a Constructor dated as of February
22, 2006 that obligates the General Contractor to cause the Completion of the Improvements to occur
prior to the Required Completion Date reasonably acceptable to Lender and the Construction
Consultant in both form and substance (once
approved, the “General Contractor’s Agreement”). The General Contractor’s Agreement, shall
have been duly executed and delivered by the parties thereto, shall be in full force and effect and
Lender shall have received a certified copy or a fully executed duplicate original thereof. The
General Contractor shall have duly executed and delivered to Lender a consent to the assignment of
the General Contractor’s Agreement, in form and substance reasonably satisfactory to Lender, and
Lender shall have received a certified copy or a fully executed duplicate original thereof. If
General Contractor consist of more than one Person, then each such Person shall deliver a consent
to the assignment of the General Contractor’s Agreement, in form and substance satisfactory to
Lender, and Lender shall have received a certified copy or a fully executed duplicate original
thereof.

          2.10.10 Architect’s and General Contractor’s Certificates. Certificates from the Borrower’s Architect (the “Architect’s Certificate”)
substantially in the form attached hereto as Exhibit F and from the General Contractor (the
“General Contractor’s Certificate”) substantially in the form attached hereto as Exhibit G.

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          2.10.11 Contracts and Subcontracts. Borrower shall have delivered to Lender, and Lender and Construction Consultant shall have
approved a list, certified by Borrower, of all Contractors and Subcontractors who have been or, to
the extent identified by Borrower, will be supplying labor or materials for the Property. The list
of Contractors and Subcontractors may be amended from time to time subject to the approval of
Lender and Construction Consultant, in accordance with the terms hereof. Borrower shall have
delivered to Lender all Contract and Major Contracts for all of the work necessary for Completion
of the Improvements, and Lender and Construction Consultant shall have approved all such Major
Contracts. No Advance shall be made by Lender with regard to work done by or on behalf of any
Contractor or Subcontractor unless Borrower shall have delivered to Lender and Construction
Consultant originals of the following documents as to such Contractor or Subcontractor, each in
form and substance reasonably satisfactory to Lender:

          (a) Performance Letters. if requested by Lender, a performance letter (“Performance
Letter”) substantially in the form attached hereto as Exhibit H from such Contractors
and/or Subcontractors as Lender shall designate.

          (b) Other Documents. Such other documents and certificates as Lender or its counsel
may reasonably require.

          2.10.12 Contractors’ Consent to Assignment. Each Contractor, Sub-Contractor and Other Design Professionals shall have delivered a
consent to the assignment of each of their Contracts, in form and substance satisfactory to Lender,
and Lender shall have received a certified copy or a fully executed duplicate original of each such
Contract.

          2.10.13 Cash Management. Lender has determined that the Cash Management Conditions have been satisfied.

          2.10.14 Notices. All notices required by any Governmental Authority or by any applicable Legal Requirement
to be filed prior to commencement of construction of the Project Improvements shall have been
filed.

          2.10.15 Deliveries. Lender shall have received:

          (a) Draw Request. A Draw Request complying with the requirements hereof;

          (b) Affirmation of Payment. An Affirmation of Payment;

          (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 Construction 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 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

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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.

          2.10.16 Building Loan Agreement Filed. This Building Loan Agreement shall have been filed in the Westchester County Clerk’s
Office.

          2.10.17 Initial Project Loan Advance. All conditions to the initial advance of the Project Loan set forth in Section 2.10 of the
Project Loan Agreement shall have been satisfied.

          2.10.18 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.

          2.10.19 Home Depot Estoppel Certificate. Borrower shall have delivered to Lender an estoppel certificate 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”).

          2.10.20 Initial Reserve Deposits Borrower 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.

          2.10.21 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”).

          2.10.22 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

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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.

     Section 2.11 Construction Advances. The obligation of Lender to make the Advances of the Building Loan after the Initial
Advance shall be subject to the following conditions precedent (collectively, the “Construction
Advance Conditions”), 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.

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          2.11.5 Deliveries. The following items or documents shall have been delivered to Lender:

          (a) Anticipated Costs Report. An anticipated cost report (“Anticipated Costs Report”)
in the form set forth in Exhibit I 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 hereto, 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.

          (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 (“Affirmation
of Payment”) (AIA Form G706) in the form attached hereto as Exhibit E.

          (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

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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 Other Bids. If in the reasonable judgment of Lender and the Construction Consultant all Contracts,
Major Contracts, and the General Contractor’s Agreement do not cover all of the work necessary for
Completion of the Improvements, Borrower shall cause to be furnished firm bids from responsible
parties, or estimates and other information reasonably satisfactory to Lender, for the work not so
covered, to enable Lender to ascertain the total estimated cost of all work done and to be done.

          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 in Exhibit J, 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.

          2.11.10 Construction Consultant Approval. Lender has received advice from the Construction Consultant, satisfactory to Lender, as to
Construction Consultant’s determination, acting reasonably, 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 Project 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

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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 no 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.

          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.

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     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 Project Loan Advance. All conditions to the Final Project Loan Advance have
been satisfied and the Final Project 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 attached hereto as Exhibit J 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.

          (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 and General Contractor.

          (g) Deposits to Reserves. If Lender determines that any Punch List Work or Deferred
Maintenance Condition exists, the Punch List and Deferred Maintenance Deposit has been made, if
Lender determines that the deposits are required to the Operating Reserve
Account, the Operating Reserve Deposit has been made, and all other deposits to the Reserve
Funds required by this 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 Project Loan Advance under the Project
Loan): (i) the Loan-to-Cost Ratio shall be no more than 80%; (ii) the Stabilized Loan-to-Value
Ratio shall be no more than 80%; (iii) the Stabilized Net Cash Flow for the entire Property shall
be not less than $3,100,000; (iv) the Debt Service Coverage Ratio based on Lender’s underwritten
Net Operating Income and the greater of the actual debt service constant or 9.30% shall be .99 to
1.0 or greater; and (v) the Debt Service Coverage Ratio based on the

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Stabilized Net Cash Flow and
the greater of the actual debt service constant or 7.31% shall be 1.15 to 1.0 or greater (the
“Required Ratios at Completion”), 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 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; 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 “Building Loan Earn Out
Advance” and the corresponding portion of the Final Project Loan Advance is referred to herein as
the “Project Loan Earn Out Advance” and together with the Building 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%.

          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

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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 this 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 hereto as Exhibit
L (“Borrower’s Requisition”).

          (a) Borrower’s Requisition shall be accompanied by a completed and itemized Application and
Certificate for Payment (AIA Document No. G702) attached hereto as Exhibit M 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 Building 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;

          (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 Building 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

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          (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 date of the requested Advance (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

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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.

          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. The affidavit attached hereto as Exhibit D is made
pursuant to and in compliance with Section 22 of the Lien Law, and, if so indicated in said
affidavit, Building Loan proceeds will be used, in part, for reimbursement for payments made by the
Borrower prior
to the Initial Advance hereunder but subsequent to the commencement of the construction and
equipping of the Improvements for items constituting Costs of the 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 Plan Review Process.

          (a) Borrower hereby acknowledges and agrees that neither Lender nor the Construction
Consultant’s approval of any Plans and Specifications (or any revisions thereto), nor its
inspection of the performance of the construction, nor its right to inspect such work, shall impose
upon Lender and/or Construction Consultant any obligation or liability whatsoever with respect
thereto, including, without limitation, any obligation or liability that might arise as a result of
such work not being performed in accordance with applicable laws and/or requirements of public
authorities or with the Plans and Specifications (and revisions thereto) approved by Lender and
Construction Consultant or otherwise. The review or approval by Lender and Construction Consultant
of any Plans and Specifications or any revisions thereto is solely for Lender’s benefit, and is
without any representation or warranty whatsoever with respect to the adequacy, correctness or
efficiency thereof or otherwise. The granting by Lender and/or Construction Consultant of its
approval of any Plans and Specifications or any revisions thereto, shall not in any manner
constitute or be deemed to constitute a judgment or acknowledgment by Lender as to their legality
or compliance with laws and/or requirements of public authorities.

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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 following conditions precedent no later than the Closing Date:

          3.1.1 Representations and Warranties; Compliance with Conditions. The representations and warranties of Borrower contained in this Agreement and the other
Loan Documents shall be true and correct in all material respects on and as of the Closing Date
with the same effect as if made on and as of such date, and no Default or an Event of Default shall
have occurred and be continuing; and Borrower shall be in compliance in all material respects with
all terms and conditions set forth in this Agreement and in each other Loan Document on its part to
be observed or performed.

          3.1.2 Loan Agreement and Note. Lender shall have received a copy of this Agreement and the Note, in each case, duly
executed and delivered on behalf of Borrower.

          3.1.3 Delivery of Loan Documents; Title Insurance; Reports; Leases.

          (a) Mortgage, Assignment of Leases. Lender shall have received from Borrower fully
executed and acknowledged counterparts of the Mortgage and the Assignment of Leases and evidence
that counterparts of the Mortgage and Assignment of Leases have been delivered to the Title Company
for recording, in the reasonable judgment of Lender, so as to effectively create upon such
recording valid and enforceable Liens upon the Property, of the requisite priority, in favor of
Lender or Lender’s nominee (or such other trustee as may be required or desired under local law),
subject only to the Permitted Encumbrances and such other Liens as are permitted pursuant to the
Loan Documents. Lender shall have also received from Borrower fully executed counterparts of the
other Loan Documents.

          (b) Title Insurance. Lender shall have received the Title Insurance Policy issued by
a title company acceptable to Lender (the “Title Company”) and dated as of the Closing Date, with
reinsurance and direct access agreements acceptable to Lender. Such Title Insurance Policy shall
(i) provide coverage in amounts satisfactory to Lender, (ii) insure Lender that the Mortgage
creates a valid lien on the Property of the requisite priority, free and clear of all exceptions
from coverage other than Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (iii) contain such endorsements and
affirmative coverages as Lender may reasonably request, and (iv) name Lender as the insured. The
Title Insurance Policy shall be assignable. Lender also shall have received evidence that all
premiums in respect of such Title Insurance Policy have been paid.

          (c) Survey. Lender shall have received a title survey for the Property, certified to
the Title Company and Lender and their successors and assigns, in form and content satisfactory to
Lender and prepared by a professional and properly licensed land surveyor satisfactory to Lender in
accordance with the Accuracy Standards for ALTA/ACSM Land Title Surveys as adopted by American Land
Title Association, American Congress on Surveying &

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Mapping and National Society of Professional
Surveyors in 1999 or in such other form as Lender shall approve (the “Survey”). The Survey shall
reflect the same legal description contained in the Title Insurance Policy referred to in
clause (b) above and shall include, among other things, a metes and bounds description of
the real property comprising part of the Property reasonably satisfactory to Lender. The
surveyor’s seal shall be affixed to the Survey and the surveyor shall provide a certification for
the Survey in form and substance acceptable to Lender.

          (d) Insurance. Lender shall have received valid certificates of insurance for the
policies of insurance required hereunder, satisfactory to Lender in its sole discretion, and
evidence of the payment of all premiums payable for the existing policy period.

          (e) Environmental Reports. Lender shall have received a Phase I environmental report
(and, if recommended by the Phase I environmental report, a Phase II environmental report) in
respect of the Property, in each case satisfactory in form and substance to Lender.

          (f) Zoning. Evidence reasonably acceptable to Lender confirming that the Project
Improvements can be developed and constructed in accordance with the Plans and
Specifications “as of right” without requiring the issuance of any zoning variance or other
discretionary permit and/or approval and such other matters as Lender may reasonably require.

          (g) Encumbrances. Borrower shall have taken or caused to be taken such actions in
such a manner so that Lender has a valid and perfected first priority Lien as of the Closing Date
with respect to the Mortgage, subject only to applicable Permitted Encumbrances and such other
Liens as are permitted pursuant to the Loan Documents, and Lender shall have received satisfactory
evidence thereof.

          3.1.4 Related Documents. Each additional document not specifically referenced herein, but relating to the
transactions contemplated herein, shall be in form and substance reasonably satisfactory to Lender,
and shall have been duly authorized, executed and delivered by all parties thereto and Lender shall
have received and approved certified copies thereof.

          3.1.5 Delivery of Organizational Documents. On or before the Closing Date, Borrower shall deliver or cause to be delivered to Lender
copies certified by Borrower of all organizational documentation related to Borrower and/or the
formation, structure, existence, good standing and/or qualification to do business, as Lender may
request in its sole discretion, including, without limitation, amendments (as requested by Lender),
good standing certificates, qualifications to do business in the appropriate jurisdictions,
resolutions authorizing the entering into of the Loan and incumbency certificates as may be
requested by Lender.

          3.1.6 Opinions of Borrower’s Counsel. Lender shall have received opinions from Borrower’s counsel with respect to due
execution, authority, enforceability of the Loan Documents and such other matters as Lender may
reasonably require, including, without limitation, the Insolvency Opinion, all such opinions in
form, scope and substance satisfactory to Lender and Lender’s counsel in their sole discretion.

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          3.1.7 Development Budget. Borrower shall have delivered, and Lender and Construction Consultant shall have
approved, the Development Budget and the Disbursement Schedule attached thereto, and certified by
Borrower as being true, correct and complete.

          3.1.8 Carrying Costs. Borrower shall have paid all Carrying Costs relating to the Property then due and payable
including without limitation, (a) accrued but unpaid Insurance Premiums due pursuant to the
Policies, (b) currently due Taxes (including any in arrears) relating to the Property, and (c)
currently due Other Charges relating to the Property, which amounts shall be funded with proceeds
of the Loan.

          3.1.9 Completion of Proceedings. All organizational and other proceedings taken or to be taken in connection with the
transactions contemplated by this Agreement and other Loan Documents and all documents incidental
thereto shall be satisfactory in form and substance satisfactory to Lender, and Lender shall have
received all such counterpart originals or certified copies of such documents as Lender may
reasonably request.

          3.1.10 Payments. All payments, deposits or escrows required to be made or established by Borrower under this
Agreement, the Note and the other Loan Documents on or before the Closing Date shall have been
paid.

          3.1.11 Payment of Fees. Payment by Borrower of all fees and expenses required by this Agreement and/or the other
Loan Documents, to the extent due and payable, including, without limitation, Lender’s reasonable
attorneys’ fees and expenses, all origination fees, and brokerage commissions.

          3.1.12 Transaction Costs. Borrower shall have paid or reimbursed Lender for all title insurance premiums, recording
and filing fees, costs of environmental reports, Physical Conditions Report, appraisals and other
reports, the fees and costs of Lender’s counsel, and all other third party out-of-pocket expenses
incurred in connection with the origination and closing of the Loan.

          3.1.13 Material Adverse Change. There shall have been no material adverse change in the financial condition or business
condition of Borrower, any one or more of the Persons comprising Guarantor that, in the aggregate,
constitutes a material adverse change in the financial condition of the Guarantor collectively, or
a material adverse change in the Property since the date of the most recent financial statements
delivered to Lender. The income and expenses of the Property, the occupancy thereof, and all other
features of the transaction shall be as represented to Lender without material adverse change.
Neither Borrower, Guarantor nor any of their respective constituent Persons shall be the subject of
any bankruptcy, reorganization, or insolvency proceeding.

          3.1.14 Required Equity Funds. Borrower shall furnish Lender with evidence in form and content satisfactory to Lender
that Borrower has contributed the Required Equity Funds for approved Project-Related Costs.

          3.1.15 Ratios. Following the Initial Advance, the Loan-to-Cost Ratio shall be no greater than 80%.

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          3.1.16 Intentionally Omitted

          3.1.17 Physical Conditions Report. Lender shall have received a Physical Conditions Report with respect to the Property, which
report shall be issued by an engineer selected by Lender and shall be reasonably satisfactory in
form and substance to Lender.

          3.1.18 The Architect’s Contract. The Architect’s Contract in form and substance satisfactory to Lender, shall have been duly
executed and delivered by the parties thereto, shall be in full force and effect and Lender shall
have received a certified copy or a fully executed duplicate original thereof. Borrower’s
Architect shall have duly executed and delivered to Lender a consent to the assignment of the
Architect’s Contract, in form and substance satisfactory to Lender, and Lender shall have received
a certified copy or a fully executed duplicate original thereof. If Borrower’s Architect consists
of more than one Person, then each such Person shall deliver a consent to the assignment of the
Architect’s Contract in form and substance satisfactory to Lender, and Lender shall have received
a certified copy or a fully executed duplicate original thereof. All Other Design Professionals
shall deliver a consent to the assignment to each of their Contracts, in form and substance
satisfactory to Lender, and Lender shall have received a certified copy or a fully executed
duplicate original of each such Contract.

          3.1.19 Appraisal. Lender shall have received an appraisal of the Property, from an appraiser selected by
Lender, which appraisal shall be satisfactory in form and substance to Lender.

          3.1.20 Deliveries. The following items or documents shall have been delivered to Lender:

          (a) Plans and Specifications. Two (2) complete sets of the Plans and Specifications
and any and all modifications and amendments made thereto which have been reviewed and approved by
Lender and the Construction Consultant. Borrower shall deliver to Lender a list identifying the
Plans and Specifications and any and all modifications and amendments made thereto.

          (b) Insurance. All Policies of insurance (or certificates thereof) required by
Section 6.1 of this Agreement or any other Loan Document.

          (c) Final Project Report. The Final Project Report shall have been delivered to
Lender by the Construction Consultant.

          (d) 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.

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          (e) Construction Schedule. The Construction Schedule, certified by Borrower as being
true, correct and complete, which shall have been approved by Lender and the Construction
Consultant.

          3.1.21 Management Agreement. Lender shall have received a certified copy of each Management Agreement with respect to
the Property which shall be satisfactory in form and substance to Lender.

          3.1.22 Subordination. Lender shall have received the Subordination of Affiliate Fee executed by Borrower,
Guarantor, each member of Borrower or any other Affiliate of Borrower entitled to an Affiliate Fee.

          3.1.23 Ground Lease/Estoppels. Lender shall have received a fully executed copy of the Ground Lease in form and substance
satisfactory to lender together with an executed estoppel letter from the Ground Lessor, which
shall be in form and substance satisfactory to Lender.

          3.1.24 Further Documents. Lender or its counsel shall have received such other documents and further approvals,
opinions, documents and information as Lender or its counsel may have reasonably requested
including the Loan Documents in form and substance satisfactory to Lender and its counsel.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

     Section 4.1 Borrower Representations. Borrower represents and warrants as of the date hereof and as of the Closing Date that:

          4.1.1 Organization. Borrower has been duly organized and is validly existing and in good standing with
requisite power and authority to own its properties and to transact the businesses in which it is
now engaged. Borrower is duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its properties, businesses
and operations. Borrower possesses all rights, licenses, permits and authorizations, governmental
or otherwise, necessary to entitle it to own its properties and to transact the
businesses in which it is now engaged, and the sole business of Borrower is the ownership,
management and operation of the Property. The ownership interests in Borrower are as set forth on
the organizational chart attached hereto as Schedule I.

          4.1.2 Proceedings. Borrower has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents. This Agreement and such other Loan
Documents have been duly executed and delivered by or on behalf of Borrower and constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in accordance with their
respective terms, subject only to applicable bankruptcy, insolvency and similar laws affecting
rights of creditors generally, and subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at law).

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          4.1.3 No Conflicts. The execution, delivery and performance of this Agreement and the other Loan Documents by
Borrower will not conflict with or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the property or assets of
Borrower pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement,
partnership agreement, management agreement or other agreement or instrument to which Borrower is a
party or by which any of Borrower’s property or assets is subject, nor will such action result in
any violation of the provisions of any statute or any order, rule or regulation of any Governmental
Authority having jurisdiction over Borrower or any of Borrower’s properties or assets, and any
consent, approval, authorization, order, registration or qualification of or with any court or any
such Governmental Authority required for the execution, delivery and performance by Borrower of
this Agreement or any other Loan Documents has been obtained and is in full force and effect.

          4.1.4 Litigation. There are no actions, suits or proceedings at law or in equity by or before any
Governmental Authority or other agency now pending, or threatened against or affecting Borrower,
Guarantor or the Property, which actions, suits or proceedings, if determined against Borrower,
Guarantor or the Property, might materially adversely affect the condition (financial or otherwise)
or business of Borrower, Guarantor or the condition or ownership of the Property.

          4.1.5 Agreements. Borrower is not a party to any agreement or instrument or subject to any restriction which
might materially and adversely affect Borrower or the Property, or Borrower’s business, properties
or assets, operations or condition, financial or otherwise. Borrower is not in default in any
material respect in the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party or by which Borrower
or the Property is bound. Borrower has no material financial obligation under any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which Borrower is a
party or by which Borrower or the Property is otherwise
bound, other than (a) obligations incurred in the ordinary course of the operation of the
Property as permitted pursuant to clause (xx) of the definition of “Special Purpose Entity”
set forth in Section 1.1 hereof and (b) obligations under the Loan Documents.

          4.1.6 Title. Borrower has good, marketable and insurable leasehold title to the real property comprising
part of the Property and good title to the balance of the Property, free and clear of all Liens
whatsoever except the Permitted Encumbrances, such other Liens as are permitted pursuant to the
Loan Documents and the Liens created by the Loan Documents. The Permitted Encumbrances in the
aggregate do not materially and adversely affect the value, operation or use of the Property (as
currently used) or Borrower’s ability to repay the Loan. The Mortgage, when properly recorded in
the appropriate records, together with any Uniform Commercial Code financing statements required to
be filed in connection therewith, will create (a) a valid, perfected first priority lien on the
Property, subject only to Permitted Encumbrances and the Liens created by the Loan Documents and
(b) perfected security interests in and to, and perfected collateral assignments of, all personalty
(including the Leases), all in accordance with the terms thereof, in each case subject only to any
applicable Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan Documents
and the Liens created by the Loan Documents. There are no claims for payment for work, labor or
materials affecting the Property

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which are or may become a Lien prior to, or of equal priority
with, the Liens created by the Loan Documents.

          4.1.7 Solvency. Borrower has (a) not entered into this transaction or executed the Note, this Agreement or
any other Loan Documents with the actual intent to hinder, delay or defraud any creditor and (b)
received reasonably equivalent value in exchange for its obligations under such Loan Documents.
Giving effect to the Loan, the fair saleable value of Borrower’s assets exceeds and will,
immediately following the making of the Loan, exceed Borrower’s total liabilities, including,
without limitation, subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower’s assets is and will, immediately following the making of the Loan, be
greater than Borrower’s probable liabilities, including the maximum amount of its contingent
liabilities on its debts as such debts become absolute and matured. Borrower’s assets do not and,
immediately following the making of the Loan will not, constitute unreasonably small capital to
carry out its business as conducted or as proposed to be conducted. Borrower does not intend to,
and does not believe that it will, incur debt and liabilities (including contingent liabilities and
other commitments) beyond its ability to pay such debt and liabilities as they mature (taking into
account the timing and amounts of cash to be received by Borrower and the amounts to be payable on
or in respect of obligations of Borrower). No petition in bankruptcy has been filed against
Borrower or any Guarantor in the last seven (7) years, and neither Borrower nor any Guarantor in
the last seven (7) years has ever made an assignment for the benefit of creditors or taken
advantage of any insolvency act for the benefit of debtors. Neither Borrower nor any Guarantor is
contemplating either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of Borrower’s assets or property, and
Borrower has no knowledge of any Person contemplating the filing of any such petition against it or
such constituent Persons.

          4.1.8 Full and Accurate Disclosure. No statement of fact made by Borrower in this Agreement or in any of the other Loan
Documents contains any untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There is no material fact
presently known to Borrower which has not been disclosed to Lender which adversely affects, nor as
far as Borrower can foresee, might adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower.

          4.1.9 No Plan Assets. Borrower does not sponsor, is not obligated to contribute to, and is not itself an
“employee benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA or
Section 4975 of the Code, and none of the assets of Borrower constitutes or will constitute “plan
assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In addition,
(a) Borrower is not a “governmental plan” within the meaning of Section 3(32) of ERISA and (b)
transactions by or with Borrower are not subject to any state or other statute , regulation or
other restriction regulating investments of, or fiduciary obligations with respect to, governmental
plans within the meaning of Section 3(32) of ERISA which is similar to the provisions of Section
406 of ERISA or Section 4975 of the Code and which prohibit or otherwise restrict the transactions
contemplated by this Agreement, including but not limited to the exercise by Lender of any of its
rights under the Loan Documents.

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          4.1.10 Compliance. Borrower and the Property and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and zoning ordinances and
codes. To the best of Borrower’s knowledge, Borrower is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority. There has not been committed by
Borrower or any other Person in occupancy of or involved with the operation or use of the Property
any act or omission affording the federal government or any other Governmental Authority the right
of forfeiture as against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents.

          4.1.11 Financial Information. All financial data, including, without limitation, the statements of cash flow and income
and operating expense, that have been delivered to Lender in connection with the Loan (i) are true,
complete and correct in all material respects, (ii) accurately represent the financial condition of
Borrower and the Property, as applicable, as of the date of such reports, and (iii) to the extent
prepared or audited by an independent certified public accounting firm, have been prepared in
accordance with GAAP throughout the periods covered, except as disclosed therein. Except for
Permitted Encumbrances, Borrower does not have any contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a materially adverse effect on
the Property or the operation thereof as a mixed use retail and self-storage facility, except as
referred to or reflected in said financial statements. Since the date of such financial
statements, there has been no materially adverse change in the financial condition, operations or
business of Borrower from that set forth in said financial statements.

          4.1.12 Condemnation. No Condemnation or other proceeding has been commenced or, to Borrower’s best knowledge, is
threatened or contemplated with respect to all or any portion of the Property or for the relocation
of roadways providing access to the Property.

          4.1.13 Federal Reserve Regulations. No part of the proceeds of the Loan will be used for the purpose of purchasing or acquiring
any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such Regulation U or any
other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements
or by the terms and conditions of this Agreement or the other Loan Documents.

          4.1.14 Utilities and Public Access. The Property has rights of access to public ways and is served by water, sewer, sanitary
sewer and storm drain facilities adequate to service the Property for its intended uses. All
public utilities necessary or convenient to the full use and enjoyment of the Property are located
either in the public right-of-way abutting the Property (which are connected so as to serve the
Property without passing over other property) or in recorded easements serving the Property and
such easements are set forth in and insured by the Title Insurance Policy. All roads necessary for
the use of the Property for its current purposes have been completed and dedicated to public use
and accepted by all Governmental Authorities.

          4.1.15 Not a Foreign Person. Borrower is not a “foreign person” within the meaning of §1445(f)(3) of the Code.

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          4.1.16 Separate Lots. The Property is comprised of one (1) or more parcels which constitute a separate tax lot or
lots and does not constitute a portion of any other tax lot not a part of the Property.

          4.1.17 Assessments. There are no pending or proposed special or other assessments for public improvements or
otherwise affecting the Property, nor are there any contemplated improvements to the Property that
may result in such special or other assessments.

          4.1.18 Enforceability. The Loan Documents are not subject to any right of rescission, set-off, counterclaim or
defense by Borrower or Guarantor, including the defense of usury, nor would the operation of any of
the terms of the Loan Documents, or the exercise of any right thereunder, render the Loan Documents
unenforceable (subject to principles of equity and bankruptcy, insolvency and other laws generally
affecting creditors’ rights and the enforcement of debtors’
obligations), and neither Borrower nor Guarantor have asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.

          4.1.19 No Prior Assignment. There are no prior assignments of the Leases or any portion of the Rents due and payable or
to become due and payable which are presently outstanding.

          4.1.20 Insurance. Borrower has obtained and has delivered to Lender certified copies of the Policies
reflecting the insurance coverages, amounts and other requirements set forth in this Agreement. No
claims have been made or are currently pending, outstanding or otherwise remain unsatisfied under
any such Policy, and neither Borrower nor any other Person, has done, by act or omission, anything
which would impair the coverage of any such Policy.

          4.1.21 Management Agreement. The Management Agreement is in full force and effect and there is no default thereunder by
any party thereto and no event has occurred that, with the passage of time and/or the giving of
notice would constitute a default thereunder. The Management Agreement was entered into on
commercially reasonable terms.

          4.1.22 Ground Lease. Borrower hereby represents and warrants to Lender the following with respect to the Ground
Lease:

          (a) Recording; Modification. A memorandum of the Ground Lease has been duly recorded.
The Ground Lease permits the interest of Borrower to be encumbered by a mortgage or the Ground
Lessor has approved and consented to the encumbrance of the Property by the Mortgage. There have
been no amendments or modifications to the terms of the Ground Lease since recordation of the
Ground Lease (or a memoranda thereof), with the exception of written instruments which have been
delivered to Lender. The Ground Lease may not be terminated, surrendered or amended without the
prior written consent of Lender; provided that Ground Lessor shall not be prevented from exercising
its remedies in accordance with the Ground Lease if the obligations of Borrower under the Ground
Lease are not performed as provided in the Ground Lease, subject to notice and cure rights provided
to Lender in the Ground Lease.

          (b) No Liens. Except for the Permitted Encumbrances and other encumbrances of record,
Borrower’s interest in the Ground Lease is not subject to any Liens or

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encumbrances superior to, or
of equal priority with, the Mortgage other than the Ground Lessor’s related fee interest.

          (c) Ground Lease Assignable. Borrower’s interest in the Ground Lease is assignable
without the consent of the Ground Lessor to Lender, the purchaser at any foreclosure sale or the
transferee under a deed or assignment in lieu of foreclosure in connection with the foreclosure of
the Lien of the Mortgage or transfer of Borrower’s leasehold state by deed or
assignment in lieu of foreclosure. In connection with the first assignment thereafter, the
Ground Lease is further assignable by such transferee and its successors and assigns without the
consent of the Ground Lessor, subject to the provisions of Section 11.1(b) of the Ground Lease.

          (d) Default. As of the date hereof, the Ground Lease is in full force and effect and
no default has occurred under the Ground Lease and there is no existing condition which, but for
the passage of time or the giving of notice, could result in a default under the terms of the
Ground Lease.

          (e) Notice. The Ground Lease requires the Ground Lessor to give notice of any default
by Borrower to Lender prior to exercising its remedies thereunder.

          (f) Cure. Lender is permitted the opportunity (including, where necessary, sufficient
time to gain possession of the interest of Borrower under the Ground Lease) to cure any default
under the Ground Lease, which is curable after the receipt of notice of any of the default before
the Ground Lessor thereunder may terminate the Ground Lease as set forth in Section 11.8 thereof.

          (g) Term. The Ground Lease has a term which extends not less than ten (10) years
beyond the Maturity Date.

          (h) New Lease. The Ground Lease requires the Ground Lessor to enter into a new lease
upon termination of the Ground Lease for any reason, including rejection or disaffirmation of the
Ground Lease in a bankruptcy proceeding.

          (i) Insurance Proceeds. Under the terms of the Ground Lease and the Mortgage, taken
together, any related insurance and condemnation proceeds that are paid or awarded with respect to
the leasehold interest will be applied either to the repair or restoration of all or part of the
Property, with Lender having the right, if the proceeds exceed $500,000, to hold and disburse the
proceeds as the repair or restoration progresses, or to the payment of the outstanding principal
balance of the Loan together with any accrued interest thereon.

          (j) Subleasing. Except as set forth in Article 11 of the Ground Lease, the Ground
Lease does not impose any restrictions on subleasing.

          4.1.23 Flood Zone. None of the Improvements on the Property is located in an area as identified by the Federal
Emergency Management Agency as an area having special flood hazards and, if so located, the flood
insurance required pursuant to Section 6.1.1(a)(A) is in full force and effect with respect
to the Property.

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          4.1.24 Required Equity Funds. Borrower represents and warrants to Lender that Borrower has contributed the Required
Equity Funds for approved Project-Related Costs.

          4.1.25 Boundaries. All of the improvements which were included in determining the appraised value of the
Property lie wholly within the boundaries and building restriction lines of the Property, and no
improvements on adjoining properties encroach upon the Property, and no easements or other
encumbrances upon the Property encroach upon any of the Improvements, so as to affect the value or
marketability of the Property except those which are insured against by the Title Insurance Policy.

          4.1.26 Leases. The Property is not subject to any leases other than the Leases described in the rent roll
attached hereto as Schedule V and made a part hereof. Borrower is the owner and lessor of
landlord’s interest in the Leases. No Person has any possessory interest in the Property or right
to occupy the same except under and pursuant to the provisions of the Leases. The current Leases
are in full force and effect and, to the best of Borrower’s knowledge, (a) there are no defaults
thereunder by either party and (b) there are no conditions that, with the passage of time or the
giving of notice, or both, would constitute defaults thereunder. No Rent (including security
deposits) has been paid more than one (1) month in advance of its due date. To the best of
Borrower’s knowledge, all work to be completed by Borrower prior to the date hereof under each
Lease has been performed as required and has been accepted by the applicable tenant, and any
payments, free rent, partial rent, rebate of rent or other payments, credits, allowances or
abatements required to be given by Borrower to any tenant has already been received by such tenant.
There has been no prior sale, transfer or assignment, hypothecation or pledge of any Lease or of
the Rents received therein. To the best of Borrower’s knowledge, no tenant listed on Schedule
I has assigned its Lease or sublet all or any portion of the premises demised thereby, no such
tenant holds its leased premises under assignment or sublease, nor does anyone except such tenant
and its employees occupy such leased premises. No Tenant under any Lease has a right or option
pursuant to such Lease or otherwise to purchase all or any part of the leased premises or the
building of which the leased premises are a part. No Tenant has no right or option for additional
space in the Improvements. Except as otherwise disclosed by the Environmental Report (as defined
in the Mortgage), no hazardous wastes or toxic substances, as defined by applicable federal, state
or local statutes, rules and regulations, have been disposed, stored or treated by any tenant under
any Lease on or about the Property nor does Borrower have any knowledge of any Tenant’s intention
to use its premises for any activity which, directly or indirectly, involves the use, generation,
treatment, storage, disposal or transportation of any petroleum product or any toxic or hazardous
chemical, material, substance or waste. True, correct and complete copies of the Leases have been
provided to Lender and such Leases have not been modified or amended in any way.

          4.1.27 Survey. The Survey for the Property delivered to Lender in connection with this Agreement has been
prepared in accordance with the provisions of Section 3.1.3(c) hereof, and does not fail to
reflect any material matter affecting the Property or the title thereto.

          4.1.28 Inventory. Borrower is the owner of all of the Equipment, Fixtures and Personal Property (as such
terms are defined in the Mortgage) located on or at the Property and shall not lease any Equipment,
Fixtures or Personal Property other than as permitted hereunder.

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All of the Equipment, Fixtures and Personal Property are sufficient to operate the Property in the manner
required hereunder and in the manner in which it is currently operated.

          4.1.29 Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid by any Person under applicable Legal Requirements currently in
effect in connection with the transfer of the Property to Borrower have been paid. All mortgage,
mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan Documents,
including, without limitation, the Mortgage, have been paid, and, under current Legal Requirements,
the Mortgage is enforceable in accordance with its terms by Lender (or any subsequent holder
thereof), subject to principles of equity and bankruptcy, insolvency and other laws generally
applicable to creditors’ rights and the enforcement of debtors’ obligations.

          4.1.30 Special Purpose Entity/Separateness.

          (a) Until the Total Debt has been paid in full, Borrower hereby represents, warrants and
covenants, that Borrower is, shall be and shall continue to be a Special Purpose Entity.

          (b) The representations, warranties and covenants set forth in Section 4.1.30(a) shall
survive for so long as any amount remains payable to Lender under this Agreement or any other Loan
Document.

          (c) All of the facts stated and all of the assumptions made in the Insolvency Opinion,
including, but not limited to, in any exhibits attached thereto, are true and correct in all
respects and all facts stated and all assumptions made in any subsequent non-consolidation opinion
required to be delivered in connection with the Loan Documents (an “Additional Insolvency
Opinion”), including, but not limited to, any exhibits attached thereto, will have been and shall
be true and correct in all respects. Borrower has complied and will comply with, all of the
assumptions made with respect to Borrower in the Insolvency Opinion. Borrower will have complied
and will comply with all of the assumptions made with respect to Borrower in any Additional
Insolvency Opinion. Each entity other than Borrower with respect to which an assumption shall be
made in any Additional Insolvency Opinion will have complied and will comply with all of the
assumptions made with respect to it in any Additional Insolvency Opinion.

          4.1.31 Property Management Agreement. The Management Agreement is in full force and effect and there is no default
thereunder by any party thereto and no event has occurred that, with the passage of time and/or the
giving of notice would constitute a default thereunder. The Management Agreement was entered into
on commercially reasonable terms.

          4.1.33 Illegal Activity. No portion of the Property has been or will be purchased with proceeds of any illegal
activity.

          4.1.34 No Change in Facts or Circumstances; Disclosure. All information submitted by and on behalf of Borrower to Lender and in all financial
statements, rent rolls

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(including the Rent Roll attached hereto as Schedule V), reports,
certificates and other documents submitted in connection with the Loan or in satisfaction of the
terms thereof and all statements of fact made by Borrower in this Agreement or in any other Loan
Document, are accurate, complete and correct in all material respects. There has been no material
adverse change in any condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that otherwise materially
and adversely affects or might materially and adversely affect the use, operation or value of the
Property or the business operations or the financial condition of Borrower. Borrower has disclosed
to Lender all material facts and has not failed to disclose any material fact that could cause any
Provided Information or representation or warranty made herein to be materially misleading.

          4.1.35 Investment Company Act. Borrower is not (a) an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended; (b) a “holding
company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding
company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of
1935, as amended; or (c) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

          4.1.36 Embargoed Person. As of the date hereof and at all times throughout the term of the Loan, including after
giving effect to any Transfers permitted pursuant to the Loan Documents, (a) none of the funds or
other assets of Borrower and Guarantor constitute property of, or are beneficially owned, directly
or indirectly, by any Embargoed Person; (b) no Embargoed Person has any interest of any nature
whatsoever in Borrower or Guarantor, as applicable, with the result that the investment in Borrower
or Guarantor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law; and (c) none of the funds of Borrower or Guarantor, as applicable have been
derived from any unlawful activity with the result that the investment in Borrower or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is in violation of
law.

          4.1.37 Principal Place of Business; State of Organization. Borrower’s principal place of business as of the date hereof is the address set forth in
the introductory paragraph of this Agreement. The Borrower is organized under the laws of the
State of Delaware.

          4.1.38 Intentionally Omitted.

          4.1.39 Mortgage Taxes. As of the date hereof, Borrower represents that it has paid all state, county and municipal
recording and all other taxes imposed upon the execution and recordation of the Mortgage.

          4.1.40 Zoning; Building Permits. The Project Improvements can be developed and constructed in accordance with the Plans and
Specifications “as of right” without requiring the issuance of any zoning variance or other
discretionary permit and/or approval. Borrower has obtain all building permits and other
Governmental Approvals required for the construction of the Project Improvements.

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          4.1.41 Intentionally Omitted..

          4.1.42 Single Purpose; Borrower’s Prior Acts. Borrower hereby represents and warrants to Lender that:

          (a) Since its formation, Borrower has not owned any asset or property other than (i) the
Property, and (ii) incidental personal property necessary for the ownership or operation of the
Property.

          (b) Since its formation, Borrower has not engaged in any business other than the ownership,
management and operation of the Property and Borrower has conducted and operated its business as
presently conducted and operated.

          (c) Since its formation, Borrower has not entered into any contract or agreement with any of
its Affiliates, any of its constituent parties or any Affiliate of any constituent party, except
those (i) in the ordinary course of its business and on terms which are intrinsically fair,
commercially reasonable and are substantially similar to those that would be obtained in a
comparable arm’s-length transaction with an unrelated third party, and (ii) in connection with this
Agreement.

          (d) Since its formation, Borrower has not incurred any Indebtedness.

          (e) Since its formation, Borrower has not made any loans to any Person or held evidence of
indebtedness issued by any other Person or entity (other than cash and investment-grade securities
issued by an entity that is not an Affiliate of or subject to common ownership with such entity).

          (f) Since its formation, Borrower has remained solvent and has paid its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) from its own assets and
generally as the same have became due.

          (g) Since its formation, Borrower, has done or caused to be done all things necessary to
observe its respective organizational formalities applicable to a business entity of its
type and to preserve their respective existence or has promptly taken curative action with
respect thereto.

          (h) Since its formation, (i) Borrower has maintained all of its respective accounts (including
bank accounts), books and records separate from those of its Affiliates and any constituent party;
(ii) Borrower has maintained separate financial statements and its respective assets have not been
listed as assets on the financial statement of any other entity except as required by GAAP;
provided, however, that any such consolidated financial statement shall contain a
note indicating that its separate assets and liabilities are neither available to pay the debts of
the consolidated entity nor constitute obligations of the consolidated entity; (iii) Borrower has
filed its own tax returns and has not filed a consolidated federal income tax return with any other
Person, except to the extent that Borrower was required to file consolidated tax returns by law;
and (iv) Borrower has maintained books, records, resolutions and agreements as official records.

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          (i) Since its formation, Borrower has been, and at all times has held itself out and
identified itself and will hold itself out and identify itself as a separate and distinct entity
under its own name or in a name franchised or licensed to it by an entity other than an Affiliate
of Borrower and not as a division or part of any other Person, except for services rendered under a
business management services agreement with an Affiliate that complies with the terms contained in
Subsection (h) above, so long as the manager, or equivalent thereof, under such business
management services agreement holds itself out as an agent of Borrower, has conducted business in
its own name; has not identified itself or any of its Affiliates as a division or part of the
other; and has used separate stationery, invoices and checks bearing its own name and not the name
of any Affiliate.

          (j) Since its formation, Borrower has maintained adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of its contemplated
business operations.

          (k) Since its formation, neither Borrower has, nor have any of its constituent parties, have
sought or effected the liquidation, dissolution, winding up, liquidation, consolidation or merger,
in whole or in part, of Borrower.

          (l) Since its formation, Borrower has not commingled its funds or other assets with those of
any Affiliate or constituent party or any other Person, and Borrower, has held all of its assets in
its own name.

          (m) Since its formation, Borrower has maintained its assets in such a manner that it would not
be costly or difficult to segregate, ascertain or identify their respective individual assets from
those of any Affiliate or constituent party or any other Person.

          (n) Since its formation, Borrower has not guaranteed or become obligated for the debts of any
other Person and has not held itself out to be responsible for or to have their respective credit
available to satisfy the debts or obligations of any other Person.

          (o) Borrower is presently conducting its business so that the assumptions made with respect to
Borrower in the Insolvency Opinion are currently true and correct in all material respects.

          (p) Since its formation, Borrower has not permitted any Affiliate or constituent party
independent access to its bank accounts.

          (q) Since its formation, Borrower has paid the salaries of its own employees (if any) from its
own funds and has maintained a sufficient number of employees (if any) in light of their respective
contemplated business operations.

          (r) Since its formation, Borrower has compensated each of its consultants and agents from its
own funds for services provided to it and pay from its own respective assets all obligations of any
kind incurred.

          (s) Since its date of formation, Borrower has not acquired any obligations or securities of
any of its Affiliates.

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          (t) Since the date of its formation, Borrower has not acquired or held any interest in or
formed any entity or subsidiary.

          4.1.43 Cash Management Account. Borrower hereby represents and warrants to Lender that:

          (a) This Agreement, together with the other Loan Documents, create a valid and continuing
security interest (as defined in the Uniform Commercial Code of the State of Delaware) in the
Clearing Account and Cash Management Account in favor of Lender, which security interest is prior
to all other Liens, other than Permitted Encumbrances, and is enforceable as such against creditors
of and purchasers from Borrower. Other than in connection with the Loan Documents and except for
Permitted Encumbrances, Borrower has not sold, pledged, transferred or otherwise conveyed the
Clearing Account and Cash Management Account;

          (b) Each of the Clearing Account and Cash Management Account constitutes a “deposit account”
within the meaning of the Uniform Commercial Code of the State of Delaware;

          (c) Pursuant and subject to the terms hereof, the Clearing Bank and the Cash Management Bank
have agreed to comply with all instructions originated by Lender, without further consent by
Borrower, directing disposition of the Clearing Account and Cash Management Account and all sums at
any time held, deposited or invested therein, together with any interest or other earnings thereon,
and all proceeds thereof (including proceeds of sales and other dispositions), whether accounts,
general intangibles, chattel paper, deposit accounts, instruments, documents or securities; and

          (d) The Clearing Account and Cash Management Account are not in the name of any Person other
than Borrower, as pledgor, or Lender, as pledgee. Borrower has not consented to the Clearing Bank
and the Cash Management Bank complying with instructions with respect to the Clearing Account and
Cash Management Account from any Person other than Lender.

          4.1.44 Trade Name; Other Intellectual Property. Borrower owns and possesses or licenses (as the case may be) all such patents, patent
rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark
rights, websites, domain names and copyrights, as Borrower considers necessary for the conduct of
its business as now conducted without, individually or in the aggregate, any infringement upon
rights of other Persons, in each case except as could not reasonably be expected to (i) materially
and adversely affect the value of the Property, (ii) impair the use and operation of the Property
or (iii) impair Borrower’s ability to pay its obligations in a timely manner, and there is no
individual patent, patent right, trademark, trademark right, trade name, trade name right, service
mark, service mark right or copyright the loss of which would (i) materially and adversely affect
the value of the Property, (ii) impair the use and operation of the Property or (iii) impair
Borrower’s ability to pay its obligations in a timely manner (collectively, the “Intellectual
Property”).

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          4.1.45 General Contractor’s Agreement. As of the date hereof, (i) the General Contractor’s Agreement is in full force and effect;
(ii) Borrower and General Contractor are in full compliance with their respective obligations under
the General Contractor’s Agreement; (iii) the work to be performed by General Contractor under the
General Contractor’s Agreement is the work called for by the Plans and Specifications; and (iv) all
work on the Project Improvements heretofore completed has been completed in accordance with the
Plans and Specifications in a good and workmanlike manner and is free of any defects. Borrower
shall from time to time, upon request by Lender, cause General Contractor to provide Lender with
reports in regard to the status of construction of the Project Improvements, in such form and
detail as reasonably requested by Lender.

          4.1.46 Architect’s Contract. As of the date hereof, (i) the Architect’s Contract is in full force and effect; (ii) both
Borrower and, to the best of Borrower’s knowledge, Borrower’s Architect are in compliance in all
material respects with their respective obligations under the Architect’s Contract; (iii) the work
to be performed by Borrower’s Architect under the Architect’s Contract is the architectural
services required to design the Project Improvements to be built in accordance with the Plans and
Specifications and all architectural services required to complete the Project Improvements in
accordance with the Plans and Specifications is provided for under the Architect’s Contract; and
(iv) all work on the Project Improvements heretofore completed has been completed in accordance
with the Plans and Specifications in a good and workmanlike manner and is free of any defects.
Upon request by Lender, Borrower shall or Borrower shall cause Borrower’s Architect to provide
Lender with reports in regard to the status of construction of the Project Improvements, in such
form and detail as reasonably requested by Lender.

          4.1.47 Plans and Specifications. As of the date hereof, Borrower has furnished Lender true and complete sets of the Plans
and Specifications. The Plans and Specifications comply with all applicable Legal Requirements,
all Governmental Approvals, and all restrictions, covenants and easements affecting the Property,
and have been approved by each such Governmental Authority as is required for construction and
renovation of the Project Improvements and the General Contractor, Guarantor, Borrower’s Architect,
Lender and the Construction Consultant.

          4.1.48 Budget. The Development Budget accurately reflects all anticipated Project-Related Costs. Upon the
making of the Advances requested in Borrower’s Requisition in the manner set forth therein, all
materials and labor therefore supplied or performed in connection with the Property will have been
paid for in full (subject to the Retainage).

          4.1.49 Feasibility. Each of the Construction Schedule and the Disbursement Schedule is accurate.

     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

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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. From the date hereof and until payment and performance in full of all obligations of
Borrower under the Loan Documents or the earlier release of the Lien of the Mortgage encumbering
the Property (and all related obligations) in accordance with the terms of this Agreement and the
other Loan Documents, Borrower hereby covenants and agrees with Lender that:

          5.1.1 Existence; Compliance with Legal Requirements. Borrower shall do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its existence, rights, licenses, permits and franchises and comply with all
Legal Requirements applicable to it and the Property. There shall never be committed by Borrower,
and Borrower shall never permit any other Person in occupancy of or involved with the operation or
use of the Property to commit any act or omission affording the federal government or any state or
local government the right of forfeiture against the Property or any part thereof or any monies
paid in performance of Borrower’s obligations under any of the Loan Documents. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or omission affording such
right of forfeiture. Borrower shall at all times maintain, preserve and protect all franchises and
trade names and preserve all the remainder of its property used or useful in the conduct of its
business and shall keep the Property in good working order and repair, and from time to time make,
or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgage. Borrower shall keep the Property
insured at all times by financially sound and
reputable insurers, to such extent and against such risks, and maintain liability and such
other insurance, as is more fully provided in this Agreement. After prior written notice to
Lender, Borrower, at its own expense, may contest by appropriate legal proceeding promptly
initiated and conducted in good faith and with due diligence, the validity of any Legal
Requirement, the applicability of any Legal Requirement to Borrower or the Property or any alleged
violation of any Legal Requirement, provided that (i) no Default or Event of Default has occurred
and remains uncured; (ii) Borrower is permitted to do so under the provisions of any mortgage or
deed of trust superior in lien to the Mortgage; (iii) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any instrument to which Borrower is subject and
shall not constitute a default thereunder and such proceeding shall be conducted in accordance with
all applicable statutes, laws and ordinances; (iv) neither the Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated, cancelled or lost; (v)
Borrower shall promptly upon final determination thereof comply with any such Legal Requirement
determined to be valid or applicable or cure any violation of any Legal Requirement; (vi) such
proceeding shall suspend the enforcement of the contested Legal Requirement against Borrower or the
Property; and (vii) Borrower shall furnish such security as may be required in the proceeding, or
as may be requested by Lender, to insure compliance with such Legal Requirement, together with all
interest and penalties payable in connection therewith. Lender may apply any such security, as
necessary to cause compliance with such Legal Requirement at any time when, in the reasonable

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judgment of Lender, the validity, applicability or violation of such Legal Requirement is finally
established or the Property (or any part thereof or interest therein) shall be in danger of being
sold, forfeited, terminated, cancelled or lost.

          5.1.2 Taxes and Other Charges. Borrower shall pay all Taxes and Other Charges now or hereafter levied or assessed or
imposed against the Property or any part thereof as the same become due and payable; provided,
however, Borrower’s obligation to directly pay Taxes shall be suspended for so long as Borrower
complies with the terms and provisions of Section 7.1 hereof. Borrower will deliver to
Lender receipts for payment or other evidence satisfactory to Lender that the Taxes and Other
Charges have been so paid or are not then delinquent no later than ten (10) days prior to the date
on which the Taxes and/or Other Charges would otherwise be delinquent if not paid. Borrower shall
furnish to Lender receipts for the payment of the Taxes and the Other Charges prior to the date the
same shall become delinquent (provided, however, Borrower is not required to furnish such receipts
for payment of Taxes in the event that such Taxes have been paid by Lender pursuant to Section
7.1 hereof). Borrower shall not suffer and shall promptly cause to be paid and discharged any
Lien or charge whatsoever which may be or become a Lien or charge against the Property, and shall
promptly pay for all utility services provided to the Property. After prior written notice to
Lender, Borrower, at its own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or validity or application
in whole or in part of any Taxes or Other Charges, provided that (i) no Default or Event of Default
has occurred and remains uncured; (ii) Borrower is permitted to do so under the provisions of any
mortgage or deed of trust superior in lien to the Mortgage; (iii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other instrument to which
Borrower is subject and shall not constitute a default thereunder and such proceeding shall be
conducted in accordance with all applicable statutes, laws and ordinances; (iv) neither the
Property nor any part thereof or interest therein will be in danger of being sold, forfeited,
terminated, cancelled or lost; (v) Borrower shall
promptly upon final determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in connection therewith; (vi)
such proceeding shall suspend the collection of such contested Taxes or Other Charges from the
Property; and (vii) Borrower shall furnish such security as may be required in the proceeding, or
as may be requested by Lender, to insure the payment of any such Taxes or Other Charges, together
with all interest and penalties thereon. Lender may pay over any such cash deposit or part thereof
held by Lender to the claimant entitled thereto at any time when, in the judgment of Lender, the
entitlement of such claimant is established or the Property (or part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, cancelled or lost or there shall be any
danger of the Lien of the Mortgage being primed by any related Lien.

          5.1.3 Litigation. Borrower shall give prompt written notice to Lender of any litigation or governmental
proceedings pending or threatened against Borrower and/or Guarantor which, might materially
adversely affect Borrower’s or Guarantor’s condition (financial or otherwise) or business or the
Property.

          5.1.4 Access to Property. Borrower shall permit agents, representatives and employees of Lender to inspect the
Property or any part thereof at reasonable hours upon reasonable advance notice and subject to the
rights of Tenants under Leases.

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          5.1.5 Notice of Default. Borrower shall promptly advise Lender of any material adverse change in Borrower’s
condition, financial or otherwise, or of the occurrence of any Default or Event of Default of which
Borrower has knowledge.

          5.1.6 Cooperate in Legal Proceedings. Borrower shall cooperate fully with Lender with respect to any proceedings before any
court, board or other Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents and, in connection
therewith, permit Lender, at its election, to participate in any such proceedings.

          5.1.7 Perform Loan Documents. Borrower shall observe, perform and satisfy all the terms, provisions, covenants and
conditions of, and shall pay when due all costs, fees and reasonable expenses to the extent
required under the Loan Documents executed and delivered by, or applicable to, Borrower.

          5.1.8 Award and Insurance Benefits. Borrower shall cooperate with Lender in obtaining for Lender the benefits of any Awards or
Insurance Proceeds lawfully or equitably payable in connection with the Property, and Lender shall
be reimbursed for any expenses incurred in connection therewith (including
attorneys’ fees and disbursements, and the payment by Borrower of the expense of an appraisal
on behalf of Lender in case of Casualty or Condemnation affecting the Property or any part thereof)
out of such Insurance Proceeds.

          5.1.9 Further Assurances. Borrower shall, at Borrower’s sole cost and expense:

          (a) furnish to Lender all instruments, documents, boundary surveys, footing or foundation
surveys, certificates, plans and specifications, appraisals, title and other insurance reports and
agreements, and each and every other document, certificate, agreement and instrument required to be
furnished by Borrower pursuant to the terms of the Loan Documents or which are reasonably requested
by Lender in connection therewith;

          (b) execute and deliver to Lender such documents, instruments, certificates, assignments and
other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect
the collateral at any time securing or intended to secure the obligations of Borrower under the
Loan Documents, as Lender may reasonably require including, without limitation, the execution and
delivery of all such writings necessary to transfer any licenses with respect to the Property into
the name of Lender or its designee after the occurrence of an Event of Default; and

          (c) do and execute all and such further lawful and reasonable acts, conveyances and assurances
for the better and more effective carrying out of the intents and purposes of this Agreement and
the other Loan Documents, as Lender shall reasonably require from time to time.

          5.1.10 Principal Place of Business, State of Organization. Borrower will not cause or permit any change to be made in its name, identity (including its
trade name or names), place of organization or formation (as set forth in Section 4.1.36
hereof) or Borrower’s corporate or partnership structure unless Borrower shall have first notified
Lender in writing of such

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change at least thirty (30) days prior to the effective date of such
change, and shall have first taken all reasonable action required by Lender for the purpose of
perfecting or protecting the lien and security interests of Lender pursuant to this Agreement, the
Cash Management Agreement and the other Loan Documents and, in the case of a change in Borrower’s
structure, without first obtaining the prior consent of Lender. Upon Lender’s request, Borrower
shall execute and deliver additional financing statements, security agreements and other
instruments which may be necessary to effectively evidence or perfect Lender’s security interest in
the Property as a result of such change of principal place of business or place of organization.
Borrower’s principal place of business and chief executive office, and the place where Borrower
keeps its books and records, including recorded data of any kind or nature, regardless of the
medium or recording, including software, writings, plans, specifications and schematics, has been
for the preceding four months (or, if less, the entire period of the existence of Borrower) and
will continue to be the address of Borrower set forth at the introductory paragraph of this
Agreement (unless Borrower notifies Lender in writing at least thirty (30) days prior to the date
of such change). Borrower’s organizational identification number, if any, assigned by the state of
incorporation or organization is correctly set forth in the introductory paragraph of this
Agreement. Borrower shall promptly notify Lender of any change in its
organizational identification number. If Borrower does not now have an organizational
identification number and later obtains one, Borrower promptly shall notify Lender of such
organizational identification number.

          5.1.11 Financial Reporting .

          (a) Borrower will keep and maintain or will cause to be kept and maintained on a Fiscal Year
basis, in accordance with GAAP (or such other accounting basis acceptable to Lender), proper and
accurate books, records and accounts reflecting all of the financial affairs of Borrower and all
items of income and expense in connection with the operation of the Property. Lender shall have
the right from time to time at all times during normal business hours upon reasonable notice to
examine such books, records and accounts at the office of Borrower or any other Person maintaining
such books, records and accounts and to make such copies or extracts thereof as Lender shall desire
at Lender’s expense unless an Event of Default shall have occurred. After the occurrence of an
Event of Default, Borrower shall pay any costs and expenses incurred by Lender to examine
Borrower’s accounting records with respect to the Property, as Lender shall determine to be
necessary or appropriate in the protection of Lender’s interest. Upon Lender’s reasonable request,
Borrower shall deliver to Lender such other information necessary and sufficient to fairly
represent the financial condition of Borrower and the Property.

          (b) Borrower will furnish to Lender annually, within one hundred twenty (120) days following
the end of each Fiscal Year of Borrower, a complete copy of Borrower’s annual financial statements
covering the Property for such Fiscal Year audited by a “Big Four” accounting firm or other
independent certified public accountant acceptable to Lender in accordance with GAAP and containing
statements of profit and loss for Borrower and the Property and a balance sheet for Borrower. Such
statements shall set forth the financial condition and the results of operations for the Property
for such Fiscal Year, and shall include, but not be limited to, amounts representing annual Net
Cash Flow, Net Operating Income, Gross Income from Operations and Operating Expenses. Borrower’s
annual financial statements shall be accompanied by (i) a comparison of the budgeted income and
expenses and the actual income

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and expenses for the prior Fiscal Year, (ii) an Officer’s
Certificate stating that each such annual financial statement presents fairly the financial
condition and the results of operations of Borrower and the Property being reported upon and has
been prepared in accordance with GAAP; (iii) a list of tenants, if any, occupying more than twenty
percent (20%) of the total floor area of the Improvements, (iv) a breakdown showing the year in
which each Lease then in effect expires and the percentage of total floor area of the Improvements
and the percentage of base rent with respect to which Leases shall expire in each such year, each
such percentage to be expressed on both a per year and cumulative basis, and (v) a schedule audited
by such independent certified public accountant reconciling Net Operating Income to Net Cash Flow
(the “Net Cash Flow Schedule”), which shall itemize all adjustments made to Net Operating Income to
arrive at Net Cash Flow deemed material by such independent certified public accountant. Together
with Borrower’s annual financial statements, Borrower shall furnish to Lender an Officer’s
Certificate certifying as of the date thereof whether there exists an event or circumstance which
constitutes a Default or Event of Default under the Loan Documents executed and delivered by, or
applicable to, Borrower, and if such Default or Event of Default exists, the nature thereof, the
period of time it has existed and the action then being taken to remedy the same.

          (c) Borrower will furnish, or cause to be furnished, to Lender on or before thirty (30) days
after the end of each calendar month throughout the term of the Loan the following items,
accompanied by an Officer’s Certificate stating that such items are true, correct, accurate, and
complete and fairly present the financial condition and results of the operations of Borrower and
the Property (subject to normal year-end adjustments) as applicable: monthly and year-to-date
operating statements (including Capital Expenditures) prepared for each calendar month, noting all
Net Operating Income, Gross Income from Operations and Operating Expenses (not including any
contributions to the Reserve Funds) and other information necessary and sufficient to fairly
represent the financial position and results of operation of the Property during such calendar
month, and containing (i) a comparison of budgeted income and expenses and the actual income and
expenses together with a detailed explanation of any variances of five percent (5%) or more between
budgeted and actual amounts for such periods, for any individual items in excess of $10,000, all in
form satisfactory to Lender, (ii) a calculation reflecting the annual Debt Service Coverage Ratio
for the immediately preceding twelve (12) month period as of the last day of such month accompanied
by an Officers’ Certificate with respect thereto; and (iii) a Net Cash Flow Schedule. In addition,
such Officer’s Certificate shall also state that the representations and warranties of Borrower set
forth in Section 4.1.30 and Section 4.1.35 are true and correct as of the date of
such certificate and that there are no trade payables outstanding for more than sixty (60) days.

          (d) Borrower will furnish, or cause to be furnished, to Lender on or before thirty (30) days
after the end of each calendar month throughout the term of the Loan, an rent roll for the subject
month, accompanied by an Officer’s Certificate stating that such rent roll is true, correct,
accurate, and complete and fairly presents the financial condition and results of the operations of
Borrower and the Property (subject to normal year-end adjustments) as applicable.

          (e) For the partial year period commencing on the date of the Closing Date, and for each
Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget not later than thirty (30)
days prior to the commencement of such period or Fiscal Year in form

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reasonably satisfactory to
Lender. The Annual Budget shall be subject to Lender’s written approval (each such Annual Budget,
an “Approved Annual Budget”). In the event that Lender objects to a proposed Annual Budget
submitted by Borrower, Lender shall advise Borrower of such objections within fifteen (15) days
after receipt thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall promptly revise such Annual Budget and resubmit the same to Lender.
Lender shall advise Borrower of any objections to such revised Annual Budget within ten (10) days
after receipt thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall promptly revise the same in accordance with the process described in
this subsection until Lender approves the Annual Budget. Until such time that Lender approves a
proposed Annual Budget, the most recent Approved Annual Budget shall apply; provided that, such
Approved Annual Budget shall be adjusted to reflect actual increases in Taxes, Insurance Premiums
and Other Charges.

          (f) In the event that, Borrower must incur an extraordinary operating expense or capital
expense not set forth in the Approved Annual Budget (each an “Extraordinary Expense”), then
Borrower shall promptly deliver to Lender a reasonably detailed explanation of such proposed
Extraordinary Expense for Lender’s approval, except in the case of emergency (provided that
Borrower will notify Lender promptly after such emergency).

          (g) Any reports, statements or other information required to be delivered under this Agreement
shall be delivered (i) in paper form, (ii) on a diskette, and (iii) if requested by Lender and
within the capabilities of Borrower’s data systems without change or modification thereto, in
electronic form and prepared using a Microsoft Word for Windows or WordPerfect for Windows files
(which files may be prepared using a spreadsheet program and saved as word processing files).
Borrower agrees that Lender may disclose information regarding the Property and Borrower that is
provided to Lender pursuant to this Section 5.1.11 in connection with the Securitization to
such parties requesting such information in connection with such Securitization.

          5.1.12 Business and Operations . Borrower will continue to engage in the businesses presently conducted by it as and to the
extent the same are necessary for the ownership, maintenance, management and operation of the
Property. Borrower will qualify to do business and will remain in good standing under the laws of
all relevant jurisdictions as and to the extent the same are required for the ownership,
maintenance, management and operation of the Property. Borrower shall at all times during the term
of the Loan, continue to own and/or maintain all of the Equipment, Fixtures and Personal Property
which are necessary to operate the Property in the manner required hereunder and in the manner in
which it is currently operated.

          5.1.13 Title to the Property . Borrower will warrant and defend (a) the title to the Property and every part thereof, subject
only to Liens permitted hereunder (including Permitted Encumbrances) and (b) the validity and
priority of the Lien of the Mortgage and the Assignment of Leases on the Property, subject only to
Liens permitted hereunder (including Permitted Encumbrances), in each case against the claims of
all Persons whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or expenses
(including reasonable attorneys’ fees and court costs) incurred by Lender if an interest in the
Property, other than as permitted hereunder, is claimed by another Person.

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          5.1.14 Costs of Enforcement. In the event (a) that the Mortgage encumbering the Property is foreclosed in whole or in part
or that the Mortgage is put into the hands of an attorney for collection, suit, action or
foreclosure, (b) of the foreclosure of any mortgage encumbering the Property prior to or subsequent
to the Mortgage in which proceeding Lender is made a party, or (c) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons
or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors,
Borrower, its successors or assigns, shall be chargeable with and agrees to pay all costs of
collection and defense, including attorneys’ fees and costs, incurred by Lender or Borrower in
connection therewith and in connection with any appellate proceeding or post-judgment action
involved therein, together with all required service or use taxes.

          5.1.15 Estoppel Statement.

          (a) After written request by Lender, Borrower shall within ten (10) days furnish Lender with a
statement, duly acknowledged and certified, setting forth (i) the original principal amount of the
Note, (ii) the unpaid principal amount of the Note, (iii) the Interest Rate
of the Note, (iv) the date installments of interest and/or principal were last paid, (v) any
offsets or defenses to the payment of the Debt, if any, and (vi) that the Note, this Agreement, the
Mortgage and the other Loan Documents are valid, legal and binding obligations and have not been
modified or if modified, giving particulars of such modification.

          (b) Borrower shall deliver to Lender upon written request, tenant estoppel certificates from
each tenant paying base rent in an amount equal to or exceeding five percent (5%) of the Gross
Income from Operations from the Property occupied by such tenant in form and substance reasonably
satisfactory to Lender provided that Borrower shall not be required to deliver such certificates
more frequently than two (2) times in any calendar year.

          (c) After written request by Borrower, Lender shall within ten (10) days furnish Borrower with
a statement, duly acknowledged and certified, setting forth (i) the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the Interest Rate of the Note, and
(iv) the date installments of interest and/or principal were last paid.

          5.1.16
Loan Proceeds . Borrower shall use the proceeds of the Loan solely and
exclusively for the purposes of constructing and renovating the Project Improvements in accordance
herewith and in accordance with the Building Loan Budget which shall be subject to no change except
as permitted hereby. Borrower will receive the Advances to be made hereunder and will hold the
right to receive the same as a trust fund for the purpose of paying the Costs of the Improvement
and it will apply the same first to such payment before using any part thereof for any other
purpose.

          5.1.17 Performance by Borrower. Borrower shall in a timely manner observe, perform
and fulfill each and every covenant, term and provision of each Loan Document executed and
delivered by, or applicable to, Borrower, and shall not enter into or otherwise suffer or permit
any amendment, waiver, supplement, termination or other modification of any Loan Document executed
and delivered by, or applicable to, Borrower without the prior written consent of Lender.

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          5.1.18 Confirmation of Representations. Borrower shall deliver, in connection with any
Securitization, (a) one (1) or more Officer’s Certificates certifying as to the accuracy of all
representations made by Borrower in the Loan Documents as of the date of the closing of such
Securitization in all relevant jurisdictions, and (b) certificates of the relevant Governmental
Authorities in all relevant jurisdictions indicating the good standing and qualification of
Borrower and Guarantor as of the date of the Securitization.

          5.1.19 Intentionally Omitted.

          5.1.20 Leasing Matters. Borrower may not enter into a Lease, license or other occupancy
agreement for any portion of the Property without Lender’s prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed, provided, however, that after the
Property shall have achieved the Required Ratios at Completion, Borrower shall not be required to
obtain Lender’s approval of Leases for less than 15,000 square feet that otherwise satisfy the
requirements of this Agreement. Upon request, Borrower shall furnish Lender with executed copies
of all Leases. All renewals of Leases and all proposed Leases shall provide for rental rates
comparable to existing local market rates. All proposed Leases shall be on commercially reasonable
terms and shall not contain any terms which would materially affect Lender’s rights under the Loan
Documents. All Leases executed after the date hereof shall provide that they are subordinate to
the Mortgage and that the lessee agrees to attorn to Lender or any purchaser at a sale by
foreclosure or power of sale. Borrower (i) shall observe and perform the obligations imposed upon
the lessor under the Leases in a commercially reasonable manner; (ii) shall enforce and may amend
or terminate the terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed in a commercially reasonable manner and in a manner
not to impair the value of the Property involved except that no termination by Borrower or
acceptance of surrender by a tenant of any Leases shall be permitted unless by reason of a tenant
default and then only in a commercially reasonable manner to preserve and protect the Property;
provided, however, that no such termination or surrender of any Lease will be permitted without the
written consent of Lender, provided, further, that after the Property shall have achieved the
Required Ratios at Completion, Borrower shall not be required to obtain Lender’s approval for
termination of Leases for less than 15,000 square feet that otherwise satisfy the requirements of
this Agreement; (iii) shall not collect any of the rents more than one (1) month in advance (other
than security deposits); (iv) shall not execute any other assignment of lessor’s interest in the
Leases or the Rents (except as contemplated by the Loan Documents); (v) shall not alter, modify or
change the terms of the Leases in a manner inconsistent with the provisions of the Loan Documents
without Lender’s prior written consent which shall not be unreasonably withheld; and (vi) shall
execute and deliver at the request of Lender all such further assurances, confirmations and
assignments in connection with the Leases as Lender shall from time to time reasonably require.
Notwithstanding anything to the contrary contained herein, Borrower shall not enter into a lease of
all or substantially all of the Property without Lender’s prior written consent.

          5.1.21 Alterations.

          (a) Following the Completion of the Improvements, Borrower shall obtain Lender’s prior written
consent to any subsequent alterations to any Improvements, which consent shall not be unreasonably
withheld or delayed except with respect to alterations that may have a

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material adverse effect on
Borrower’s financial condition or the value of the Property or the Net Operating Income.
Notwithstanding the foregoing, Lender’s consent shall not be required in connection with (i) any
alterations that will not have a material adverse effect on Borrower’s financial condition or the
value of the Property or the Net Operating Income, and not adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any Improvements or the
exterior of any building constituting a part of any Improvements, or (ii) alterations performed in
connection with the Restoration of the Property after the occurrence of a Casualty or Condemnation
in accordance with the terms and provisions of this Agreement. If the total unpaid amounts due and
payable with respect to alterations to the Improvements at the Property (other than such amounts to
be paid or reimbursed by tenants under the Leases) shall at any time exceed Two Hundred Fifty
Thousand and 00/100 Dollars ($250,000.00) (the “Threshold Amount”), Borrower shall promptly deliver
to Lender as security for the payment of such amounts and as additional security for Borrower’s
obligations under the Loan Documents any of the following: (A) cash, (B) U.S. Obligations, (C)
other securities having a rating acceptable to Lender and that the applicable Rating Agencies have
confirmed in writing will not, in and of itself, result in a downgrade, withdrawal or qualification
of the initial, or, if higher, then current ratings assigned to any Securities or any class thereof
in connection with any Securitization or (D) a completion and performance bond or (E) a Letter of
Credit. Such security shall be in an amount equal to the excess of the total unpaid amounts with
respect to alterations to the Improvements on the Property (other than such amounts to be paid or
reimbursed by tenants under the Leases) over the Threshold Amount and Lender may apply such
security from time to time at the option of Lender to pay for such alterations.

          (b) Notwithstanding anything contained herein to the contrary, the construction, Building Loan
and alteration of the Improvements in accordance with the Plans and Specifications shall not
constitute “alterations” to the Improvements and will not be subject to the terms of this
Section 5.1.21.

          5.1.22 No Fees or Payments to Affiliates. In no event shall Borrower pay any fees or make
any payments to any Affiliates without Lender’s approval, which may be withheld in its sole
discretion.

          5.1.23 Payment of Administration Fee. Borrower shall pay to Lender on the first
(1st) day of each calendar month the Administration Fee in advance.

          5.1.24 General Contractor’s Agreement. Borrower shall (a) enforce the General Contractor’s Agreement in the best interests of the
Improvements using sound business judgment, (b) waive none of the material obligations of any of
the parties thereunder, (c) do no act which would relieve the General Contractor from its material
obligations to construct the Project Improvements according to the Plans and Specifications, (d)
make no amendments to or change orders under the General Contractor’s Agreement, except as
permitted under this Agreement, without the prior approval of Lender, (e) ensure that the work to
be performed by General Contractor under the General Contractor’s Agreement is the work called for
by the Plans and Specifications, and (f) ensure that all work on the Improvements shall be
completed in accordance with the Plans and Specifications in a good and workmanlike manner and
shall be free of any defects. Borrower shall from time to time, upon request by Lender, use
reasonable efforts to cause General Contractor to provide Lender with reports in regard to the
status of

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construction of the Project Improvements, in such form and detail as reasonably requested
by Lender.

          5.1.25 Architect’s Contract. Borrower shall enforce the Architect’s Contract in the best
interests of Borrower consistent with the construction of the Project Improvements using sound
business judgment, (b) waive none of the material obligations of Borrower’s Architect thereunder,
(c) do no act which would relieve Borrower’s Architect from its material obligations under the
Architect’s Contract and (d) make no amendments to the Architect’s Contract without the prior
approval of Lender. Upon request by Lender, Borrower shall cause Borrower’s Architect to provide
Lender with reports in regard to the status of construction of the Project Improvements, in such
form and detail as reasonably requested by Lender.

          5.1.26 Building Loan Costs and Expenses. Borrower shall promptly pay when due all Building
Loan Costs.

          5.1.27 Fees. Borrower shall pay when due the reasonable fees of the Construction Consultant,
all reasonable costs and expenses, including, without limitation, appraisal fees (only if required
by law after the initial appraisal) recording fees and charges, abstract fees, title policy fees,
escrow fees, reasonable attorneys’ fees, fees of inspecting architects and engineers to the extent
provided hereunder in connection with Advances, fees of environmental consultants to the extent
provided in the Mortgage, and all other reasonable and customary costs and expenses which have been
incurred or which may hereafter be incurred by Lender in connection with the preparation and
execution of the Loan Documents, including any extension, amendment or modification thereof; the
funding of the Loan, the administration and enforcement of this Agreement, the Mortgage, the Note,
and the other Loan Documents, including, without limitation, reasonable attorneys’ fees in any
action for the foreclosure of the Mortgage and the collection of the Loan, and all such fees
incurred in connection with any bankruptcy or insolvency proceeding; and Borrower will, within
twenty (20) days after demand by Lender, reimburse Lender for all such expenses which have been
incurred; and Borrower will indemnify and hold harmless Lender from and against, and reimburse it
for all claims, demands, liabilities, losses, damages, judgments, penalties, costs, and expenses
(including, without limitation, reasonable attorneys’ fees) which may be imposed upon, asserted against, or incurred or paid
by Lender by reason of, on account of or in connection with any bodily injury or property damage
occurring in or upon or in the vicinity of the Property through any cause whatsoever or asserted
against Lender or Borrower on account of any act performed or omitted to be performed hereunder by
Borrower or on account of any transaction arising out of or in any way connected with the Property,
or with this Agreement or any of the indebtedness evidenced by the Note, provided that the
foregoing indemnity shall not apply to any such liabilities, losses, damages and expenses of Lender
to the extent arising from the willful misconduct or gross negligence of Lender. All amounts
incurred or paid by Lender under this Section 5.1.27, together with interest thereon at the
Default Rate from the due date until paid by Borrower, shall be added to the Debt and shall be
secured by the lien of the Mortgage.

          5.1.28 Completion of Construction.

          (a) Borrower shall cause the Project Improvements to be constructed in accordance with the
Plans and Specifications and any Permitted Encumbrance and in full

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compliance with the Building
Loan Budget, as the same may be amended from time to time in accordance with the terms hereof.

          (b) Borrower shall cause the Completion of the Improvements to occur on or before the Required
Completion Date.

          (c) Borrower shall diligently pursue construction of the entire Project Improvements to cause
the Complete of the Improvements and obtain a temporary or permanent certificate of occupancy (and
to the extent the same are conditional or require performance by Borrower, satisfy all conditions
to the issuance of and/or performed all obligations required for the continued validity of the
same) for the Property on or prior to the Required Completion Date, in accordance with the Plans
and Specifications and in compliance with all restrictions, covenants and easements affecting the
Property, all applicable Legal Requirements, and all Governmental Approvals, and with all terms and
conditions of the Loan Documents; pay all sums and to perform such duties as may be necessary to
complete such construction of the Project Improvements substantially in accordance with the Plans
and Specifications and in compliance with all restrictions, covenants and easements affecting the
Property, all Legal Requirements and all Governmental Approvals, and with all terms and conditions
of the Loan Documents, all of which shall be accomplished on or before the Required Completion
Date, free from any liens, claims or assessments (actual or contingent) asserted against the
Property for any material, labor or other items furnished in connection therewith unless bonded and
removed as a Lien on the Property. The renovation of the Project Improvements shall include all
work necessary to put the Property in conformity with, and eliminate any breaches from, the ADA.
Evidence of satisfactory compliance with all of the foregoing shall be furnished by Borrower to
Lender on or before the Required Completion Date. In addition, if such certificate of occupancy or
other Governmental Approvals are temporary in nature, Borrower shall diligently pursue procuring
final Governmental Approvals. In addition, Borrower shall diligently pursue construction of the
entire Project Improvements to Final Completion after the Required Completion Date.

          (d) If at any time prior to the Completion of the Improvements and satisfaction of the
conditions to the Final Advance Lender determines in its sole discretion that the undrawn funds
then available under the Interest Reserve Line Item of the Project Loan Budget and the amount of
Interest Reserve Funds on deposit with Lender is insufficient to pay the Debt Service on the Loan,
then, Borrower shall deposit with Lender, on demand, either (i) an amount reasonably determined by
Lender to pay interest on the Loan as it comes due prior to the Completion of the Improvements and
the satisfaction of the conditions to the Final Advance (the “Additional Interest Reserve
Deposit”), or (ii) a Letter of Credit in such amount (the “Additional Interest Reserve Letter of
Credit”). In determining the amount of the Additional Interest Reserve Deposit or Additional
Interest Reserve Letter of Credit, Lender will consider, among other things, (i) the degree of
completion of the Improvements on such date, and (ii) the amount, if any, of undrawn funds then
available under the Interest Reserve Line Item of the Project Loan Budget. In addition, and
subject to the applicable terms hereof and the applicable terms of the Project Loan Agreement
regarding the re-allocation of Line Items, Lender shall not unreasonably withhold its consent to
Borrower’s request at the time of the deposit of the Additional Interest Reserve Deposit or the
Additional Interest Reserve Letter of Credit to re-allocate a portion of the then undrawn
Contingency Line Item (or any other Line Item within the

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Building Loan Budget) from the Project
Loan Budget to the Interest Reserve Line Item of the Project Loan Budget, provided,
however, under no circumstances may any portion of the Contingency Line Item of the
Building Loan Budget be reallocated to the Interest Reserve Line Item. The Additional Interest
Reserve Deposit or Additional Interest Reserve Letter of Credit shall be a Reserve Fund for all
purposes hereunder. Lender shall apply the Additional Interest Reserve Deposit or Additional
Interest Reserve Letter of Credit in accordance with Section 7.2 hereof.

          5.1.29 Inspection of Property. Borrower shall permit Lender, the Construction Consultant and
their respective representatives, to enter upon the Property, inspect the Project Improvements and
all materials to be used in the construction and Building Loan thereof and to examine the Plans and
Specifications which are or may be kept at the construction site and will cooperate, and cause the
General Contractor, the Major Contractors and the Major Subcontractors to cooperate with the
Construction Consultant to enable him or her to perform his or her functions hereunder.

          5.1.30 Construction Consultant. Borrower acknowledges that (i) the Construction Consultant
has been retained by Lender to act as a consultant and only as a consultant to Lender in connection
with the construction of the Project Improvements and has no duty to Borrower, (ii) the
Construction Consultant shall in no event have any power or authority to give any approval or
consent or to do any other act or thing which is binding upon Lender, (iii) Lender reserves the
right to make any and all decisions required to be made by Lender under this Agreement and to give
or refrain from giving any and all consents or approvals required to be given by Lender under this
Agreement and to accept or not accept any matter or thing required to be accepted by Lender under
this Agreement, and without being bound or limited in any manner or under any circumstance
whatsoever by any opinion expressed or not expressed, or advice given or not given, or information,
certificate or report provided or not provided, by the Construction
Consultant with respect thereto, (iv) Lender reserves the right in its sole and absolute
discretion to disregard or disagree, in whole or in part, with any opinion expressed, advice given
or information, certificate or report furnished or provided by the Construction Consultant to
Lender or any other person or party, and (v) Lender reserves the right to replace the Construction
Consultant with another construction consultant at any time and without prior notice to or approval
by Borrower.

          5.1.31 Construction Consultant/Duties and Access. Borrower shall permit Lender to retain the
Construction Consultant at the reasonable cost of Borrower to perform the following services on
behalf of Lender:

          (a) Prepare the Final Project Report;

          (b) To review and advise Lender whether, in the opinion of the Construction Consultant, the
Plans and Specifications are satisfactory;

          (c) To review Draw Requests and change orders; and

          (d) To make periodic inspections in accordance with Section 5.1.29 (approximately at
the date of each Draw Request) for the purpose of assuring that construction of

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the Project
Improvements to date is in accordance with the Plans and Specifications and to approve Borrower’s
then current Draw Request as being consistent with Borrower’s Obligations under this Agreement.

The fees of the Construction Consultant shall be paid by Borrower within thirty (30) days after
billing therefor and expenses incurred by Lender on account thereof shall be reimbursed to Lender
within thirty (30) days after request therefor, but neither Lender nor the Construction Consultant
shall have any liability to Borrower on account of (i) the services performed by the Construction
Consultant, (ii) any neglect or failure on the part of the Construction Consultant to properly
perform its services or (iii) any approval by the Construction Consultant of construction of the
Project Improvements. Neither Lender nor the Construction Consultant assumes any obligation to
Borrower or any other Person concerning the quality of construction of the Project Improvements or
the absence therefrom of defects.

          5.1.32 Correction of Defects. Borrower shall promptly correct all material defects in the
Project Improvements or any material departure from the Plans and Specifications not previously
approved by Lender to the extent required hereunder. Borrower agrees that the advance of any
proceeds of the Loan whether before or after such defects or departures from the Plans and
Specifications are discovered by, or brought to the attention of, Lender shall not constitute a
waiver of Lender’s right to require compliance with this covenant.

          5.1.33 Approval of Change Orders; Cost Savings. Borrower shall permit no deviations from the
Plans and Specifications during construction without the prior approval of Lender; provided,
however, that Borrower may make
changes without Lender’s prior written approval so long as (a) with respect to any Major
Contract or Major Subcontract, such changes do not exceed two percent (2%) of the amount of the
applicable contract, (b) such changes do not exceed in the aggregate $250,000.00, provided that
changes which have been approved by Lender either before or after such changes have been made shall
be disregarded in calculating said $250,000.00 threshold, (c) such changes do not cause any line
item in the Building Loan Budget to be exceeded (after taking into account use of the Contingency
Reserve to the extent permitted under Section 2.1.7, reallocations under this Section
5.1.33 and other reallocations approved by Lender in its sole discretion), (d) Borrower uses
reasonable efforts to deliver to Lender and Construction Consultant prior notice of such change
orders or, if Borrower is unable to deliver prior notice, Borrower shall submit to Lender and
Construction Consultant copies of all change orders entered into with respect to the Project
Improvements within fifteen (15) days after the same are entered into, irrespective of whether the
same require the prior approval of Lender and Construction Consultant pursuant to this Agreement,
(e) such changes will not materially change the gross square feet or the net rentable square feet
of commercial space to be contained in the Improvements, or the basic layout of the Improvements,
or involve the use of materials, furniture, fixtures and equipment that will not be at least equal
in quality to the materials, furniture, fixtures and equipment originally specified in or required
by the approved Plans and Specifications, and (f) such change will not prevent Borrower from
completing the Project Improvements by the Required Completion Date. The foregoing to the contrary
notwithstanding, Borrower may allocate cost savings actually achieved and verifiable in any line
item of the Building Loan Budget to other line items of the Building Loan Budget, provided that if
such costs savings are being allocated from a line item of the Building Loan Budget, (i) such
Building Loan Budget line item has a firm contract or sub-contract in place, (ii) the work has

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commenced and is proceeding in accordance with the Construction Schedule and (iii) the Construction
Consultant is satisfied with said contract or sub-contract, including, without limitation, with
regard to the scope of said contract or sub-contract.

          5.1.34 Intentionally Omitted.

          5.1.35 Easements and Restrictions; Zoning. Borrower shall submit to Lender for Lender’s
approval prior to the execution thereof by Borrower all proposed easements, restrictions,
covenants, permits, licenses, and other instruments which would affect the title to the Property,
accompanied by a Survey showing the exact proposed location thereof and such other information as
Lender shall reasonably require. Borrower shall not subject the Property or any part thereof to
any easement, restriction or covenant (including any restriction or exclusive use provision in any
lease or other occupancy agreement) without the prior approval of Lender (not to be unreasonably
withheld or delayed in the case of utility easements only). Notwithstanding the foregoing, Lender
shall consent to a reciprocal easement agreement in connection with the future development of the
adjacent development site provided that such reciprocal easement agreement is reasonably acceptable
to Lender. With respect to any and all existing easements, restrictions, covenants or operating
agreements which benefit or burden the Property and any easement, restriction or covenant to which
the Property may hereafter be subjected in accordance with the provisions hereof, Borrower shall:
(a) observe and perform in all material respects the obligations imposed upon
Borrower or the Property; (b) not alter, modify or change the same in any material respect
without the prior approval of Lender; (c) enforce its rights thereunder in a commercially
reasonable manner so as to preserve for the benefit of the Property the full benefits of the same;
and (d) deliver to Lender a copy of any notice of default or other material notice received by
Borrower in respect of the same promptly after Borrower’s receipt of such notice.

          5.1.36 Laborers, Subcontractors and Materialmen. Borrower shall notify Lender promptly, and
in writing, if Borrower receives any default notice, notice of lien or demand for past due payment,
written or oral, from any laborer, subcontractor or materialmen. Borrower will also furnish to
Lender at any time and from time to time upon reasonable demand by Lender, lien waivers in form
reasonably satisfactory to Lender bearing a then current date from the Major Contractors and the
Major Subcontractors.

          5.1.37 Ownership of Personalty. Borrower shall furnish to Lender, if Lender so requests,
photocopies of the fully executed contracts, bills of sale, receipted vouchers and agreements, or
any of them, under which Borrower claims title to the materials, articles, fixtures and other
personal property used or to be used in the construction or operation of the Improvements.

          5.1.38 Comply with Other Loan Documents. Borrower shall perform all of Borrower’s
Obligations under the Note and the other Loan Documents.

          5.1.39 Purchase of Material Under Conditional Sale Contract. Borrower shall not permit any
materials, equipment, fixtures or any other part of the Improvements to be purchased or installed
under any security agreement or other arrangements wherein the seller reserves or purports to
reserve the right to remove or to repossess any such items or to consider

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them personal property
after their incorporation in the Property, unless authorized by Lender in writing and in advance.

          5.1.40 Further Assurance of Title. If at any time Lender has reason to believe in its
reasonable opinion that any Advance is not secured or will or may not be secured by the Mortgage as
a first priority lien or security interest on the Improvements (subject only to the Permitted
Encumbrances and the Loan Documents), then Borrower shall, within ten (10) days after written
notice from Lender, do all things and matters necessary (including execution and delivery to Lender
of all further documents and performance of all other acts which Lender reasonably deems necessary
or appropriate) to assure to the reasonable satisfaction of Lender that any Advance previously made
hereunder or to be made hereunder is secured or will be secured by the Mortgage as a first priority
lien or security interest with respect to the Improvements (subject only to the Permitted
Encumbrances and the Loan Documents). Lender, at Lender’s option, may decline to make further
Advances hereunder until Lender has received such assurance.

          5.1.41 Management Agreement.

          (a) From and after Final Completion, Borrower shall cause the Property to be operated, in all
material respects, in accordance with the Management Agreement (or Replacement Management
Agreement, as applicable). In the event that the Management Agreement expires or is terminated
(without limiting any obligation of Borrower to obtain Lender’s consent to any termination or
modification of the Management Agreement in accordance with the terms and provisions of this
Agreement), Borrower shall promptly enter into a Replacement Management Agreement with Manager or
another Qualified Manager, as applicable.

          (b) Borrower shall: (i) promptly perform and/or observe, in all material respects, all of the
covenants and agreements required to be performed and observed by it under the Management Agreement
and do all things necessary to preserve and to keep unimpaired its material rights thereunder; (ii)
promptly notify Lender of any material default under the Management Agreement of which it is aware;
(iii) promptly deliver to Lender a copy of each financial statement, business plan, capital
expenditures plan, notice, report and estimate received by it under the Management Agreement; and
(iv) enforce the performance and observance of all of the covenants and agreements required to be
performed and/or observed by Manager under the Management Agreement, in a commercially reasonable
manner.

          (c) If: (a) an Event of Default shall have occurred and be continuing, (b) Manager shall
become bankrupt or insolvent; (c) a default beyond any applicable notice and/or cure period, if
any, occurs under the Management Agreement, or (d) following the Completion of the Improvements,
the Debt Service Coverage Ratio (based upon the trailing six (6) month period, annualized) as of
any Debt Service Coverage Determination Date is less than 1.05 to 1.00, then, in any such event,
Borrower shall, at the request of Lender, terminate the Management Agreement and replace the
Manager with a Qualified Manager pursuant to a Replacement Management Agreement, it being
understood and agreed that the management fee for such Qualified Manager shall not exceed then
prevailing market rates.

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          5.1.42 Embargoed Person. Borrower has performed and shall perform reasonable due diligence
to insure that at all times throughout the term of the Loan, including after giving effect to any
Transfers permitted pursuant to the Loan Documents, (a) none of the funds or other assets of
Borrower, Principal and Guarantor constitute property of, or are beneficially owned, directly or
indirectly, by any person, entity or government subject to trade restrictions under U.S. law,
including, but not limited to, The USA PATRIOT Act (including the anti-terrorism provisions
thereof), the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701, et seq., The Trading
with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder including those related to Specially Designated Nationals and Specially Designated
Global Terrorists, with the result that the investment in Borrower, Principal or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan made by the Lender is
in violation of law (“Embargoed Person”); (b) no Embargoed Person has any interest of any
nature whatsoever in Borrower, Principal or Guarantor, as applicable, with the result that the
investment in Borrower, Principal or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law; and (c) none of the funds of Borrower,
Principal or Guarantor, as applicable, have been derived from, or are the proceeds of, any unlawful
activity, including money laundering, terrorism or terrorism activities, with the result that the
investment in Borrower, Principal or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law, or may cause the Property to be subject to
forfeiture or seizure.

          5.1.43 Ground Lease. (a) Borrower shall, at its sole cost and expense, promptly and
timely perform and observe all the material terms, covenants and conditions required to be
performed and observed by Borrower as lessee under the Ground Lease (including, but not limited to,
the payment of all rent, additional rent, percentage rent and other charges required to be paid
under the Ground Lease).

          (b) If Borrower shall be in default under the Ground Lease, then, subject to the terms of the
Ground Lease, Borrower shall grant Lender the right (but not the obligation), to cause the default
or defaults under the Ground Lease to be remedied and otherwise exercise any and all rights of
Borrower under the Ground Lease, as may be necessary to prevent or cure any default provided such
actions are necessary to protect Lender’s interest under the Loan Documents, and Lender shall have
the right to enter all or any portion of the Ground Lease Property at such times and in such manner
as Lender deems necessary, to prevent or to cure any such default.

          (c) The actions or payments of Lender to cure any default by Borrower under the Ground Lease
shall not remove or waive, as between Borrower and Lender, the default that occurred under this
Agreement by virtue of the default by Borrower under the Ground Lease. All sums expended by Lender
to cure any such default shall be paid by Borrower to Lender, upon demand, with interest on such
sum at the rate set forth in this Agreement from the date such sum is expended to and including the
date the reimbursement payment is made to Lender. All such indebtedness shall be deemed to be
secured by the Mortgage.

          (d) Borrower shall notify Lender promptly in writing of the occurrence of any material default
by the Ground Lessor under the Ground Lease or the occurrence of any event that, with the passage
of time or service of notice, or both, would constitute a material default by

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the Ground Lessor
under the Ground Lease, and the receipt by Borrower of any notice (written or otherwise) from the
Ground Lessor under the Ground Lease noting or claiming the occurrence of any default by Borrower
under the Ground Lease or the occurrence of any event that, with the passage of time or service of
notice, or both, would constitute a default by Borrower under the Ground Lease. Borrower shall
promptly deliver to Lender a copy of any such written notice of default.

          (e) Within ten (10) days after receipt of written demand by Lender, Borrower shall use
reasonable efforts to obtain from the Ground Lessor under the Ground Lease and furnish to Lender
the estoppel certificate of the Ground Lessor stating the date through which
rent has been paid and whether or not there are any defaults thereunder and specifying the
nature of such claimed defaults, if any.

          (f) Borrower shall promptly execute, acknowledge and deliver to Lender such instruments as may
reasonably be required to permit Lender to cure any default under the Ground Lease or permit Lender
to take such other action required to enable Lender to cure or remedy the matter in default and
preserve the security interest of Lender under the Loan Documents with respect to the Ground Lease
Property. Borrower irrevocably appoints Lender as its true and lawful attorney-in-fact to do, in
its name or otherwise, any and all acts and to execute any and all documents that are necessary to
preserve any rights of Borrower under or with respect to the Ground Lease, including, without
limitation, the right to effectuate any extension or renewal of the Ground Lease, or to preserve
any rights of Borrower whatsoever in respect of any part of the Ground Lease (and the above powers
granted to Lender are coupled with an interest and shall be irrevocable).

          (g) Notwithstanding anything to the contrary contained in this Agreement with respect to the
Ground Lease:

     (i) The lien of the Mortgage attaches to all of Borrower’s rights and remedies
at any time arising under or pursuant to Subsection 365(h) of the Bankruptcy Code,
including, without limitation, all of Borrower’s rights, as debtor, to remain in
possession of the related Ground Lease Property.

     (ii) Borrower shall not, without Lender’s written consent, elect to treat the
Ground Lease as terminated under subsection 365(h)(l) of the Bankruptcy Code. Any
such election made without Lender’s prior written consent shall be void.

     (iii) As security for the Debt, Borrower unconditionally assigns, transfers and
sets over to Lender all of Borrower’s claims and rights to the payment of damages
arising from any rejection by the Ground Lessor under the Ground Lease under the
Bankruptcy Code. Lender and Borrower shall proceed jointly or in the name of
Borrower in respect of any claim, suit, action or proceeding relating to the
rejection of the Ground Lease, including, without limitation, the right to file and
prosecute any proofs of claim, complaints, motions, applications, notices and other
documents in any case in respect of Ground Lessor under the Bankruptcy Code. This
assignment constitutes a

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present, irrevocable and unconditional assignment of the
foregoing claims, rights and remedies, and shall continue in effect until all of the
Debt shall have been satisfied and discharged in full. Any amounts received by
Lender or Borrower as damages arising out of the rejection of the Ground Lease as
aforesaid shall be applied to all costs and expenses of Lender (including, without
limitation, attorney’s fees and costs) incurred in connection with the exercise of
any of its rights or remedies in accordance with the applicable provisions of this
Agreement.

     (iv) If, pursuant to subsection 365(h) of the Bankruptcy Code, Borrower seeks
to offset, against the rent reserved in the Ground Lease, the
amount of any damages caused by the nonperformance by Ground Lessor of any of
its obligations thereunder after the rejection by Ground Lessor of the Ground Lease
under the Bankruptcy Code, then Borrower shall not effect any offset of the amounts
so objected to by Lender. If Lender has failed to object as aforesaid within ten
(10) days after notice from Borrower in accordance with the first sentence of this
subsection, Borrower may proceed to offset the amounts set forth in Borrower’s
notice.

     (v) If any action, proceeding, motion or notice shall be commenced or filed in
respect of Ground Lessor of all or any part of the Property in connection with any
case under the Bankruptcy Code, Lender and Borrower shall cooperatively conduct and
control any such litigation with counsel agreed upon between Borrower and Lender in
connection with such litigation. Borrower shall, upon demand, pay to Lender all
costs and expenses (including reasonable attorneys’ fees and costs) actually paid or
actually incurred by Lender in connection with the cooperative prosecution or
conduct of any such proceedings. All such costs and expenses shall be secured by
the lien of the related Mortgage.

     (vi) Borrower shall promptly, after obtaining knowledge of such filing notify
Lender orally of any filing by or against Ground Lessor under the Ground Lease of a
petition under the Bankruptcy Code. Borrower shall thereafter promptly give written
notice of such filing to Lender, setting forth any information available to Borrower
as to the date of such filing, the court in which such petition was filed, and the
relief sought in such filing. Borrower shall promptly deliver to Lender any and all
notices, summonses, pleadings, applications and other documents received by Borrower
in connection with any such petition and any proceedings relating to such petition.

          5.1.44 Storage Facility Master Lease. (a) Borrower has entered into a Sublease
Agreement dated December 10, 2007 (the “Storage Facility Master Lease”) with Acadia Strategic
Opportunity Fund II, LLC, a Delaware limited liability company (the “Storage Facility Tenant”) for
the approximately 88,127 square foot self storage facility to be constructed at the Property (the
"Self Storage Facility”) which Storage Facility Master Lease (i) provides for the payment of an
annual base rent of $800,000 per annum (the “Storage Facility Rent”) (payable in equal monthly
installments), (b) has a term expiring no earlier than December 1, 2024, and (c) is otherwise in
form and substance satisfactory to Lender. Borrower hereby assigns to Lender all

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of its right
title and interest in the Storage Facility Master Lease and the guaranty thereto as additional
security for the Loan.

               (b) The Storage Facility Master Lease is in full force and effect and there are no uncured
defaults thereunder by either party and there are no conditions that, with the passage of time or
the giving of notice, or both, would constitute defaults thereunder. The copy of the Storage
Facility Master Lease delivered to Lender is true and complete, and there are no oral agreements
with respect thereto.

               (c) Borrower shall give to Lender copies of all notices given to Borrower or received by
Borrower with respect to the Storage Facility Master Lease. Borrower shall not (i) waive any
rights under the Storage Facility Master Lease, (ii) modify the Rent or other amounts payable under
the Storage Facility Master Lease, or extend any period for the payment of rent or other amounts
under the Storage Facility Master Lease, or (iii) terminate, cancel accept a surrender (except as
specifically provided in Section 5.1.44(d) hereof) of or otherwise amend or modify the
Storage Facility Master Lease, without, in each case, the prior written consent of Lender, which
consent may be granted or withheld by Lender in Lender sole discretion.

               (d) Lender will consent to a termination of the Storage Facility Master Lease in the event
that (i) the Self Storage Facility is open for business and (ii) either (x) the Self Storage
Facility yields an underwritten Net Cash Flow of $800,000 with no free rent, credit or right of
offset, or (y) the entire Property yields a Stabilized Net Cash Flow of $3,100,000.

               (e) Notwithstanding anything to the contrary in the organizational documents of Storage
Facility Tenant, Storage Facility Tenant shall not dissolve unless and until each of the following
conditions have been satisfied: (i) an appropriate winding down of and disposition of its assets
and liabilities, satisfaction of all claims, creditors and liabilities, and retention of adequate
reserves to satisfy future contingent liabilities, including, without limitation, its liabilities
under the Storage Facility Master Lease; (ii) compliance with all organizational and applicable
Legal Requirements relating to dissolution and winding up of Storage Facility Tenant, and (iii) the
assignment of the Storage Facility Master Lease to and the assumption thereof by a replacement
storage facility tenant acceptable to Lender in its sole discretion and as to which Lender has
received a Rating Agency Confirmation.

          5.1.45 Home Depot Work. Borrower agrees (i) to complete the Asphalt Binder Work (as
defined in the Home Depot Lease) prior to February 1, 2008, (ii) to complete the Site Work (as
defined in the Home Depot Lease) prior to April 18, 2008, and (iii) to complete all of Landlord’s
Work (as defined in the Home Depot Lease) prior to March 18, 2009. Borrower’s failure to complete
the foregoing work within the time periods required hereunder shall, at Lender’s election, be an
Event of Default and Lender shall have the right (without prejudice to any other rights of Lender
hereunder), but not the obligations, to complete such work and Borrower shall reimburse Lender for
any costs and expenses incurred in connection therewith upon demand.

          5.1.46 Condominium Provisions.

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          (a) Condominium Representations and Warranties. Borrower hereby makes the following
representations and warranties: (a) no unpaid Condominium Assessments currently exist, or to the
best of Borrower’s knowledge, are pending and to the best of Borrower’s knowledge, no assessments
or special assessments are currently contemplated, (b) the Condominium Documents are in full force
and effect and Borrower is not in default of any obligation to the Condominium with respect to any
of the Condominium Documents and (c) to the best of Borrower’s knowledge, the Condominium is in
compliance with all state, local or federal laws, rules and regulation applicable to the
condominium regime.

          (b) Condominium Covenants.

          (i) Borrower shall pay all Condominium Assessments, as and when the same become due and
payable, subject to any right of Borrower to contest same in accordance with the provisions
of the Condominium Documents and provided that Borrower shall exercise any such right if and
only if: (i) such proceeding suspends the collection of such Condominium Assessments and the
Property will not be in danger of being sold for such unpaid Condominium Assessments, or
Borrower has paid all of such Condominium Assessments under protest, (ii) such proceeding is
permitted under and is conducted in accordance with the provisions of the Condominium
Documents, (iii) if Borrower has not paid the disputed amounts in full under protest,
Borrower shall deposit with Lender cash (or other security as may be approved, in writing,
by Lender) in an amount Lender deems sufficient to insure the payment of any such
Condominium Assessments together with interest and penalties thereon, if any, provided
that after a Securitization, one hundred twenty-five percent (125%) of the contested
amount (plus anticipated penalty and interest) shall be deposited with Lender, (iv) Borrower
furnishes to Lender all other items reasonably requested by Lender and (v) upon a final
determination thereof, Borrower promptly pays the amount of any such Condominium
Assessments, together with all costs, interest and penalties which may be payable in
connection therewith.

          (ii) In addition to the financial reporting requirements of Section 5.1.11
hereof Borrower shall furnish the following to Lender, each prepared in such detail as
reasonably required by Lender and certified by a Responsible Officer to be true, complete
and correct: as soon as available, but in any event within forty-five (45) days after the
end of each fiscal quarter, evidence satisfactory to Lender that all Condominium Assessments
for the immediately preceding quarter which are then due and payable for an Individual
Property, have been paid by Borrower (or are being duly and properly contested in accordance
with Section (a)(1) above) which evidence shall include, without limitation, a true and
correct photocopy of Borrower’s cancelled check(s) evidencing such payment(s) with respect
to such Individual Property provided, however, in lieu of furnishing such evidence to
Lender, Borrower shall have the right to deposit cash with Lender in the full annual amount
of such Condominium Assessments due with respect to such Individual Property, which deposit
shall be held by Lender as additional security for the Loan until such time as satisfactory
evidence of such payment in accordance with this clause is accepted by Lender.

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          (iii) Borrower shall observe and enforce all obligations imposed upon it under the
Condominium Documents and shall enforce the terms, covenants and conditions contained in the
Condominium Documents to be observed or performed upon the part of the other parties
thereunder in a commercially reasonable manner.

          (iv) Borrower shall not alter, modify or change the material terms of, nor terminate,
any of the Condominium Documents without Lender’s consent (which consent shall not be
unreasonably withheld, conditioned or delayed).

          (v) Borrower shall comply with any such state, local or federal law, rule and
regulation applicable to the condominium regime at the Property, the Land or the sale or
transfer of the Land, including but not limited to, the securities and condominium laws of
the State where the Property is located and the rules and regulations pertaining thereto.

          (vi) Borrower shall take all actions as may be necessary from time to time to preserve
and maintain the condominium regime at the Property in accordance with the laws of the State
where the Property is located.

          (vii) Provided that the same was not included in any of the reports, statements,
certificates or other documentation submitted to Lender, Borrower shall give Lender prompt
notice of any special assessment relating to the condominium regime received by Borrower.

          (viii) Borrower shall provide Lender with notice of any proposed additions, alterations
or improvements proposed by any Condominium Board costing in excess of $50,000 and provided
that Borrower or its designee has consent rights under the Condominium Documents, Borrower
shall not consent to same without Lender’s prior approval, not to be unreasonably withheld.

          (ix) Borrower shall promptly deliver to Lender a true and complete copy of each and
every notice of default received or delivered by Borrower with respect to any obligation of
Borrower or any other party under the Condominium Documents.

          (x) If an Event of Default has occurred and is continuing, Borrower hereby acknowledges
and agrees that, subject to the provisions of the Condominium Documents, Lender (or its
nominee) shall be solely entitled to remove any Condominium Board members appointed by
Borrower and/or to designate replacement or substitute members of the Condominium Board. If
an Event of Default has occurred and is continuing, Lender shall have the right to exercise
the power of attorney granted pursuant to the Proxy (as hereinafter defined) to exercise all
rights, powers and remedies of Borrower pursuant to the Condominium Documents. The rights
granted to Lender under the Proxy shall automatically terminate upon the payment of the Loan
in full or upon a defeasance of the Loan in accordance with the terms hereof.

          (xi) If an Event of Default has occurred and is continuing, Lender may, at its option,
and Borrower hereby grants and assigns to Lender, from and after the occurrence and during
the continuation of an Event of Default, the right, either by itself

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or by its nominee or
designee, in the name of Borrower, to exercise the rights, powers and remedies of Borrower
pursuant to the Condominium Documents. Such rights and remedies shall include, without
limitation, the right to exercise all voting, consent, managerial and other rights relating
to the Condominium, whether in Borrower’s name or otherwise, and the right to exercise
Borrower’s rights in the Condominium, including, without limitation, voting to elect members
of the Condominium Board and voting to amend the Condominium Documents.

          (c) Additional Event of Default. It shall be an immediate Event of Default hereunder
if Borrower violates or does not comply with any of the material provisions of Section
5.1.46(a) or (b) above and/or the Condominium shall become subject to an action for
partition and said action has been commenced and not dismissed within thirty (30) days after
commencement thereof, or if any provision of the applicable Condominium Act or any section,
sentence, clause, phrase or word or the application thereof in any circumstances, is held invalid
and such invalidity shall affect the lien of the Security Instrument or the rights of Lender under
the Loan Documents.

          (d) Additional Defined Terms. As used herein, the following words and phrases shall
have the meaning specified below:

     “Association” means the Condominium Association of the Property.

     “Condominium” means the P/A Acadia Pelham Manor Condominium established pursuant to the
Declaration.

     “Condominium Assessment” means the Common Charges (as such term is defined in the By-Laws) and
all other assessments for common charges against the Property.

     “Condominium Board” means the Board of Directors or the Association of an Individual Property.

     “Condominium Documents” means, the Declaration, the By-Laws attached thereto, and all other
constituent documents establishing or governing the condominium regime at such Individual Property,
as the same may be amended from time to time.

     “Declaration” means that certain Declaration of P/A-Acadia Pelham Manor Condominium (the
“Declaration”), dated September 17, 2007, recorded October 23, 2007 as Document number 472850497
for the creation and establishment of the Condominium with respect to the Property.

     “Proxy” shall mean that certain Condominium Proxy, dated as of the date hereof, from Borrower
to Lender, pursuant to which Borrower granted Lender a proxy to vote its interest with respect to
all matters affecting the Condominium upon the occurrence and during the continuance of an Event of
Default and which includes conditional resignations of each of the representatives elected or
appointed by Borrower to the Condominium Board.

     Section 5.2 Negative Covenants. From the date hereof until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier

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release of the Lien of the Mortgage
and any other collateral in accordance with the terms of this Agreement and the other Loan
Documents, Borrower covenants and agrees with Lender that it will not do, directly or indirectly,
any of the following:

          5.2.1 Intentionally Omitted.

          5.2.2 Liens. Borrower shall not create, incur, assume or suffer to exist any Lien on any
portion of the Property or permit any such action to be taken, except:

               (i) Permitted Encumbrances;

               (ii) Liens created by or permitted pursuant to the Loan Documents; and

               (iii) Liens for Taxes or Other Charges not yet due.

          5.2.3 Dissolution. Borrower shall not (a) engage in any dissolution, liquidation or
consolidation or merger with or into any other business entity, (b) engage in any business activity
not related to the ownership and operation of the Property, (c) transfer, lease or sell, in one
transaction or any combination of transactions, the assets or all or substantially all of the
properties or assets of Borrower except to the extent permitted by the Loan Documents, or (d)
modify, amend, waive or terminate its organizational documents or its qualification and good
standing in any jurisdiction in each case, without obtaining the prior written consent of Lender or
Lender’s designee.

          5.2.4 Change In Business. Borrower shall not enter into any line of business other than the
ownership and operation of the Property, or make any material change in the scope or nature of its
business objectives, purposes or operations, or undertake or participate in activities other than
the continuance of its present business.

          5.2.5 Debt Cancellation. Borrower shall not cancel or otherwise forgive or release any
claim or debt (other than termination of Leases in accordance herewith) owed to Borrower by any
Person, except for adequate consideration and in the ordinary course of Borrower’s business.

          5.2.6 Zoning. Borrower shall not initiate or consent to any zoning reclassification of any
portion of the Property or seek any variance under any existing zoning ordinance or use or permit
the use of any portion of the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use law, rule or
regulation, without the prior consent of Lender.

          5.2.7 No Joint Assessment. Borrower shall not suffer, permit or initiate the joint
assessment of the Property with (a) any other real property constituting a tax lot separate from
the Property, or (b) any
portion of the Property which may be deemed to constitute personal property, or any other
procedure whereby the Lien of any taxes which may be levied against such personal property shall be
assessed or levied or charged to the Property.

          5.2.8 Ground Lease. (a) Borrower shall not, without Lender’s written consent, fail
to exercise any option or right to renew or extend the term of the Ground Lease in

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accordance with
the terms of the Ground Lease, and shall give immediate written notice to Lender and shall execute,
acknowledge, deliver and record any document requested by Lender to evidence the Lien of the
Mortgage on such extended or renewed lease term; provided, however, Borrower shall not be required
to exercise any particular such option or right to renew or extend to the extent Borrower shall
have received the prior written consent of Lender (which consent may be withheld by Lender in its
sole and absolute discretion) allowing Borrower to forego exercising such option or right to renew
or extend. If Borrower shall fail to exercise any such option or right as aforesaid, Lender may
exercise the option or right as Borrower’s agent and attorney-in-fact as provided above in Lender’s
own name or in the name of and on behalf of a nominee of Lender, as Lender may determine in the
exercise of its sole and absolute discretion.

          (b) Borrower shall not waive, excuse, condone or in any way release or discharge Ground Lessor
under the Ground Lease of or from Ground Lessor’s material obligations, covenant and/or conditions
under the Ground Lease without the prior written consent of Lender.

          (c) Borrower shall not, without Lender’s prior written consent, surrender, terminate, forfeit,
or suffer or permit the surrender, termination or forfeiture of, or change, modify or amend in a
material or adverse manner, any Ground Lease. Consent to one amendment, change, agreement or
modification shall not be deemed to be a waiver of the right to require consent to other, future or
successive amendments, changes, agreements or modifications. Any acquisition of lessor’s interest
in the Ground Lease by Borrower or any Affiliate of Borrower shall be accomplished by Borrower in
such a manner so as to avoid a merger of the interests of lessor and lessee in Ground Lease, unless
consent to such merger is granted by Lender.

          5.2.10 ERISA.

          (a) Borrower shall not engage in any transaction which would cause any obligation, or action
taken or to be taken, hereunder (or the exercise by Lender of any of its rights under the Note,
this Agreement or the other Loan Documents) to be a non-exempt (under a statutory or administrative
class exemption) prohibited transaction under ERISA.

          (b) Borrower further covenants and agrees to deliver to Lender such certifications or other
evidence from time to time throughout the term of the Loan, as requested by Lender in its sole
discretion, that (A) Borrower is not and does not maintain an “employee benefit plan” as defined in
Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the
meaning of Section 3(32) of ERISA; (B) Borrower is not subject
to any state statute regulating investment of, or fiduciary obligations with respect to
governmental plans and (C) one or more of the following circumstances is true:

     (i) Equity interests in Borrower are publicly offered securities, within the
meaning of 29 C.F.R. §2510.3-101(b)(2);

     (ii) Less than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower are held by “benefit plan investors” within the meaning of
29 C.F.R. §2510.3-101(f)(2); or

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     (iii) Borrower qualifies as an “operating company” or a “real estate
operating company” within the meaning of 29 C.F.R. §2510.3-101(c) or (e).

          5.2.11 Transfers.

          (a) Borrower acknowledges that Lender has examined and relied on the experience of Borrower
and its general partners, members, principals and (if Borrower is a trust) beneficial owners in
owning and operating properties such as the Property in agreeing to make the Loan, and will
continue to rely on Borrower’s ownership of the Property as a means of maintaining the value of the
Property as security for repayment of the Debt and the performance of the Other Obligations.
Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so
as to ensure that, should Borrower default in the repayment of the Debt or the performance of the
Other Obligations, Lender can recover the Debt by a sale of the Property.

          (b) Without the prior written consent of Lender, and except to the extent otherwise set forth
in this Section 5.2.11, Borrower shall not, and shall not permit any Restricted Party do
any of the following (collectively, a “Transfer”): (i) sell, convey, mortgage, grant, bargain,
encumber, pledge, assign, grant options with respect to, or otherwise transfer or dispose of
(directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and
whether or not for consideration or of record) the Property or any part thereof or any legal or
beneficial interest therein or (ii) permit a Sale or Pledge of an interest in any Restricted Party,
other than (A) pursuant to Leases of space in the Improvements to tenants in accordance with the
provisions of Section 5.1.20 and (B) Permitted Transfers.

          (c) A Transfer shall include, but not be limited to, (i) an installment sales agreement
wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in
installments; (ii) an agreement by Borrower leasing all or a substantial part of the Property for
other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Borrower’s right, title and interest in and to any
Leases or any Rents; (iii) if a Restricted Party is a corporation, any merger, consolidation or
Sale or Pledge of such corporation’s stock or the creation or issuance of new stock; (iv) if a
Restricted Party is a limited or general partnership or joint venture, any merger or consolidation
or the change, removal, resignation or addition of a general partner or the Sale or Pledge of the
partnership interest of any general partner or any profits or proceeds relating to such partnership
interest, or the Sale or Pledge of limited partnership interests or any profits or proceeds
relating to such
limited partnership interest or the creation or issuance of new limited partnership interests;
(v) if a Restricted Party is a limited liability company, any merger or consolidation or the
change, removal, resignation or addition of a managing member or non-member manager (or if no
managing member, any member) or the Sale or Pledge of the membership interest of a managing member
(or if no managing member, any member) or any profits or proceeds relating to such membership
interest, or the Sale or Pledge of non-managing membership interests or the creation or issuance of
new non-managing membership interests; (vi) if a Restricted Party is a trust or nominee trust, any
merger, consolidation or the Sale or Pledge of the legal or beneficial interest in a Restricted
Party or the creation or issuance of new legal or beneficial interests; or (vii) the removal or the
resignation of the managing agent (including, without limitation, an Affiliated Manager) other than
in accordance with Section 5.1.22 hereof.

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          (d) Notwithstanding the provisions of this Section 5.2.11, Lender’s consent shall not
be required in connection with one or a series of Transfers, of not more than forty-nine percent
(49%) of the stock, the limited partnership interests or non-managing membership interests (as the
case may be) in a Restricted Party; provided, however, no such Transfer shall result in the change
of Control in a Restricted Party, and as a condition to each such Transfer, Lender shall receive
not less than thirty (30) days prior notice of such proposed Transfer. If after giving effect to
any such Transfer, more than forty-nine percent (49%) in the aggregate of direct or indirect
interests in a Restricted Party are owned by any Person and its Affiliates that owned less than
forty-nine percent (49%) direct or indirect interest in such Restricted Party as of the Closing
Date, Borrower shall, no less than thirty (30) days prior to the effective date of any such
Transfer, deliver to Lender an Additional Insolvency Opinion acceptable to Lender and the Rating
Agencies. In addition, at all times, (a) Guarantor must continue to Control, and own, directly or
indirectly, in the aggregate, at least a 51% legal and beneficial interest in, Borrower, and (b)
Acadia Realty Trust must continue to Control, and own, directly or indirectly, at least a 20% legal
and beneficial interest in, each of Guarantor and any Affiliated Manager.

          (e) No consent to any assumption of the Loan shall occur on or before the date that is twelve
(12) Payment Dates after the Completion of the Improvements. Thereafter, Lender’s consent to a
Transfer of the Property and assumption of the Loan shall not be unreasonably withheld provided
that Lender receives sixty (60) days prior written notice of such Transfer and no Event of Default
has occurred and is continuing, and further provided that the following additional requirements are
satisfied for all Transfers other than those described in subsection (d) above:

     (i) Borrower shall pay Lender at the time of such Transfer a transfer fee
equal to one half of one percent (0.5%) of the outstanding principal balance of
the Loan for the first Transfer and one percent (1.0%) of the outstanding
principal balance of the Loan for each subsequent Transfer;

     (ii) Borrower shall pay any and all reasonable out-of-pocket costs incurred
in connection with such Transfer (including, without limitation, Lender’s counsel
fees and disbursements and all recording fees, title insurance premiums and
mortgage and intangible taxes and the fees and expenses of the Rating Agencies
pursuant to clause (x) below);

     (iii) The proposed transferee (the “Transferee”) or Transferee’s Principals
must have demonstrated expertise in owning and operating properties similar in
location, size, class and operation to the Property, which expertise shall be
reasonably determined by Lender;

     (iv) Transferee and Transferee’s Principals shall, as of the date of such
transfer, have an aggregate Net Worth and Liquidity reasonably acceptable to
Lender;

     (v) Transferee, Transferee’s Principals and all other entities which may be
owned or Controlled directly or indirectly by Transferee’s Principals (“Related
Entities”) must not have been party to any bankruptcy proceedings,

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voluntary or
involuntary, made an assignment for the benefit of creditors or taken advantage of
any insolvency act, or any act for the benefit of debtors within seven (7) years
prior to the date of the proposed Transfer;

     (vi) Transferee shall assume all of the obligations of Borrower under the
Loan Documents in a manner satisfactory to Lender in all respects, including,
without limitation, by entering into an assumption agreement in form and substance
satisfactory to Lender;

     (vii) There shall be no material litigation or regulatory action pending or
threatened against Transferee, Transferee’s Principals or Related Entities which
is not reasonably acceptable to Lender;

     (viii) Transferee, Transferee’s Principals and Related Entities shall not
have defaulted under its or their obligations with respect to any other
Indebtedness in a manner which is not reasonably acceptable to Lender;

     (ix) Transferee and Transferee’s Principals must be able to satisfy all the
representations and covenants set forth in Sections 4.1.30, 4.1.35, 5.1.46
and 5.2.10 of this Agreement, no Default or Event of Default shall
otherwise occur as a result of such Transfer, and Transferee and Transferee’s
Principals shall deliver (A) all organizational documentation reasonably requested
by Lender, which shall be reasonably satisfactory to Lender and (B) all
certificates, agreements and covenants reasonably required by Lender;

     (x) Transferee shall be approved by the Rating Agencies selected by Lender,
which approval, if required by Lender, shall take the form of a confirmation in
writing from such Rating Agencies to the effect that such Transfer will not result
in a requalification, reduction, downgrade or withdrawal of the ratings in effect
immediately prior to such assumption or transfer for the Securities or any class
thereof issued in connection with a Securitization which are then outstanding;

     (xi) Borrower or Transferee, at its sole cost and expense, shall deliver to
Lender an Additional Insolvency Opinion reflecting such Transfer satisfactory in
form and substance to Lender;

     (xii) Prior to any release of Guarantor, one (1) or more substitute
guarantors reasonably acceptable to Lender shall have assumed all of the
liabilities and obligations of Guarantor under the Guaranty of Completion, the
Guaranty of Recourse Carveouts and the Environmental Indemnity executed by
Guarantor or execute replacement guaranties and environmental indemnity reasonably
satisfactory to Lender;

     (xiii) Borrower shall deliver, at its sole cost and expense, an endorsement
to the Title Insurance Policy, as modified by the assumption agreement, as a valid
first lien on the Property and naming the Transferee as owner of the Property,
which endorsement shall insure that, as of the date of the

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recording of the
assumption agreement, the Property shall not be subject to any additional
exceptions or liens other than those contained in the Title Policy issued on the
date hereof and the Permitted Encumbrances; and

     (xiv) The Property shall be managed by a Qualified Manager pursuant to a
Replacement Management Agreement.

Immediately upon a Transfer to such Transferee and the satisfaction of all of the above
requirements, the named Borrower and Guarantor herein shall be released from all liability under
this Agreement, the Note, the Mortgage and the other Loan Documents accruing after such Transfer.
The foregoing release shall be effective upon the date of such Transfer, but Lender agrees to
provide written evidence thereof reasonably requested by Borrower.

          5.2.12 No Distributions. Until Completion of the Improvements and satisfaction of the
conditions to the Final Advance, Borrower shall not make any distributions or other disbursements
to its partners, shareholders, members or Persons owned by or related to any of its partners,
shareholders or members. Borrower shall use any and all Rents collected from the Property to pay
operating expenses of and real property taxes on the Property.

          5.2.13 Management Agreement. Borrower shall not, without Lender’s prior written consent
(which consent shall not be unreasonably withheld): (i) surrender, terminate, cancel, amend or
modify the Management Agreement; provided, that Borrower may, without Lender’s consent, replace the
Manager so long as the replacement manager is a Qualified Manager pursuant to a Replacement
Management Agreement; (ii) reduce or consent to the reduction of the term of the Management
Agreement; (iii) increase or consent to the increase of the amount of any charges under the
Management Agreement; or (iv) otherwise modify, change, supplement, alter or amend, or waive or
release any of its rights and remedies under, the Management Agreement in any material respect.
Following the occurrence and during the continuance of an Event of Default, Borrower shall not
exercise any rights, make any decisions, grant any approvals or otherwise take any action under the
Management Agreement without the prior written consent of Lender, which consent may be granted,
conditioned or withheld in Lender’s sole discretion.

          5.2.14 Permitted Additional Mezzanine Indebtedness. Notwithstanding anything the contrary contained in this Agreement, but subject to the
rights of Lender to convert a portion of the Loan to a mezzanine loan pursuant to Section
9.1.2 hereof, an Additional Mezzanine Borrower (as defined below) shall have the right to
pledge its direct and/or indirect equity interests in Borrower or Mezzanine Borrower, as applicable
(but not of any direct interest in the Property, or Borrower, if there is Subordinate Financing in
the form of a mezzanine loan) to a Permitted Mezzanine Lender (as defined below) as security for a
loan to such Additional Mezzanine Borrower (an “Additional Mezzanine Loan”) provided that the
following terms and conditions are satisfied:

               (a) no Event of Default shall then exist;

               (b) Lender shall have received at least thirty (30) and no more than sixty (60) days’ prior
written notice of the proposed Additional Mezzanine Loan;

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               (c) the Completion of the Improvements shall have occurred and all of the conditions to the
Final Advance shall have been satisfied;

               (d) the aggregate amounts of the outstanding principal amount of the Total Debt (calculated
without regard to any scheduled amortization paid under the Building Loan or the Project Loan) and
the maximum principal amount of the Additional Mezzanine Loan (as of the effective date of the
Additional Mezzanine Loan) shall not exceed eighty-five (85%) of the fair market value of the
Property as determined by an MAI appraisal performed, at Borrower’s sole cost and expense, by an
appraiser approved by Lender acting reasonably and dated, or updated, to a date within 30 days of
the effective date of the Additional Mezzanine Loan, made in compliance with FIRREA and reasonably
satisfactory to Lenders 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.

               (e) the Aggregate Debt Service Coverage Ratio is at least 1.10 to 1.00;

               (f) Borrower shall not be obligated to repay the Additional Mezzanine Loan nor incur any
obligation or liability to the Permitted Mezzanine Lender or any other Person with respect to the
Additional Mezzanine Loan, and the terms and conditions of the Additional Mezzanine Loan, the
collateral pledged as security therefor, and the documents evidencing the Additional Mezzanine Loan
(the “Additional Mezzanine Loan Documents”), shall be reasonably satisfactory to Lender;

               (g) a new Single-Purpose Entity shall have been formed that will directly or indirectly own
100% of the Equity Interests in Borrower, or Mezzanine Borrower, as applicable (the “Additional
Mezzanine Borrower”), the organizational documents of Borrower, Mezzanine Borrower, if any, such
Additional Mezzanine Borrower, and their respective constituent owners shall be reasonably
satisfactory to Lender, and Borrower, Mezzanine Borrower, if any and such Additional Mezzanine
Borrower shall otherwise satisfy all applicable Rating Agency criteria for single-purpose entities,
bankruptcy remoteness, and mezzanine borrowers;

               (h) the Permitted Mezzanine Lender shall have executed and delivered to Lender a
subordination, standstill and intercreditor agreement acceptable to Lender in its sole
and absolute discretion, which shall provide among other things that the Permitted Mezzanine
Lender shall not have the right to foreclose on its interest in Borrower or Mezzanine Borrower, as
applicable, or otherwise exercise its rights under the Additional Mezzanine Loan Documents unless
and until the Loan is paid in full and that the Additional Mezzanine Loan shall not be transferable
except to a Qualified Transferee;

               (i) Borrower and Guarantor shall have executed such additional Loan Documents and such
amendments to and reaffirmations of the existing Loan Documents as Lender may require , including
entering into a new cash management arrangement with Lender (or modifying any existing cash
management requirement) to provide for, among other things, the payment of Lender-approved
operating expenses and capital expenses prior to the payment of debt service on the Additional
Mezzanine Loan;

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               (j) Lender shall have received (i) such opinions of counsel to Borrower as Lender may require,
in form and content acceptable to Lender (including a new non-consolidation opinion if one was
required to be delivered in connection with the Loan); and (ii) confirmation by each of the
applicable Rating Agencies that the incurrence of the Additional Mezzanine Loan will not result in
any qualification, withdrawal or downgrading of any existing ratings of securities created in any
applicable Securitization; and

               (k) Borrower shall have paid or reimbursed Lender for all of its costs and expenses (including
reasonable attorneys’ fees and disbursements) incurred in connection with the foregoing.

          Notwithstanding anything herein to the contrary, none of BSCMI, Lender or their respective
Affiliates shall have any obligation to provide an Additional Mezzanine Loan or any other
financing.

          For purposes hereof, the following terms shall have the following respective meanings:

          “Aggregate Debt Service Coverage Ratio” shall mean a ratio for the applicable period in
which:,

	 	(a)	 	the numerator is the Net Operating Income (excluding interest
on credit accounts and using annualized operating expenses for any recurring
expenses not paid monthly (e.g., Taxes and Insurance Premiums)) for such period
as set forth in the statements required hereunder, adjusted for a vacancy rate
equal to the greater of the actual vacancy rate, the market vacancy rate and an
assumed vacancy rate equal to five percent (5%), without deduction for (i)
actual management fees incurred in connection with the operation of the
Property less (A) management fees equal to the greater of (1) assumed
management fees of four percent (4%) of Gross Income from Operations or (2) the
actual management fees incurred, (B) Replacement Reserve Fund contributions
equal to $47,544 per annum; and (C) Rollover Reserve Fund contributions equal
to $187,744 per annum; and
	 
	 	(b)	 	the denominator is the Total Debt Service for such period
assuming a thirty (30) year amortization schedule (and calculated without
regard to any scheduled amortization paid under the Building Loan or the
Project Loan, or the Subordinate Financing, if applicable), plus all principal
and interest payable for such period under the Additional Mezzanine Loan
(assuming the Additional Mezzanine Loan had been fully advanced at the
beginning of such period) (provided, however, with respect to the Additional
Mezzanine Loan, such ratio shall be determined utilizing a debt service
constant calculated with the interest rate payable with respect to the
Additional Mezzanine Loan and an assumed amortization period of thirty (30)
years).

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          “Permitted Mezzanine Lender” shall mean a Qualified Transferee.

          “Qualified Transferee” means (i) BSCMI or an Affiliate of BSCMI, or (ii) one or more of the
following:

     (A) a real estate investment trust, bank, saving and loan association, investment bank,
insurance company, trust company, commercial credit corporation, pension plan, pension fund
or pension advisory firm, mutual fund, government entity or plan, provided that any such
Person referred to in this clause (A) satisfies the Eligibility Requirements;

     (B) an investment company, money management firm or “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act of 1933, as amended, or an
institutional “accredited investor” within the meaning of Regulation D under the Securities
Act of 1933, as amended, provided that any such Person referred to in this clause
(B) satisfies the Eligibility Requirements;

     (C) an institution substantially similar to any of the foregoing entities described in
clause (ii)(A), (ii)(B) or (ii)(F) that satisfies the Eligibility
Requirements;

     (D) any entity Controlled by, Controlling or under common Control with any of the
entities described in clause (i) or clause (ii)(A) or (ii)(C) above
or clause (ii)(F) below;

     (E) a Qualified Trustee in connection with (aa) a securitization of, or (bb) the
creation of collateralized debt obligations (“CDO”) secured by, or (cc) a financing through
an “owner trust” of, the Mezzanine Loan or any interest therein (any of the foregoing, a
“Securitization Vehicle”), provided, that (1) one or more classes of securities issued by
such Securitization Vehicle is initially rated at least investment grade by each of the
Rating Agencies which assigned a rating to one or more classes of securities issued in
connection with a Securitization (it being understood that with respect to any Rating Agency
that assigned such a rating to the securities issued by such Securitization Vehicle, a
Rating Agency Confirmation will not be required in connection with a transfer of the
Additional Mezzanine Loan or any interest therein to such Securitization Vehicle, except
that if one or more classes of securities issued in
connection with a Securitization is rated by Moody’s, the transferee may not rely on
this clause (1) with respect to Moody’s); (2) in the case of a Securitization Vehicle that
is not a CDO, the special servicer of such Securitization Vehicle has the Required Special
Servicer Rating at the time of Transfer and the related transaction documents for such
Securitization Vehicle require that any successor have the Required Special Servicer Rating
(such entity, an “Approved Servicer”) and such Approved Servicer is required to service and
administer such Additional Mezzanine Loan or any interest therein in accordance with
servicing arrangements for the assets held by the Securitization Vehicle which require that
such Approved Servicer act in accordance with a servicing standard notwithstanding any
contrary direction or instruction from any other Person; or (3) in the case of a
Securitization Vehicle that is a CDO, the CDO Asset Manager and, if applicable, each
Intervening Trust Vehicle that is not administered and managed by a

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CDO Asset Manager which
is a Qualified Transferee, are each a Qualified Transferee under clauses (ii)(A), (B), (C),
(D), (F) or (G) of this definition;

     (F) an investment fund, limited liability company, limited partnership or general
partnership (a “Permitted Investment Fund”) where a Permitted Fund Manager acts as general
partner, managing member or fund manager and at least fifty percent (50%) of the equity
interests in such investment vehicle are owned, directly or indirectly, by one or more of
the following: the Mezzanine Lender, a Qualified Transferee, an institutional “accredited
investor”, within the meaning of Regulation D promulgated under the Securities Act of 1933,
as amended, and/or a “qualified institutional buyer” or both within the meaning of Rule 144A
promulgated under the Securities Exchange Act of 1934, as amended, provided such
institutional “accredited investors” or “qualified institutional buyers” that are used to
satisfy the 50% test set forth above in this clause (F) satisfy the financial tests
in clause (i) of the definition of Eligibility Requirements; or

     (G) any Person for which the Rating Agencies have issued a Rating Agency Confirmation
with respect to such Transfer.

          “Eligibility Requirements” means, with respect to any Person, that such Person (i) has total
assets (in name or under management) in excess of $650,000,000 and (except with respect to a
pension advisory firm or similar fiduciary) capital/statutory surplus or shareholder’s equity of
$250,000,000 and (ii) is regularly engaged in the business of making or owning commercial real
estate loans or loans similar in type as the Mezzanine Loan or operating commercial mortgage
properties.

          “CDO Asset Manager” with respect to any Securitization Vehicle (hereinafter defined) that is a
CDO, shall mean the entity that is responsible for managing or administering the Additional
Mezzanine Loan (or any interest therein) as an underlying asset of such Securitization Vehicle or,
if applicable, as an asset of any Intervening Trust Vehicle (including, without limitation, the
right to exercise any consent and control rights available to the holder of the Additional
Mezzanine Loan).

          “Intervening Trust Vehicle” shall mean with respect to any Securitization Vehicle that is a
CDO, a trust vehicle or entity which holds the Additional Mezzanine Loan (or
any interest therein) as collateral securing (in whole or in part) any obligation or security
held by such Securitization Vehicle as collateral for the CDO.

          “Permitted Fund Manager” means any Person that on the date of determination is not subject to
a Proceeding and is either (i) a nationally-recognized manager of investment funds investing in
debt or equity interests relating to commercial real estate, or (ii) an entity that is a Qualified
Transferee pursuant to clause (i) or clauses (ii)(A), (B), (C),
(D) or (G) of the definition thereof, in each case, which is investing through a
fund with committed capital of at least $250,000,000.

          “Qualified Trustee” means (i) a corporation, national bank, national banking association or a
trust company, organized and doing business under the laws of any state or the United States of
America, authorized under such laws to exercise corporate trust powers and to

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accept the trust
conferred, having a combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by federal or state authority, (ii) an institution insured by the
Federal Deposit Insurance Corporation or (iii) an institution whose long-term senior unsecured debt
is rated either of the then in effect top two (2) rating categories of S&P and either Fitch or
Moody’s (provided, however, if the Loan has been securitized, the rating requirement of any agency
not a Rating Agency will be disregarded).

          “Required Special Servicer Rating” means a special servicer that (i) has a rating of “CSS3” in
the case of Fitch, (ii) is on the S&P’s select servicer list as a “U.S. Commercial Mortgage Special
Servicer” in the case of S&P and (iii) in the case of Moody’s, such special servicer is acting as
special servicer in a commercial mortgage loan securitization that was rated by Moody’s within the
twelve (12) month period prior to the date of determination and Moody’s has not downgraded or
withdrawn the then-current rating on any class of commercial mortgage securities or placed any
class of commercial mortgage securities on watch citing the continuation of such special servicer
as special servicer of such commercial mortgage securities. The requirement of any agency not a
Rating Agency shall be disregarded.

          “Rating Agency Confirmation” means a written affirmation from each of the Rating Agencies that
the credit rating of the Certificates assigned by such Rating Agency immediately prior to the
occurrence of the event with respect to which such Rating Agency Confirmation is sought will not be
qualified, downgraded or withdrawn as a result of the occurrence of such event. In the event that
no Certificates are outstanding or the Loan is not part of a Securitization, any action that would
otherwise require a Rating Agency Confirmation shall instead require the consent of Lender. All
fees and expenses of the Rating Agencies incurred in connection with any Rating Agency Confirmation
required pursuant to this Agreement as the result of a request or action of Borrower shall be paid
by Borrower.

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          5.2.15 Guarantor. Notwithstanding anything to the contrary in the organizational documents
of Guarantor, Guarantor shall not dissolve unless and until each of the following conditions have
been satisfied: (i) an appropriate winding down of and disposition of its assets and liabilities,
satisfaction of all claims, creditors and liabilities, and retention of adequate reserves to
satisfy future contingent liabilities, including, without limitation, its liabilities under the
Guaranty and the Environmental Indemnity; (ii) compliance with all organizational and applicable
Legal Requirements relating to dissolution and winding up of Guarantor, and (iii) replacement of
the Guarantor with a replacement guarantor acceptable to Lender in its sole discretion and as to
which Lender has received a Rating Agency Confirmation.

ARTICLE VI.

INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS

     Section 6.1 Insurance.

          6.1.1 Insurance Policies. Borrower, at its sole cost and expense, shall obtain and
maintain, or cause to be maintained, the following insurance policies:

          (a) At all times prior to Completion of the Improvements and at any time thereafter during
which construction work is being performed at the Property:

                    (A) Builder’s Risk “All Risk” insurance in such amount as Lender shall require but in no event
less than one hundred percent (100%) of the replacement cost value of the completed Project
Improvements, but excluding foundations and any other improvements not subject to physical damage).
Such policy shall be written on a Builder’s Risk Completed Value Form (100% non-reporting) or its
equivalent and shall include, without limitation, coverage for loss by testing, collapse, theft,
flood, and earth movement. Such insurance Policy shall also include coverage for:

     (i) Loss suffered with respect to materials, equipment, heating and air
conditioning machinery, machinery, and supplies, in each case owned by Borrower or
required to be insured by Borrower, whether on-site, in transit, or stored offsite
and with respect to temporary structures, hoists, sidewalks, retaining walls, and
underground property in each case owned by Borrower or required to by insured by
Borrower;

     (ii) Soft costs that are recurring costs, which shall include, without
limitation, delayed opening loss of income/revenue coverage for a period of
recovery of not less than twelve (12) months commencing from the date the Project
Improvements are as to be completed agreed to by Lender in its sole
discretion, as well as costs to reproduce plans, specifications, blueprints
and models in connection with any restoration following a casualty;

     (iii) Demolition, debris removal and increased cost of construction,
including, without limitation, increased costs arising out of changes in
applicable laws and codes; and

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     (iv) Operation of building laws.

                    (B) Borrower shall cause the Borrower’s Architect to obtain and maintain Architect’s or
Professional Liability insurance during the period commencing on the date of the Architect’s
Contract respectively, and expiring no earlier than five (5) years after the Completion of the
Improvements. Such insurance shall be in an amount equal to at least $1,000,000 per claim or as
otherwise acceptable to Lender.

                    (C) Commercial General Liability insurance (vacant building) naming Lender as an additional
insured with a minimum liability of $10,000,000 including “Umbrella Liability,” of like amount per
occurrence and in the aggregate per location.

                    (D) Workers Compensation, Employer’s Liability coverage and Disability insurance as required
by law covering Borrower.

                    (E) Prior to or simultaneously with its entering into the General Contractor’s Agreement,
Borrower shall, or shall cause the General Contractor to, obtain and maintain Commercial General
Liability coverage, including, without limitation, products and completed operations and containing
no “X”, “C”, “U” exclusion if excavation and/or demolition is to be provided, and Automobile
Liability insurance with no less than $10,000,000 in limits per occurrence and in the aggregate per
project through primary and umbrella liability coverages. Such insurance shall name Borrower as
the insured and Lender as additional insured. Borrower shall also require that all Contractors
cause all of their respective subcontractors to maintain similar coverage with limits of no less
than $1,000,000 per occurrence and shall include Borrower and Lender as additional insureds. All
Persons engaged in work on the improvements at the Property shall maintain statutory Workers
Compensation and Disability insurance in force for all workers on the job. The liability insurance
to be maintained by Borrower and/or the General Contractor pursuant to this subsection (E)
shall include coverage for products and completed operations and coverage for construction defects
for a period of five (5) years after Completion of the Improvements.

          (b) At all times after Completion of the Improvements:

          (i) comprehensive all risk insurance (“Special Form”) including, but not limited to,
loss caused by any type of windstorm or hail on the Improvements and the Personal Property,
(A) in an amount equal to one hundred percent (100%) of the “Full Replacement Cost,” which
for purposes of this Agreement shall mean actual replacement value (exclusive of costs of
excavations, foundations, underground utilities and footings) with a waiver of depreciation,
but the amount shall in no event be less than the outstanding principal balance of the Loan;
(B) containing an agreed amount endorsement with respect to the Improvements and Personal
Property waiving all co-insurance
provisions or to be written on a no co-insurance form; (C) providing for no deductible
in excess of Twenty-Five Thousand and 00/100 Dollars ($25,000.00) for all such insurance
coverage excluding windstorm and earthquake and (D) if any of the Improvements or the use
of the Property shall at any time constitute legal non-conforming structures or uses,
coverage for loss due to operation of law in an amount equal to the full Replacement Cost,
coverage for demolition costs and coverage for increased costs of construction. In

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addition, Borrower shall obtain: (x) if any portion of the Improvements is currently or at
any time in the future located in a federally designated “special flood hazard area”, flood
hazard insurance in an amount equal to the lesser of (1) the outstanding principal balance
of the Note or (2) the maximum amount of such insurance available under the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the National Flood
Insurance Reform Act of 1994, as each may be amended or such greater amount as Lender shall
require and (y) earthquake insurance in amounts and in form and substance satisfactory to
Lender in the event the Property is located in an area with a high degree of seismic
activity;

          (ii) business income insurance (A) with loss payable to Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i) above; (C) in an
amount equal to one hundred percent (100%) of the projected gross revenues from the
operation of the Property (as reduced to reflect expenses not incurred during a period of
Restoration) for a period of at least eighteen (18) months after the date of the Casualty;
and (D) containing an extended period of indemnity endorsement which provides that after the
physical loss to the Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the same level it was at
prior to the loss, or the expiration of six (6) months from the date that the Property is
repaired or replaced and operations are resumed, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period. The amount of such business
income insurance shall be determined prior to the date hereof and at least once each year
thereafter based on Borrower’s reasonable estimate of the gross revenues from the Property
for the succeeding eighteen (18) month period. Notwithstanding the provisions of Section
2.7.1 hereof, all proceeds payable to Lender pursuant to this subsection shall be held by
Lender and shall be applied to the obligations secured by the Loan Documents from time to
time due and payable hereunder and under the Note; provided, however, that nothing herein
contained shall be deemed to relieve Borrower of its obligations to pay the obligations
secured by the Loan Documents on the respective dates of payment provided for in this
Agreement and the other Loan Documents except to the extent such amounts are actually paid
out of the proceeds of such business income insurance; and

          (iii) comprehensive boiler and machinery insurance, if steam boilers or other
pressure-fixed vessels are in operation, in amounts as shall be reasonably required by
Lender on terms consistent with the commercial property insurance policy required under
subsection (i) above.

          (c) At all times during the term of the Loan:

          (i) commercial general liability insurance against claims for personal injury, bodily
injury, death or property damage occurring upon, in or about the Property, such insurance
(A) to be on the so-called “occurrence” form with a combined limit of not less than Two
Million and 00/100 Dollars ($2,000,000.00) in the aggregate and One Million and 00/100
Dollars ($1,000,000.00) per occurrence; (B) to continue at not less than the aforesaid limit
until required to be changed by Lender in writing by reason of changed economic conditions
making such protection inadequate and (C) to cover at least

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the following hazards: (1)
premises and operations; (2) products and completed operations on an “if any” basis; (3)
independent contractors; (4) blanket contractual liability for all written contracts and (5)
contractual liability covering the indemnities contained in Article 9 of the Mortgage to the
extent the same is available;

          (ii) automobile liability coverage for all owned and non-owned vehicles, including
rented and leased vehicles containing minimum limits per occurrence of One Million Dollars
and 00/100 Dollars ($1,000,000.00);

          (iii) worker’s compensation and employee’s liability subject to the worker’s
compensation laws of the applicable state;

          (iv) umbrella and excess liability insurance in an amount not less than Fifty Million
and 00/100 Dollars ($50,000,000.00) per occurrence on terms consistent with the commercial
general liability insurance policy required under subsection (v) above, including, but not
limited to, supplemental coverage for employer liability and automobile liability, which
umbrella liability coverage shall apply in excess of the automobile liability coverage in
clause (ii) above;

          (v) Insurance covering the decrease or diminution in value of the Property resulting
from the enforcement of any law, building code, zoning regulation or other Legal Requirement
or act of any Governmental Authority to the extent that the Property cannot legally be
restored to a condition that existed prior to the Casualty (which insurance shall be in a
stipulated sum amount reasonably acceptable to Lender in its sole discretion);

          (vi) the insurance required under this Sections 6.1(a)(A) and 6.1(b)(i)
 above shall cover perils of terrorism and acts of terrorism and Borrower shall maintain
insurance for loss resulting from perils and acts of terrorism on terms (including amounts)
consistent with those required under Sections 6.1(a)(A) and 6.1(b)(i) above
at all times during the term of the Loan; and

          (vii) upon sixty (60) days written notice, such other reasonable insurance, including,
but not limited to, sinkhole or land subsidence insurance, and in such reasonable amounts as
Lender from time to time may reasonably request against such other insurable hazards which
at the time are commonly insured against for property similar to the Property located in or
around the region in which the Property is located.

          (d) Intentionally Omitted.

          (e) All insurance provided for in this Section 6.1 shall be obtained under valid and
enforceable policies (collectively, the “Policies” or in the singular, the “Policy”), and, to the
extent not specified above, shall be subject to the approval of Lender as to deductibles, loss
payees and insureds. The Policies described in Section 6.1 hereof (other than those strictly
limited to liability protection) shall designate Lender as loss payee. Not less than fifteen (15)
days prior to the expiration dates of the Policies theretofore furnished to Lender, certificates of
insurance evidencing the Policies and within thirty (30) days after commencement of the new or

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renewal Policy evidence satisfactory to Lender of payment of the premiums due thereunder (the
"Insurance Premiums”), shall be delivered by Borrower to Lender.

          (f) Prior to the renewal or replacement of any Policy (the “Existing Policy”), any required
insurance may be procured under a blanket insurance Policy covering the Property and other
properties or assets of Borrower or its affiliates, provided that any such blanket insurance Policy
shall specifically allocate to the Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of this Article VI. Lender, in its
reasonable discretion, shall determine whether such blanket Policies provide sufficient limits of
insurance.

          (g) Unless otherwise specified, all Policies of insurance provided for or contemplated by this
Article VI shall, in the case of property damage, builder’s risk, boiler and machinery,
flood and earthquake insurance, name Borrower as the insured and Lender (for the ratable benefit of
Lenders and their successors and/or assigns) as the additional insured and shall contain a
so-called New York standard non-contributing mortgagee clause or its equivalent in favor of Lender
(including Lender as mortgagee and loss payee) providing that the loss thereunder shall be payable
to Lender for the ratable benefit of Lenders and providing thirty (30) days’ advance notice of
cancellation to Lender.

          (h) All Property insurance also shall include a co-insurance waiver and Agreed Amount
Endorsement. The amount of any deductible under any Policy must be reasonably acceptable to
Lender. Without the Lender’s prior written consent, Borrower shall not name any Person other than
the Lender, as loss payee, as it pertains to the Property, nor shall Borrower carry separate or
additional insurance coverage covering the improvements at the Property concurrent in form or
contributing in the event of loss with that required by this Agreement or; provided that, if
blanket policies are obtained, this sentence shall not apply to property covered by such blanket
policies other than the improvements at the Property and such tenant improvements and betterments
that Borrower is required to insure pursuant to the applicable Lease.

          (i) Each Policy shall contain a provision whereby the insurer: (i) agrees that such Policy
shall not be canceled or terminated, the coverage, deductible, and limits of such Policy shall not
be modified, other provisions of such Policy shall not be modified if such Policy, after giving
effect to such modification, would not satisfy the requirements of this Agreement, and such Policy
shall not be so modified, canceled or fail to be renewed, without in each case, at least thirty
(30) days prior written notice to Lender, (ii) waives any right to claim any Insurance Premiums and
commissions against Lender or any Lender, provided that the Policy need not waive the requirement
that the Insurance Premiums be paid in order for a claim to be paid to the
insured and (iii) provides that Lender is permitted to make payments to effect the
continuation of such policy upon notice of cancellation due to non-payment of premiums. In the
event any Policy (except for general public and other liability and Workers Compensation insurance)
shall contain breach of warranty provisions, such Policy shall not be invalidated by and shall
insure Lender for the benefit of Lenders regardless of (A) any act, failure to act or negligence of
or violation of warranties, declarations or conditions contained in such Policy by any named
insured, (B) the occupancy or use of the Property for purposes more hazardous than permitted by

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the
terms thereof, or (C) any foreclosure or other action or proceeding taken by Lender pursuant to any
provision of the Mortgage or any other Loan Document.

          (j) Borrower shall pay the Insurance Premiums for the Policies as the same become due and
payable. Borrower shall deliver to Lender certified copies of the Policies required to be
maintained pursuant to this Article VI; provided, however, Lender shall not
be deemed by reason of the custody of such Policies to have knowledge of the contents thereof.
Borrower also shall deliver to Lender within ten (10) days after Lender’s request, a statement
setting forth the particulars as to all such Policies, indicating that all Insurance Premiums due
thereon have been paid and that the same are in full force and effect. Not later than fifteen (15)
days prior to the expiration date of each Policy, Borrower shall deliver to Lender a certificate of
insurance evidencing renewal of coverage as required herein. Not later than thirty (30) days after
the renewal or replacement of each of the Policies, Borrower shall deliver to Lender evidence of
payment of Insurance Premiums for such renewal or replacement Policies satisfactory to the Lender
and not later than sixty (60) days after the renewal or replacement of each of the Policies,
Borrower shall deliver to Lender an original or certified copy (as required pursuant to this
paragraph) of a renewal or replacement Policy or Policies.

          (k) If at any time Lender is not in receipt of written evidence that all insurance required
hereunder is maintained in full force and effect, Lender shall have the right (but not the
obligation), upon notice to Borrower, to take such action as Lender deems necessary to protect
Lenders’ interest in the Property, including, without limitation, the obtaining of such insurance
coverage as Lender in its sole discretion deems appropriate after three (3) Business Days notice to
Borrower if prior to the date upon which any such coverage will lapse or at any time Lender deems
necessary (regardless of prior notice to Borrower) to avoid the lapse of any such coverage. All
Insurance Premiums incurred by Lender in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by Borrower to Lender upon demand and until paid shall be
secured by the Building Loan Mortgage and shall bear interest at the Default Rate.

          (l) In the event of foreclosure of the Building Loan Mortgage and/or the Project Loan Mortgage
or other transfer of title to the Property in extinguishment in whole or in part of the Total Debt,
all right, title and interest of Borrower in and to the Policies that are not blanket Policies then
in force concerning the Property and all proceeds payable thereunder shall thereupon vest in the
purchaser at such foreclosure or Lender or other transferee in the event of such other transfer of
title.

     6.1.2 Insurance Company. The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the state in which the Property is located and
having a claims paying ability rating of “A/VII” or better by A.M. Best Company, Inc. and “A- or better
(and the equivalent thereof) by at least two (2) of the Rating Agencies rating the Securities (one
of which shall be S&P if they are rating the Securities and one of which will be Moody’s if they
are rating the Securities), or if only one (1) Rating Agency is rating the Securities, then only by
such Rating Agency.

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     Section  6.2Casualty and Condemnation.

          6.2.1 Casualty. The term “Net Proceeds” for purposes of this Agreement shall mean: (i) the
net amount of all insurance proceeds received by Lender pursuant to Section 6.1.1 (b)(1),
(b)(iii), (c)(ii) and (c)(iv) as a result of such damage or destruction, after
deduction of its reasonable costs and expenses (including, but not limited to, reasonable counsel
fees), if any, in collecting same (“Insurance Proceeds”), or (ii) the net amount of the Award,
after deduction of its reasonable costs and expenses (including, but not limited to, reasonable
counsel fees), if any, in collecting same (“Condemnation Proceeds”), whichever the case may be. If
the Property shall be damaged or destroyed, in whole or in part, by fire or other casualty (a
"Casualty”), Borrower shall give prompt notice of such Casualty to Lender and Borrower shall
promptly commence and diligently prosecute to completion the repair and restoration of the Property
as nearly as possible to the condition the Property was in immediately prior to such Casualty with
such alterations as may be reasonably approved by Lender (a “Restoration”) and otherwise in
accordance with this Agreement. Borrower shall pay all costs of such Restoration whether or not
such costs are covered by the Net Proceeds. Lender may, but shall not be obligated to, make proof
of loss if not made promptly by Borrower. In addition, Lender may participate in any settlement
discussions with any insurance companies (and shall approve the final settlement, which approval
shall not be unreasonably withheld or delayed) with respect to any Casualty in which the Net
Proceeds or the costs of completing the Restoration are equal to or greater than One Million and
00/100 Dollars ($1,000,000.00) and Borrower shall deliver to Lender all instruments required by
Lender to permit such participation.

          6.2.2 Condemnation. Borrower shall give Lender prompt notice of any actual or threatened
commencement of any proceeding for the Condemnation by any Governmental Authority of all or any
part of the Property and shall deliver to Lender a copy of any and all papers served in connection
with such proceedings. Lender may participate in any such proceedings, and Borrower shall from
time to time deliver to Lender all instruments requested by Lender to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or defense of any
such proceedings. Notwithstanding any Condemnation, Borrower shall continue to pay the Total Debt
at the time and in the manner provided for its payment in the Building Loan Note and the Project
Loan Note and in this Agreement and the Project Loan Agreement. Lenders shall not be limited to
the interest paid on the Award by any Governmental Authority but shall be entitled to receive out
of the Award interest and additional interest (if any)
at the rate or rates provided in this Agreement or in the Building Loan Note or in the Project
Loan Agreement or in the Project Loan Note, as applicable and the Debt shall not be reduced until
any Award shall have been actually received and applied by Lender, after the deduction of expenses
of collection, to the reduction or discharge of the Debt. If the Property or any portion thereof
is taken by any Governmental Authority, Borrower shall promptly commence and diligently prosecute
the Restoration of the Property pursuant to this Section 6.2 and otherwise comply with the
provisions of hereof. If the Property is sold, through foreclosure or otherwise, prior to the
receipt by Lender of the Award, Lender shall have the right, whether or not a deficiency judgment
on the Building Loan Note or the Project Loan Note shall have been sought, recovered or denied, to
receive the Award, or a portion thereof sufficient to pay the Total Debt. Notwithstanding anything
contained in this Section 6.2 or this Agreement to the contrary, Lender may, in its sole
discretion, elect to (y) apply the net proceeds of any Condemnation

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Proceeds (after deduction of
Lender’s reasonable costs and expenses, if any, in collecting the same) in reduction of the Total
Debt in such order and manner as Lender may elect, whether due or not, or (z) make the proceeds
available to Borrower for the restoration or repair of the Property. Any implied covenant in this
Agreement restricting the right of Lender to make such an election is waived by Borrower. If the
Condemnation Proceeds are made available to Borrower for restoration or repair, the Condemnation
Proceeds shall be disbursed upon satisfaction of and in accordance with the terms and conditions
set forth in this Section 6.2.

          6.2.3 Application of Net Proceeds.

          (a) Minor Casualty or Condemnation. If a Casualty or Condemnation has occurred to the
Property, Borrower’s right, title and interest in and to all Proceeds are, except as otherwise
herein provided, hereby assigned by Borrower to Lender and all Net Proceeds shall, except as
otherwise herein provided, be paid to Lender. Borrower shall, in good faith and in a commercially
reasonable manner, file and prosecute the adjustment, compromise or settlement of any claim for
Proceeds and, subject to Borrower’s right to receive the direct payment of any Net Proceeds as
herein provided, will cause the same to be paid directly to Lender to be held and applied in
accordance with the provisions of this Agreement. Except upon the occurrence and during the
continuance of an Event of Default, Borrower may settle any insurance claim with respect to Net
Proceeds which do not One Million and 00/100 Dollars ($1,000,000.00) (the “Restoration Threshold”).
Whether or not an Event of Default shall have occurred and be continuing, Lender shall have the
right to approve, such approval not to be unreasonably withheld, any settlement which would in
Lender’s reasonable judgment result in Net Proceeds which exceed the Restoration Threshold and
Borrower shall deliver or cause to be delivered to Lender all instruments reasonably requested by
Lender to permit such approval. Borrower shall pay all reasonable out-of-pocket costs, fees and
expenses incurred by Lender on behalf of Lenders (including all reasonable attorneys’ fees and
expenses, the reasonable fees of insurance experts and adjusters and reasonable costs incurred in
any litigation or arbitration), and interest thereon at the Default Rate to the extent not paid
within fifteen (15) Business Days after delivery of a request for reimbursement by Lender,
accompanied by reasonable back-up documentation, in connection with the settlement of any claim for
Proceeds and the seeking and obtaining of any payment on account thereof in accordance with the
foregoing provisions. If any Proceeds are received by Borrower and may be retained by Borrower
pursuant to this Section 6.2, such
Proceeds shall, until the completion of the related Work, be held in trust for Lender for the
ratable benefit of Lenders and shall be segregated from other funds of Borrower to be used to pay
for the cost of the Restoration in accordance with the terms hereof, and to the extent such
Proceeds exceed the Restoration Threshold, such Proceeds shall be forthwith paid directly to and
held by Lender to be applied or disbursed in accordance with this Article VI. If an Event
of Default shall have occurred and be continuing, or if Borrower fails to file any insurance claim
for a period of fifteen (15) Business Days, or to prosecute same with commercially reasonable
diligence following Borrower’s receipt of written notice to do so from Lender, Borrower hereby
irrevocably empowers Lender, in the name of Borrower as its true and lawful attorney-in-fact, to
file and prosecute such claim (including settlement thereof) with counsel satisfactory to Lender
and to collect and to make receipt for any such payment, all at Borrower’s expense (including
payment of interest at the Default Rate for any amounts advanced by Lender pursuant to this
sentence). Notwithstanding anything to the contrary set forth in this Agreement, but excluding all
situations requiring prepayment of the Note, to the extent any Proceeds (either singly or when

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aggregated with all other then unapplied Proceeds with respect to the Property) do not exceed the
Restoration Threshold, such Proceeds are to be paid directly to Borrower to be applied to
restoration of the Property in accordance with the terms hereof. As soon as reasonably practicable
after receipt of the Net Proceeds Borrower shall commence and satisfactorily complete with due
diligence: (x) the Completion of the Improvements in accordance with the terms of this Agreement,
if such Casualty or Condemnation occurs prior to the Completion of the Improvements; of (y) the
Restoration in accordance with the terms of this Agreement, if such Casualty or Condemnation occurs
after the Completion of the Improvements.

          6.2.4 Major Casualty or Condemnation.

          (a) If a Casualty or Condemnation has occurred to the Property, Borrower shall commence and
satisfactorily complete with due diligence the Restoration in accordance with the terms of this
Agreement and the Project Loan Agreement. If the Net Proceeds are equal to or greater than the
Restoration Threshold or the costs of completing the Restoration, or Completion of the
Improvements, as applicable, is equal to or greater than the Restoration Threshold, Lender shall
make the Net Proceeds available for the Restoration, provided that each of the following conditions
are met:

                    (A) If the Casualty or Condemnation occurs prior to the Completion of the Improvements:

     (i) No Event of Default shall have occurred and be continuing;

     (ii) Lender is reasonably satisfied that the Net Proceeds plus any Advances
available under this Building Loan Agreement and Project Loan Agreement is
sufficient to cause the Completion of the Improvements and pay all Project-Related
Costs to be incurred in connection therewith;

     (iii) Lender shall be reasonably satisfied that Completion of the
Improvements will be achieved on or prior to the Required Completion Date as such
date may be extended by Force Majeure (which may include the Casualty giving rise
to the Net Proceeds).

                    (B) If the Casualty or Condemnation occurs following the Completion of the Improvements:

     (i) No Event of Default shall have occurred and be continuing;

     (ii) In the event the Net Proceeds are Insurance Proceeds, less than
thirty-five percent (35%) of the total floor area of the Improvements at the
Property has been damaged, destroyed or rendered unusable as a result of such
Casualty or (B) in the event the Net Proceeds are Condemnation :Proceeds, less
than ten percent (10%) of the land constituting the Property is taken, and such
land is located along the perimeter or periphery of the Property, and no portion
of the Improvements is the subject of the Condemnation;

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     (iii) Leases demising in the aggregate a percentage amount equal to or
greater than the Rentable Space Percentage of the total rentable space in the
Property which has been demised under executed and delivered Leases in effect as
of the date of the occurrence of such Casualty or Condemnation, whichever the case
may be, shall remain in full force and effect during and after the completion of
the Restoration, notwithstanding the occurrence of any such Casualty or
Condemnation, whichever the case may be, and Borrower and/or Tenant, as applicable
under the respective Lease, will make all necessary repairs and restorations
thereto at their sole cost and expense. The term “Rentable Space Percentage”
shall mean (1) in the event the Net Proceeds are Insurance Proceeds, a percentage
amount equal to ninety percent (90%) and (2) in the event the Net Proceeds are
Condemnation Proceeds, a percentage amount equal to ninety percent (90%);

     (iv) Borrower shall commence the Restoration as soon as reasonably
practicable (but in no event later than sixty (60) days after such Casualty or
Condemnation, whichever the case may be) and Borrower and shall diligently pursue
the same to satisfactory completion;

     (v) Lender shall be satisfied that any operating deficit, including all
scheduled all payments of principal and interest under the Note which will be
incurred with respect to the Property as a result of the occurrence of any such
Casualty or Condemnation, whichever the case may be, will be paid during the
period required for Restoration from (A) the Net Proceeds, (B) the insurance
coverage referred to in Section 6.1.1(b)(ii) hereof, if applicable, or (C)
other funds of Borrower;

     (vi) Lender shall be satisfied that the Restoration will be achieved, on or
before the earliest to occur of (A) the date six (6) months prior to the Maturity
Date, (B) such time as may be required under applicable Legal Requirements in
order to repair and restore the Property to the condition it was in immediately
prior to such Casualty or to as nearly as possible the condition it was in
immediately prior to such Condemnation, as applicable or (C) the expiration of the
insurance coverage referred to above;

     (vii) The Property and the use thereof after the Restoration will be in
compliance with and permitted under all applicable Legal Requirements;

     (viii) The Restoration shall be done and completed by Borrower in an
expeditious and diligent fashion and in compliance with all applicable Legal
Requirements; and

     (ix) Such Casualty or Condemnation, as applicable, does not result in the
permanent loss of access to the Property or the related Improvements

     (x) the Debt Service Coverage Ratio for the Property, after giving effect to
the Restoration, shall be equal to or greater than 1.15 to 1.00;

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     (xi) Borrower shall deliver, or cause to be delivered, to Lender a signed
detailed budget approved in writing by Borrower’s architect or engineer stating
the entire cost of completing the Restoration, which budget shall be acceptable to
Lender; and

     (xii) the Net Proceeds together with any Cash or Cash Equivalent deposited by
Borrower with Lender are sufficient in Lender’s discretion to cover the cost of
the Restoration.

          (b) The Net Proceeds shall be paid directly to Lender and held by Lender in an
interest-bearing account and, until disbursed in accordance with the provisions of this Section
6.2.4 shall constitute additional security for the Total Debt and the Other Obligations under
the Loan documents.

          (c) Net Proceeds shall be disbursed by Lender to, or as directed by, Borrower from time to
time during the course of the Restoration, upon receipt of evidence satisfactory to Lender that (A)
all requirements set forth in Section 6.2.4(a) have been satisfied, (B) all relevant
conditions to the making of Advances of the Building Loan shall have been satisfied with respect to
disbursements of Net Proceeds for Restoration as though such disbursements were of Loan Proceeds
rather than Net Proceeds, it being understood however that disbursements of Net Proceeds shall not
be deemed to be advances of the Loan, (C) all materials installed and work and labor performed
(except to the extent that they are to be paid for out of the requested disbursement) in connection
with the Restoration have been paid for in full, and (D) there exist no notices of pendency, stop
orders, mechanic’s or materialman’s liens or notices of intention to file same, or any other Liens
of any nature whatsoever on the Property arising out of the Restoration which have not either been
fully bonded to the satisfaction of Lender and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the Title Company issuing the Title Insurance Policy.

          (d) All plans and specifications required in connection with the Restoration shall be subject
to prior approval by Lender and by an independent architect selected by Lender (which shall be the
Construction Consultant if the Casualty or Condemnation occurs prior to the Completion of the
Improvements) (the “Casualty Consultant”). Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in connection with the
Restoration. The identity of the contractors, subcontractors and materialmen
engaged in the Restoration, as well as the contracts under which they have been engaged, shall
be subject to approval by Lender and the Casualty Consultant. All costs and expenses incurred by
Lender in connection with recovering, holding and advancing the Net Proceeds for the Restoration
including, without limitation, reasonable attorneys’ fees and disbursements and the Casualty
Consultant’s reasonable fees and disbursements, shall be paid by Borrower.

          (e) In no event shall Lender be obligated to make disbursements of the Net Proceeds in excess
of an amount equal to the costs actually incurred from time to time for work in place as part of
the Restoration, as certified by the Casualty Consultant, less the Casualty Retainage. The term
"Casualty Retainage” shall mean an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty Consultant, until the
Restoration has been completed. The Casualty Retainage shall in

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no event, and notwithstanding
anything to the contrary set forth above, be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the Restoration. The Casualty
Retainage shall not be released until the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this Section 6.2 and
all applicable Legal Requirements and that all approvals necessary for the re-occupancy and use of
the Property have been obtained from all appropriate Governmental Authorities, and Lender receives
evidence reasonably satisfactory to Lender that the costs of the Restoration have been paid in full
or will be paid in full out of the Casualty Retainage; provided, however, that Lender will release
the portion of the Casualty Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty Consultant certifies
to Lender that the contractor, subcontractor or materialman has satisfactorily completed all work
and has supplied all materials in accordance with the provisions of such contractor’s,
subcontractor’s or materialman’s contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the contractor, subcontractor
or materialman as may be reasonably requested by Lender or by the Title Company issuing the Title
Insurance Policy, and Lender receives an endorsement to the Title Insurance Policy insuring the
continued priority of the Lien of the Mortgage and evidence of payment of any premium payable for
such endorsement. If required by Lender, the release of any such portion of the Casualty
Retainage shall be approved by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or materialman.

          (f) Lender shall not be obligated to make disbursements of the Net Proceeds more frequently
than once every calendar month.

          (g) If at any time the Net Proceeds or the undisbursed balance thereof shall not, in the
opinion of Lender in consultation with the Casualty Consultant, be sufficient to pay in full the
balance of the costs which are estimated by the Casualty Consultant to be incurred in connection
with the completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds
Deficiency”) with Lender before any further disbursement of the Net Proceeds shall be made. The
Net Proceeds Deficiency deposited with Lender shall be held by Lender and shall be disbursed for
costs actually incurred in connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this Section 6.2.4
shall constitute additional security for the Debt.

          (h) The excess, if any, of the Net Proceeds and the remaining balance, if any, of the Net
Proceeds Deficiency deposited with Lender after the Casualty Consultant certifies to Lender that
the Restoration has been completed in accordance with the provisions of this Section 6.2.4,
and the receipt by Lender of evidence satisfactory to Lender that all costs incurred in connection
with the Restoration have been paid in full, shall be deposited in the Cash Management Account to
be disbursed in accordance with the Cash Management Agreement provided no Event of Default shall
have occurred and shall be continuing under any of the Loan Documents.

          (i) All Net Proceeds not required (i) to be made available for the Restoration or (ii) to be
returned to Borrower as excess Net Proceeds pursuant to this Article VI may be retained and
applied by Lender toward the payment of the Total Debt in accordance with Section

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2.4.2 whether or
not then due and payable in such order, priority and proportions as Lender in its sole discretion
shall deem proper, or, at the discretion of Lender, the same may be paid, either in whole or in
part, to Borrower for such purposes as Lender shall approve, in its discretion.

     Section 6.3 Application of Net Proceeds. Upon the occurrence and continuation of an Event of
Default, Lender, at its option, may withdraw all the Net Proceeds or the undisbursed balance
thereof and the remaining balance, if any, of the Net Proceeds Deficiency deposited with Lender and
may apply the such Net Proceeds and Net Proceeds Deficiency either to the payment of Restoration or
to payment of the Total Debt in such order, proportion and priority as Lender may determine in its
sole discretion. Lender’s right to withdraw and apply such Net Proceeds and Net Proceeds
Deficiency shall be in addition to all other rights and remedies provided to Lender under the
Building Loan Documents.

ARTICLE VII.

RESERVE FUNDS

     Section 7.1 Tax and Insurance Escrow Fund. On the date hereof, Borrower shall pay or cause to be
paid, all Taxes, Insurance Premiums and Other Charges that will be payable on or prior to January
2, 2008. Simultaneously with the Initial Advance, Borrower shall deposit with Lender an amount
(the “Initial Tax and Insurance Escrow Deposit”) equal to the Taxes, Insurance Premiums and Other
Charges that Lender estimates will be payable from and after the date of the Initial Advance
through and including the date that the Second Tax and Insurance Escrow Deposit is payable, which
shall be funded from the Project Loan Advance. At least thirty (30) day prior to the first
anniversary of the date hereof, Borrower shall deposit with Lender an amount (the “Second Tax and
Insurance Escrow Deposit”) equal to the Taxes, Insurance Premiums and Other Charges that Lender
estimates will be payable from and after the first anniversary of the date hereof through and
including the last day of the Construction Term. Subject to the terms and conditions of the
Project Loan Agreement concerning Advances, the Second Tax and Insurance Escrow Deposit shall be
funded from an Advance of like amount under the Project Loan. Simultaneously with the Final
Advance, Borrower shall pay to Lender an amount that, when added to the amounts payable under the
next sentence, will be sufficient to accumulate
with Lender sufficient funds to pay all Taxes and Other Charges payable on the next due date
thereof at least thirty (30) days prior to their respective due dates, and to pay all Insurance
Premiums that Lender estimates will be payable for the next renewal of the coverage afforded by the
Policies upon the expiration thereof at least thirty (30) days prior to the expiration of the
Policies. In addition, Borrower shall pay to Lender (or shall cause Lender to advance) on each
Payment Date occurring after the Construction Term (a) one-twelfth (1/12) of the Taxes and Other
Charges that Lender estimates will be payable during the next ensuing twelve (12) months in order
to accumulate with Lender sufficient funds to pay all such Taxes and Other Charges at least thirty
(30) days prior to their respective due dates, and (b) one-twelfth (1/12) of the Insurance Premiums
that Lender estimates will be payable for the renewal of the coverage afforded by the Policies upon
the expiration thereof in order to accumulate with Lender sufficient funds to pay all such
Insurance Premiums at least thirty (30) days prior to the expiration of the Policies (said amounts
in (a) and (b) above hereinafter called the “Tax and Insurance Escrow Fund”). The Tax and
Insurance Escrow Fund and the Monthly Debt Service Payment Amount, shall be added together and
shall be paid as an aggregate sum by Borrower to

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Lender. Lender will apply the Tax and Insurance
Escrow Fund to payments of Taxes and Insurance Premiums required to be made by Borrower pursuant to
Section 5.1.2 hereof and under the Mortgage. In making any payment relating to the Tax and
Insurance Escrow Fund, Lender may do so according to any bill, statement or estimate procured from
the appropriate public office (with respect to Taxes) or insurer or agent (with respect to
Insurance Premiums), without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. If the
amount of the Tax and Insurance Escrow Fund shall exceed the amounts due for Taxes, Other Charges
and Insurance Premiums pursuant to Section 5.1.2 hereof, Lender shall, in its sole
discretion, return any excess to Borrower or credit such excess against future payments to be made
to the Tax and Insurance Escrow Fund. Any amount remaining in the Tax and Insurance Escrow Fund
after the Debt has been paid in full shall be returned to Borrower. If at any time Lender
reasonably determines that the Tax and Insurance Escrow Fund is not or will not be sufficient to
pay Taxes, Other Charges and Insurance Premiums by the dates set forth in (a) and (b) above, Lender
shall notify Borrower of such determination and Borrower shall increase its monthly payments (or,
if such determination is made during the Construction Term, Borrower shall deposit the full amount
of such deficiency within 5 days of such notice) to Lender by the amount that Lender estimates is
sufficient to make up the deficiency at least thirty (30) days prior to the due date of the Taxes
and Other Charges and/or thirty (30) days prior to expiration of the Policies, as the case may be.
Notwithstanding the foregoing, Borrower’s obligation to make monthly deposits with Lender for
Insurance Premiums shall be suspended for so long as no Event of Default has occurred and is
continuing and Borrower provides Lender with written evidence reasonably satisfactory to Lender
that all insurance coverages required to be maintained by Borrower pursuant to the terms of this
Agreement are being maintained in full force and effect through one or more blanket insurance
policies (provided that any such blanket insurance policies provide the same level of coverage
which would otherwise be provided by a stand-alone policy). Borrower shall provide evidence
reasonably acceptable to Lender on an annual basis thirty (30) days prior to the expiration of the
existing insurance that the insurance has been renewed and will provide notice of cancellation for
non-payment. In the event Borrower fails to provide such evidence or an Event of Default occurs,
however, Borrower will thereafter be required to make deposits with Lender for Insurance Premiums
as provided herein.

     Section 7.2 Interest Reserve.

          7.2.1 Deposit of Interest Reserve Funds. Simultaneously with the Initial Advance,
Borrower shall deposit the sum of $5,970,398.00 with Lender (the “Initial Interest Reserve
Deposit”), which shall be funded from the Initial Advance of the Project Loan. In addition,
pursuant to Section 5.1.28(d), Borrower may be obligated to deposit an Additional Interest
Reserve Deposit and in the event that Lender determines in its sole discretion that the Interest
Reserve Funds on deposit in the Interest Reserve Account are insufficient, Borrower shall deposit
with Lender an amount equal to the deficiency in the Interest Reserve Funds as determined by Lender
(each an “Interest Reserve Deposit”, each such amount so deposited shall hereinafter be referred to
as the “Interest Reserve Fund”). The account in which the Interest Reserve Fund are held shall
hereinafter be referred to as Borrower’s “Interest Reserve Account”. In lieu of making the
Interest Reserve Deposits with Lender, Borrower shall have the right to deliver to Lender an
irrevocable Letter of Credit acceptable to Lender in the amount of the Interest Reserve Deposit.

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          7.2.2 Release of Interest Reserve Funds. Provided no Event of Default or monetary
Default exists and no amounts remain available for Advance under the Interest Reserve Line Item of
the Project Loan Budget, on each Payment Date, Lender shall apply the Interest Reserve Funds to
payments of the Monthly Debt Service Payment due on such date.

          7.2.3 Application of Interest Reserve Funds. Upon the occurrence of an Event of
Default, Lender, at its option, may withdraw all the Interest Reserve Funds and if Lender does so,
shall apply the Interest Reserve Funds either to the payment of interest due on the Loan or toward
payment of the Total Debt in such order, proportion and priority as Lender may determine in its
sole discretion. Lender’s right to withdraw and apply the Interest Reserve Funds shall be in
addition to all other rights and remedies provided to Lender under the Loan Documents.

     Section 7.3 Replacements and Replacement Reserve.

          7.3.1 Replacement Reserve Fund. From and after Completion of the Improvements, Borrower
shall pay to Lender on each Payment Date an amount equal to $3,962.00 (the “Replacement Reserve
Monthly Deposit”) for replacements and repairs required to be made to the Property (collectively,
the “Replacements”). Amounts so deposited shall hereinafter be referred to as Borrower’s
"Replacement Reserve Fund” and the account in which such amounts are held shall hereinafter be
referred to as Borrower’s “Replacement Reserve Account”. Lender may reassess its estimate of the
amount necessary for the Replacement Reserve Fund from time to time, and may increase the monthly
amounts required to be deposited into the Replacement Reserve Fund upon thirty (30) days notice to
Borrower if Lender determines in its reasonable discretion that an increase is necessary to
maintain the proper maintenance and operation of the Property. Notwithstanding the foregoing,
Borrower shall not be required to deposit any portion of the
Replacement Reserve Monthly Deposit which would cause the amount then on deposit in the
Replacement Reserve, as determined by Lender, to exceed $236,280 (the “Replacement Reserve Cap”).
When the Replacement Reserve Funds on deposit in the Replacement Reserve Account equals or exceeds
the Replacement Reserve Cap, Borrower may cease making Replacement Reserve Monthly Deposits to the
Replacement Reserve Fund. If at any time thereafter the amount of the Replacement Reserve funds on
deposit in the Replacement Reserve Account is less than the Replacement Reserve Cap, then Borrower
shall recommence and continue making Replacement Reserve Monthly Deposits to the Replacement
Reserve Funds, until the amount of Replacement Reserve Funds on deposit in the Replacement Reserve
Account equal or exceed the Replacement Reserve Cap.

          7.3.2 Disbursements from Replacement Reserve Account. (a) Lender shall make disbursements
from the Replacement Reserve Account to pay Borrower only for the costs of the Replacements.
Lender shall not be obligated to make disbursements from the Replacement Reserve Account to
reimburse Borrower for the costs of routine maintenance to the Property, replacements of inventory
or for costs which are a Tenant’s obligation.

          (b) Lender shall, upon written request from Borrower and satisfaction of the requirements set
forth in this Section 7.3.2, disburse to Borrower amounts from the Replacement Reserve
Account necessary to pay for the actual approved costs of Replacements or to reimburse Borrower
therefor, upon completion of such Replacements (or, upon partial completion in the

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case of
Replacements made pursuant to Section 7.3.2(e) hereof) as determined by Lender. In no
event shall Lender be obligated to disburse funds from the Replacement Reserve Account if a Default
or an Event of Default exists.

          (c) Each request for disbursement from the Replacement Reserve Account shall be in a form
specified or approved by Lender and shall specify (i) the specific Replacements for which the
disbursement is requested, (ii) the quantity and price of each item purchased, if the Replacement
includes the purchase or replacement of specific items, (iii) the price of all materials (grouped
by type or category) used in any Replacement other than the purchase or replacement of specific
items, and (iv) the cost of all contracted labor or other services applicable to each Replacement
for which such request for disbursement is made. With each request Borrower shall certify that all
Replacements have been made in accordance with all applicable Legal Requirements of any
Governmental Authority having jurisdiction over the Property. Each request for disbursement shall
include copies of invoices for all items or materials purchased and all contracted labor or
services provided and, unless Lender has agreed to issue joint checks as described below in
connection with a particular Replacement, each request shall include evidence satisfactory to
Lender of payment of all such amounts. Except as provided in Section 7.3.2(e) hereof, each
request for disbursement from the Replacement Reserve Account shall be made only after completion
of the Replacement for which disbursement is requested. Borrower shall provide Lender evidence of
completion of the subject Replacement satisfactory to Lender in its reasonable judgment.

          (d) Borrower shall pay all invoices in connection with the Replacements with respect to which
a disbursement is requested prior to submitting such request for disbursement
from the Replacement Reserve Account or, at the request of Borrower, Lender will issue joint
checks, payable to Borrower and the contractor, supplier, materialman, mechanic, subcontractor or
other party to whom payment is due in connection with a Replacement. In the case of payments made
by joint check, Lender may require a waiver of lien from each Person receiving payment prior to
Lender’s disbursement from the Replacement Reserve Account. In addition, as a condition to any
disbursement, Lender may require Borrower to obtain lien waivers from each contractor, supplier,
materialman, mechanic or subcontractor who receives payment in an amount equal to or greater than
Twenty-Five Thousand and 00/100 Dollars ($25,000.00) for completion of its work or delivery of its
materials. Any lien waiver delivered hereunder shall conform to the requirements of applicable law
and shall cover all work performed and materials supplied (including equipment and fixtures) for
the Property by that contractor, supplier, subcontractor, mechanic or materialman through the date
covered by the current reimbursement request (or, in the event that payment to such contractor,
supplier, subcontractor, mechanic or materialmen is to be made by a joint check, the release of
lien shall be effective through the date covered by the previous release of funds request).

          (e) If (i) the cost of a Replacement exceeds Twenty-Five Thousand and 00/100 Dollars
($25,000.00), (ii) the contractor performing such Replacement requires periodic payments pursuant
to terms of a written contract, and (iii) Lender has approved in writing in advance such periodic
payments, a request for reimbursement from the Replacement Reserve Account may be made after
completion of a portion of the work under such contract, provided (A) such contract requires
payment upon completion of such portion of the work, (B) the materials for which the request is
made are on site at the Property and are properly secured or

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have been installed in the Property,
(C) all other conditions in this Agreement for disbursement have been satisfied, (D) funds
remaining in the Replacement Reserve Account are, in Lender’s judgment, sufficient to complete such
Replacement and other Replacements when required, and (E) if required by Lender, each contractor or
subcontractor receiving payments under such contract shall provide a waiver of lien with respect to
amounts which have been paid to that contractor or subcontractor.

          (f) Borrower shall not make a request for disbursement from the Replacement Reserve Account
more frequently than once in any calendar month and (except in connection with the final
disbursement) the total cost of all Replacements in any request shall not be less than Ten Thousand
and 00/100 Dollars ($10,000.00).

          7.3.3 Performance of Replacements. (a) Borrower shall make Replacements when required in
order to keep the Property in condition and repair consistent with other first class, mixed use
retail and self-storage facilities in the same market segment in the metropolitan area in which the
Property is located, and to keep the Property or any portion thereof from deteriorating. Borrower
shall complete all Replacements in a good and workmanlike manner as soon as practicable following
the commencement of making each such Replacement.

          (b) Lender reserves the right, at its option, to approve all contracts or work orders over
Twenty-five Thousand and 00/100 Dollars ($25,000.00) with materialmen, mechanics, suppliers,
subcontractors, contractors or other parties providing labor or materials in
connection with the Replacements. Upon Lender’s request, Borrower shall assign any contract
or subcontract to Lender.

          (c) In the event Lender determines in its reasonable discretion that any Replacement is not
being performed in a workmanlike or timely manner or that any Replacement has not been completed in
a workmanlike or timely manner, after notice and a reasonable period to cure, Lender shall have the
option to withhold disbursement for such unsatisfactory Replacement and to proceed under existing
contracts or to contract with third parties to complete such Replacement and to apply the
Replacement Reserve Fund toward the labor and materials necessary to complete such Replacement,
upon reasonable prior notice to Borrower and to exercise any and all other remedies available to
Lender upon an Event of Default hereunder.

          (d) In order to facilitate Lender’s completion or making of such Replacements pursuant to
Section 7.3.3(c) above, Borrower grants Lender the right to enter onto the Property and
perform any and all work and labor necessary to complete or make such Replacements and/or employ
watchmen to protect the Property from damage. All sums so expended by Lender, to the extent not
from the Replacement Reserve Fund, shall be deemed to have been advanced under the Loan to Borrower
and secured by the Mortgage. For this purpose Borrower constitutes and appoints Lender its true
and lawful attorney-in-fact with full power of substitution to complete or undertake such
Replacements 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 use any funds in the Replacement Reserve Account for the purpose of making or completing such
Replacements; (ii) to make such additions, changes and corrections to such Replacements as shall be
necessary or desirable to complete such Replacements; (iii) to employ such contractors,
subcontractors, agents, architects

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and inspectors as shall be required for such purposes; (iv) 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 Replacements, 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 rehabilitation and repair of the Property; and
(vii) to do any and every act which Borrower might do in its own behalf to fulfill the terms of
this Agreement.

          (e) Nothing in this Section 7.3.3 shall: (i) make Lender responsible for making or
completing any Replacements; (ii) require Lender to expend funds in addition to the Replacement
Reserve Fund to make or complete any Replacement; (iii) obligate Lender to proceed with any
Replacements; or (iv) obligate Lender to demand from Borrower additional sums to make or complete
any Replacement.

          (f) Borrower shall permit Lender and Lender’s agents and representatives (including, without
limitation, Lender’s engineer, architect, or inspector) or third parties making Replacements
pursuant to this Section 7.3.3 to enter onto the Property during normal business hours
(subject to the rights of tenants under their Leases) to inspect the progress of any Replacements
and all materials being used in connection therewith, to examine all plans and shop drawings
relating to such Replacements which are or may be kept at the Property, and to complete any
Replacements made pursuant to this Section 7.3.3. Borrower shall cause all contractors and
subcontractors to cooperate with Lender or Lender’s representatives or such
other persons described above in connection with inspections described in this Section
7.3.3(f) or the completion of Replacements pursuant to this Section 7.3.3.

          (g) Lender may require an inspection of the Property at Borrower’s expense prior to making a
monthly disbursement from the Replacement Reserve Account in order to verify completion of the
Replacements for which reimbursement is sought. Lender may require that such inspection be
conducted by an appropriate independent qualified professional selected by Lender and/or may
require a copy of a certificate of completion by an independent qualified professional acceptable
to Lender prior to the disbursement of any amounts from the Replacement Reserve Account. Borrower
shall pay the expense of the inspection as required hereunder, whether such inspection is conducted
by Lender or by an independent qualified professional.

          (h) The Replacements and all materials, equipment, fixtures, or any other item comprising a
part of any Replacement shall be constructed, installed or completed, as applicable, free and clear
of all mechanic’s, materialmen’s or other liens (except for those Liens existing on the date of
this Agreement which have been approved in writing by Lender).

          (i) Before each disbursement from the Replacement Reserve Account, Lender may require Borrower
to provide Lender with a search of title to the Property effective to the date of the disbursement,
which search shows that no mechanic’s or materialmen’s liens or other liens of any nature have been
placed against the Property since the date of recordation of the related Mortgage and that title to
the Property is free and clear of all Liens (other than the lien of the related Mortgage and any
other Liens previously approved in writing by Lender, if any).

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          (j) All Replacements shall comply with all applicable Legal Requirements of all Governmental
Authorities having jurisdiction over the Property and applicable insurance requirements including,
without limitation, applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.

          (k) In addition to any insurance required under the Loan Documents, Borrower shall provide or
cause to be provided workmen’s compensation insurance, builder’s risk, and public liability
insurance and other insurance to the extent required under applicable law in connection with a
particular Replacement. All such policies shall be in form and amount reasonably satisfactory to
Lender. All such policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. Certified copies of such policies shall be
delivered to Lender.

          7.3.4 Failure to Make Replacements. (a) It shall be an Event of Default under this
Agreement if Borrower fails to comply with any provision of this Section 7.3 and such
failure is not cured within thirty (30) days after notice from Lender. Upon the occurrence of such
an Event of Default, Lender may use the Replacement Reserve Fund (or any portion thereof) for any
purpose, including but not limited to completion of the Replacements as provided in Section
7.3.3, or for any other repair or replacement to the Property or toward payment of the Total
Debt in such order, proportion and priority as Lender may determine in its sole discretion.
Lender’s right to withdraw and apply the
Replacement Reserve Fund shall be in addition to all other rights and remedies provided to
Lender under this Agreement and the other Loan Documents.

          (a) Nothing in this Agreement shall obligate Lender to apply all or any portion of the
Replacement Reserve Fund on account of an Event of Default to payment of the Total Debt or in any
specific order or priority.

          7.3.5 Balance in the Replacement Reserve Account. The insufficiency of any balance in the
Replacement Reserve Account shall not relieve Borrower from its obligation to fulfill all
preservation and maintenance covenants in the Loan Documents.

     Section 7.4 Punch List and Deferred Maintenance Reserve.

          7.4.1 Establishment of Deferred Maintenance Reserve. In the event that, following the
Completion of the Improvements but prior to the Final Advance, Lender determines that any Punch
List Items remain to be completed or if Lender determines that any condition (a “Deferred
Maintenance Condition”) exists at the Property which requires maintenance or correction, Borrower
shall deposit with Lender an amount equal to 150% of Lender’s good faith estimate of the cost to
perform any Punch List Items plus 125% of Lender’s good faith estimate of the cost of
performing such Deferred Maintenance Condition (the “Punch List and Deferred Maintenance Reserve
Deposit”, such amounts so deposited shall hereinafter be referred to as the “Punch List and
Deferred Maintenance Reserve Funds”).

          7.4.2 Performance of Punch List Items and Deferred Maintenance. Borrower shall correct the
Punch List Items and Deferred Maintenance Conditions in a diligent, workmanlike manner and shall
complete the same within a reasonable time period. Upon the

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request of Borrower from time to time
(but not more often than once per calendar month), Lender shall cause disbursements to Borrower
from the Punch List and Deferred Maintenance Reserve Funds to reimburse Borrower for reasonable
costs and expenses incurred in order to correct Punch List Items and Deferred Maintenance
Conditions, upon satisfaction by Borrower of each of the following conditions: (a) Borrower shall
submit a written request for payment to Lender at least thirty (30) days prior to the date on which
Borrower requests such payment be made and specifies the Punch List Items and Deferred Maintenance
Conditions to be paid, (b) on the date such request is received by Lender and on the date such
payment is to be made, no Default or Event of Default shall exist and remain uncured, (c) Lender
shall have received an Officers’ Certificate (i) stating that all the Punch List Items and Deferred
Maintenance Conditions to be funded by the requested disbursement have been completed in good and
workmanlike manner and in accordance with all applicable federal, state and local laws, rules and
regulations, such certificate to be accompanied by a copy of any license, permit or other approval
by any Governmental Authority required to commence and/or complete the Punch List Items and
Deferred Maintenance Conditions, (ii) identifying each
Person that supplied materials or labor in connection with the Punch List Items and Deferred
Maintenance Conditions to be funded by the requested disbursement, and (iii) stating that each such
Person has been paid in full or will be paid in full upon such disbursement, such Officers’
Certificate to be accompanied by lien waivers or other evidence of payment satisfactory to Lender,
(d) at Lender’s option, a title search for the Property indicating that the Property is free from
all liens, claims and other encumbrances not previously approved by Lender, and (e) Lender shall
have received such other evidence as Lender shall reasonably request that the Required Repairs to
be funded by the requested disbursement have been completed and are paid for or will be paid upon
such disbursement to Borrower. Lender may condition the making of a requested disbursement on (1)
reasonable evidence establishing that Borrower has applied any amounts previously received by it in
accordance with this Section 7.4 for the expenses to which specific draws made hereunder
relate, (2) reasonably satisfactory site inspections, and (3) receipt of lien releases and waivers
from any contractors, subcontractors and others with respect to such amounts. Lender shall not be
required to make disbursements from the Required Repair Account with respect to the Property unless
such requested disbursement is in an amount greater than Twenty-five Thousand and 00/100 Dollars
($25,000.00) (or a lesser amount if the total amount in the Required Repair Account is less than
Twenty-five Thousand and 00/100 Dollars ($25,000.00), in which case only one disbursement of the
amount remaining in the account shall be made) and such disbursement shall be made only upon
satisfaction of each condition contained in this Section 7.4.2.

          7.4.3 Release of Deferred Maintenance Funds. Upon substantial completion (as reasonably
determined by Lender) of any Punch List Item or Deferred Maintenance Condition, and provided no
Event of Default is then continuing, Lender shall, on the first following Payment Date, release to
Borrower the remainder of the portion of the Punch List and Deferred Maintenance Reserve Funds held
for such Punch List Item or Deferred Maintenance Condition.

     Section 7.5 Intentionally Omitted.

     Section 7.6 Excess Cash Flow. Any Excess Cash Flow that, pursuant to the Cash Management
Agreement, is required to be deposited to the Excess Cash Flow Reserve (such funds “Excess Cash
Flow Funds”) shall be deposited in an account (the “Excess Cash Flow

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Reserve Account”) and held by
Lender as additional security for the payment and performance by Borrower of its obligations
hereunder and other the other Loan Documents.

     Section 7.7 Operating Reserve.

          7.7.1 Deposit of Operating Reserve Funds. In the event that, following the Completion
of the Improvements, Lender determines that the Gross Income from Operations is not sufficient to
pay the Operating Expenses of the Property and the Total Debt Service,
Borrower shall deposit with Lender an amount equal Lender’s good faith estimate of the
shortfall in Gross Income from Operations until such time that Lender determines that the Property
will achieve a Debt Service Coverage Ratio of 1.15 to 1.00 (the “Operating Reserve Deposit”, such
amounts so deposited shall hereinafter be referred to as the “Operating Reserve Funds”). The
account in which the Interest Reserve Fund are held shall hereinafter be referred to as the
"Operating Reserve Account”.

          7.7.2 Release of Operating Reserve Funds. Provide no Event of Default or monetary
Default exists, in the event that the amounts on deposit in the Cash Management Account are not
sufficient to make the payments required under Section 3.4(a) through (g), of the
Cash Management Agreement on each Payment Date, Lender shall apply the Operating Reserve Funds to
payments of the such items.

          7.7.3 Application of Operating Reserve Funds. Upon the occurrence of an Event of
Default, Lender, at its option, may withdraw all the Operating Reserve Funds and if Lender does so,
shall apply the Operating Reserve Funds toward payment of the Total Debt in such order, proportion
and priority as Lender may determine in its sole discretion. Lender’s right to withdraw and apply
the Operating Reserve Funds shall be in addition to all other rights and remedies provided to
Lender under the Loan Documents.

          7.7.4 Release of Operating Reserve Funds. Provided that no Event of Default or
Monetary Default then exists if Lender determines that the Property has achieved a Debt Service
Coverage Ratio of 1.15 to 1.00 for two consecutive Debt Service Coverage Ratio Determination Dates,
Lender shall release to Borrower any amount remaining in the Operating Reserve Account.

     Section 7.8 Rollover Reserve.

          7.8.1 Deposits to Rollover Reserve Fund. From and after Completion of the
Improvements, Borrower shall pay to Lender on each Payment Date the sum of $15,645.33 (the
"Rollover Reserve Monthly Deposit”), which amounts shall be deposited with and held by Lender for
tenant improvement and leasing commission obligations incurred following the date hereof. Amounts
so deposited shall hereinafter be referred to as the “Rollover Reserve Fund” and the account to
which such amounts are held shall hereinafter be referred to as the “Rollover Reserve Account".
Notwithstanding the foregoing, Borrower shall not be required to deposit any portion of the
Rollover Reserve Monthly Deposit which would cause the amount then on deposit in the Rollover
Reserve, as determined by Lender, to exceed $938,720.00 (the “Rollover Reserve Cap”). When the
Rollover Reserve Funds on deposit in the Rollover Reserve Account equals or exceeds the Rollover
Reserve Cap, Borrower may cease making Rollover Reserve

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Monthly Deposits to the Rollover Reserve
Fund. If at any time thereafter the amount of the Rollover Reserve funds on deposit in the
Rollover Reserve Account is less than the Rollover Reserve Cap, then Borrower shall recommence and
continue making Rollover Reserve
Monthly Deposits to the Rollover Reserve Funds, until the amount
of Rollover Reserve Funds on deposit in the Rollover Reserve Account equal or exceed the Rollover
Reserve Cap.

          7.8.2 Withdrawal of Rollover Reserve Funds. Lender shall make disbursements from the
Rollover Reserve Fund for tenant improvement and leasing commission
obligations incurred by Borrower. All such expenses shall be approved by Lender in its sole
discretion. Lender shall make disbursements as requested by Borrower on a quarterly basis in
increments of no less than $5,000.00 upon delivery by Borrower of Lender’s standard form of draw
request accompanied by copies of paid invoices for the amounts requested and, if required by
Lender, lien waivers and releases from all parties furnishing materials and/or services in
connection with the requested payment. Lender may require an inspection of the Property at
Borrower’s expense prior to making a quarterly disbursement in order to verify completion of
improvements for which reimbursement is sought.

     Section 7.9 Ground Lease Reserve Fund.

          7.9.1 Deposits to Ground Lease Fund. From and after the earlier of the Completion of
the Improvements or the Required Completion Date, Borrower shall deposit with Lender, the sum of
$250,000.00. On each Payment Date, commencing on the Payment Date occurring in February, 2008,
Borrower shall pay to Lender an amount equal to the rents (including both base and additional
rents) and other charges due under the Ground Lease that will be payable by Borrower as lessee
under the Ground Lease (collectively, the “Ground Rent”) on the next date that Ground Rent is
payable under the Ground Lease. Amounts so deposited shall hereinafter be referred to as the
"Ground Lease Reserve Fund” and the account in which such amounts are held shall hereinafter be
referred to as the “Ground Lease Reserve Account.” Notwithstanding the foregoing, Borrower’s
obligation to make monthly deposits with Lender for Ground Rent shall be suspended for so long as
no Event of Default has occurred and is continuing and Borrower provides Lender with written
evidence reasonably satisfactory to Lender on a monthly basis that all Ground Rent has been paid
when due. In the event Borrower fails to provide such evidence or an Event of Default occurs,
however, Borrower will thereafter be required to make deposits with Lender for Ground Rent as
provided herein.

          7.9.2 Release of Ground Lease Reserve Fund. Provided no Event of Default has occurred
and is continuing, Lender shall apply amounts in the Ground Lease Reserve Fund to the payment of
the Ground Rent as and when such Ground Rent is payable. In making any payment relating to the
Ground Rent, Lender may do so according to any bill, statement or estimate procured from the Ground
Lessor, without inquiry into the accuracy of such bill, statement or estimate. Any amounts
remaining in the Ground Lease Reserve Fund after the Debt has been paid in full shall be returned
to Borrower. If the Ground Rent increases at any time Borrower shall, within thirty (30) days
thereafter, deposit with Lender such amount as shall be sufficient so that at all times the amount
on deposit in the Ground Rent Reserve Account shall be not less than two month’s rent.

     Section 7.10 Storage Facility Master Lease Reserve. 

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          7.10.1 Storage Facility Master Lease Reserve Fund. On the earlier of the Completion
of the Improvements or the Required Completion Date, Borrower shall deposit with Lender the amount
of $800,000.00, representing one (1) year’s Storage Facility Rent under the Storage Facility Master
Lease, which amount shall be deposited with and held by Lender as additional security for the Loan.
Amounts so deposited shall hereinafter be referred to as the “Storage Facility Master Lease
Reserve Fund” and the account in which such amount is held shall hereinafter be referred to as the
“Storage Facility Master Lease Reserve Account”. Until
such time as the Storage Facility Master Lease Reserve Fund is fully released as set forth in
Section 7.10.2, the Storage Facility Master Lease Reserve Fund shall be held by Lender as
additional security for the Loan. The tenant under the Storage Facility Master Lease shall be
obligated to make monthly rent payments and reimbursements thereunder until such time as the
Storage Facility Master Lease shall have been terminated pursuant to Section 5.1.44.

          7.10.2 Disbursement of Storage Facility Master Lease Reserve Funds. Provided no Event
of Default shall have occurred and be continuing; Lender shall disburse the Storage Facility Master
Lease Reserve Fund in the event that (a) the Self Storage Facility is open for business and (b)
either (i) the Self Storage Facility yields an underwritten Net Cash Flow of $800,000 with no free
rent, credit or right of offset, or (ii) the entire Property yields a Stabilized Net Cash Flow of
$3,100,000.

     Section 7.11 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 Total 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. The Reserve Funds shall be
held in an Eligible Account in Permitted Investments in accordance with the terms and provisions of
the Cash Management Agreement. Interest earned on the Replacement Reserve Funds shall be added to
and become a part of such Reserve Fund and shall be disbursed in the same manner as other monies
deposited in such Reserve Fund. Any interest on the Rollover Reserve Funds, the Ground Rent
Reserve Funds, the Cash Collateral Reserve Funds, the Punch List and Deferred Maintenance Reserve
Funds, the Operating Reserve Funds, the Interest Reserve Funds, the Storage Facility Master Lease
Reserve Fund and the Tax and Insurance Escrow Funds 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

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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.

     Section 7.12 Letter of Credit Rights. Any Letter of Credit delivered to Lender pursuant to this
Agreement shall be held by Lender as additional security for the Loan. Lender shall have the right
to draw upon any Letter of Credit immediately and without further notice:

          (a) upon the occurrence and during the continuance of an Event of Default;

          (b) if Borrower fails to deliver to Lender, no less than thirty (30) days prior to the
expiration of any Letter of Credit (including any renewal or extension thereof), a renewal or
extension of such Letter of Credit or a replacement Letter of Credit; or

          (c) if the institution issuing the Letter of Credit ceases to be an Approved Bank and Borrower
fails to deliver to Lender a replacement Letter of Credit from an Approved Bank within thirty (30)
days of the date that such institution ceased to be an Approved Bank.

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;

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     (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;

     (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;

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     (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;

     (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 Project Loan Agreement) shall
have occurred;

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     (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;

     (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; or

     (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.

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          (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.

     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) to 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

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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.

     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

     Section 9.1 Sale of Notes and Securitization. Borrower acknowledges and agrees that Lender may
sell all or any portion of the Loan and the Loan Documents, or issue one or more participations
therein, or consummate one or
more private or public securitizations of rated single- or multi-class securities (the
“Securities”) secured by or evidencing ownership interests in all or any portion of the Loan and
the Loan Documents or a pool of assets that include the Loan and the Loan Documents (such sales,
participations and/or securitizations, collectively, a “Securitization”). At the request of
Lender, and to the extent not already required to be

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provided by or on behalf of Borrower under this Agreement, Borrower shall use reasonable efforts to
provide information not in the possession of Lender or which may be reasonably required by Lender
or take other actions reasonably required by Lender, in each case in order to satisfy the market
standards to which Lender customarily adheres or which may be reasonably required by prospective
investors and/or the Rating Agencies in connection with any such Securitization including, without
limitation, to:

          (a) provide additional and/or updated Provided Information, together with appropriate
verification and/or consents related to the Provided Information through letters of auditors or
opinions of counsel of independent attorneys reasonably acceptable to Lender, prospective investors
and/or the Rating Agencies;

          (b) assist in preparing descriptive materials for presentations to any or all of the Rating
Agencies, and work with, and if requested, supervise, third-party service providers engaged by
Borrower and approved by Lender, Guarantor and their respective affiliates to obtain, collect, and
deliver information requested or required by Lender, prospective investors and/or the Rating
Agencies;

          (c) deliver (i) an Additional Insolvency Opinion and an opinion with respect to, due execution
and enforceability with respect to the Property, Borrower, Guarantor and their respective
Affiliates and the Loan Documents, and such other legal opinions as Lender may request including,
without limitation, a so called “10b-5” opinion, and (ii) revised organizational documents for
Borrower, which counsel opinions and organizational documents shall be reasonably satisfactory to
Lender, prospective investors and/or the Rating Agencies;

          (d) if required by any prospective investor and/or any Rating Agency, use commercially
reasonable efforts to deliver such additional tenant estoppel letters, subordination agreements or
other agreements from parties to agreements that affect the Property, which estoppel letters,
subordination agreements or other agreements shall be reasonably satisfactory to Lender,
prospective investors and/or the Rating Agencies;

          (e) make such representations and warranties as of the closing date of the Securitization with
respect to the Property, Borrower, Guarantor and the Loan Documents as may be reasonably requested
by Lender, prospective investors and/or the Rating Agencies and consistent with the facts covered
by such representations and warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents;

          (f) execute such amendments to the Loan Documents as may be requested by Lender, prospective
investors and/or the Rating Agencies to effect the Securitization;

          (g) if requested by Lender, review any information regarding the Property, Borrower,
Guarantor, and the Loan which is contained in a preliminary or final private placement memorandum,
prospectus, prospectus supplement (including any amendment or supplement to either thereof), or
other disclosure document to be used by Lender or any affiliate thereof; and

          (h) supply to Lender such documentation, financial statements and reports in form and
substance required in order to comply with any applicable securities laws.

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          9.1.2 Loan Components.

          (a) Borrower covenants and agrees that in connection with any Securitization of the Loan, upon
Lender’s request, Borrower shall deliver one or more new component notes to replace the original
note or modify the original note to reflect multiple components of the Loan (and such new notes or
modified note shall initially have the same fully funded weighted average interest rate as the
original note, but such new notes or modified note may subsequently change the weighted average
spread and apply principal, interest rates and amortization of the Loan between the components in a
manner specified by Lender in its sole discretion) and modify the Cash Management Agreement with
respect to the newly created components such that the pricing and marketability of the Securities
and the size of each class of Securities and the rating assigned to each such class by the Rating
Agencies shall provide the most favorable rating levels and achieve the optimum rating levels for
the Loan, provided that the same do not materially increase Borrower’s obligations and/or
liabilities under the Loan Documents or materially decrease Borrower’s rights under the Loan
Documents.

          (b) Borrower covenants and agrees that Lender may hereafter convert any portion of the Loan to
subordinate financing, including one or more tranches of mezzanine debt, preferred equity,
subordinate debt or participation in such loan, subordinate to such loan (collectively,
“Subordinate Financing”), provided, however, such Subordinate Financing and the Loan following the
creation of the Subordinate Financing shall, in the aggregate, initially have the same fully funded
weighted average interest rate as the fully funded interest rate of the Loan prior to the creation
of such Subordinate Financing, but such Subordinate Financing may subsequently change the weighted
average spread and Lender may apply principal, interest rates and amortization of the Loan and the
Subordinate Financing in a manner specified by Lender in its sole discretion. If the Subordinate
Financing takes the form of a mezzanine loan, a mezzanine borrower (the “Mezzanine Borrower”) may
be created which will own one hundred percent (100%) of the equity interests in the Borrower. One
hundred percent (100%) of the ownership and economic interests in the Mezzanine Borrower may, at
Lender’s discretion, be required to be pledged as security for such tranches of Subordinate
Financing, if any. A default with the related Loan shall be a default under the respective
Subordinate Financing. Such Subordinate Financing shall be subject to an intercreditor agreement
by and between the Lender and the subordinate lender(s).

          9.1.3 Costs of Subordinate Financing. Borrower shall be responsible for all costs and
expenses incurred by Lender in connection with any Subordinate Financing, (including reasonable
attorneys’ fees and disbursements) including without limitation (i) the preparation, negotiation,
execution and delivery of any mezzanine loan documents (“Mezzanine Loan Documents”) and the
consummation of the transactions contemplated thereby and all the costs of furnishing all opinions
by counsel for Borrower and Mezzanine Borrower; (ii) Mezzanine Borrower’s and Lender’s ongoing
performance under and compliance with the Mezzanine Loan Documents, including confirming compliance
with environmental and insurance requirements; (iii) the negotiation, preparation, execution,
delivery and administration of any consents, amendments,
waivers or other modifications of or under any Mezzanine Loan Document and any other documents
or matters requested by Lender; (iv) filing and recording of any Mezzanine Loan Documents; (v)
title insurance (including any applicable mezzanine endorsements or UCC endorsements or policies),
surveys, inspections and appraisals; (vi) the creation, perfection or

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protection of Lender’s Liens
in the collateral securing the Mezzanine Loan Documents (including fees and expenses for title and
lien searches, intangibles taxes, personal property taxes, recording taxes, due diligence expenses,
travel expenses, accounting firm fees, costs of appraisals, environmental reports and Construction
Consultant, surveys and engineering reports); and (vii) fees charged by Rating Agencies in
connection with the creation of the Subordinate Financing, or any modification of the Loan or the
Subordinate Financing.

     Section 9.2 Securitization Indemnification . (a) Borrower understands that certain
of the Provided Information may be included in Disclosure Documents in connection with the
Securitization and may also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or provided or made available to investors
or prospective investors in the Securities, the Rating Agencies, and service providers relating to
the Securitization. In the event that the Disclosure Document is required to be revised prior to
the sale of all Securities, Borrower will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information necessary to keep the Disclosure Document
accurate and complete in all material respects.

          (b) The Indemnifying Persons agree to provide, in connection with the Securitization, an
indemnification agreement (A) certifying that (i) the Indemnifying Persons have carefully examined
the Disclosure Documents, including without limitation, the sections entitled “Risk Factors,”
“Special Considerations,” “Description of the Mortgages,” “Description of the Mortgage Loans and
Mortgaged Property,” “The Manager,” “The Borrower” and “Certain Legal Aspects of the Mortgage
Loan,” and (ii) such sections and such other information in the Disclosure Documents (to the extent
such information relates to or includes any Provided Information or any information regarding the
Properties, Borrower, Manager and/or the Loan) (collectively with the Provided Information, the
“Covered Disclosure Information”) do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (B) jointly and severally indemnifying
Lender, BSCMI (whether or not it is the Lender), any Affiliate of BSCMI that has filed any
registration statement relating to the Securitization or has acted as the sponsor or depositor in
connection with the Securitization, any Affiliate of BSCMI that acts as an underwriter, placement
agent or initial purchaser of Securities issued in the Securitization, any other co-underwriters,
co-placement agents or co-initial purchasers of Securities issued in the Securitization, and each
of their respective officers, directors, partners, employees, representatives, agents and
Affiliates and each Person or entity who Controls any such Person within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (collectively, the “Indemnified Persons”),
for any losses, claims, damages, liabilities, costs or expenses (including without limitation legal
fees and expenses for enforcement of these obligations (collectively, the “Liabilities”) to which
any such Indemnified Person may become subject insofar as the Liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact contained in the Covered
Disclosure Information or arise out of or are based upon the omission or alleged omission to state
in the
Covered Disclosure Information a material fact required to be stated therein or necessary in
order to make the statements in the Covered Disclosure Information, in light of the circumstances
under which they were made, not misleading and (C) agreeing to reimburse each Indemnified Person
for any legal or other expenses incurred by such Indemnified Person, as they are incurred,

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in
connection with investigating or defending the Liabilities. This indemnity agreement will be in
addition to any liability which Borrower may otherwise have. Moreover, the indemnification and
reimbursement obligations provided for in clauses (B) and (C) above shall be
effective, valid and binding obligations of the Indemnifying Persons whether or not an
indemnification agreement described in clause (A) above is provided.

          (c) In connection with Exchange Act Filings, the Indemnifying Persons jointly and severally
agree to indemnify (i) the Indemnified Persons for Liabilities to which any such Indemnified Person
may become subject insofar as the Liabilities arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact in the Covered Disclosure Information, or the
omission or alleged omission to state in the Covered Disclosure Information a material fact
required to be stated therein or necessary in order to make the statements in the Covered
Disclosure Information, in light of the circumstances under which they were made, not misleading
and (ii) reimburse each Indemnified Person for any legal or other expenses incurred by such
Indemnified Persons, as they are incurred, in connection with defending or investigating the
Liabilities.

          (d) Promptly after receipt by an Indemnified Person of notice of any claim or the commencement
of any action, the Indemnified Person shall, if a claim in respect thereof is to be made against
any Indemnifying Person, notify such Indemnifying Person in writing of the claim or the
commencement of that action; provided, however, that the failure to notify such Indemnifying Person
shall not relieve it from any liability which it may have under the indemnification provisions of
this Section 9.2 except to the extent that it has been materially prejudiced by such
failure and, provided further that the failure to notify such Indemnifying Person shall not relieve
it from any liability which it may have to an Indemnified Person otherwise than under the
provisions of this Section 9.2. If any such claim or action shall be brought against an
Indemnified Person, and it shall notify any Indemnifying Person thereof, such Indemnifying Person
shall be entitled to participate therein and, to the extent that it wishes, assume the defense
thereof with counsel reasonably satisfactory to the Indemnified Person. After notice from any
Indemnifying Person to the Indemnified Person of its election to assume the defense of such claim
or action, such Indemnifying Person shall not be liable to the Indemnified Person for any legal or
other expenses subsequently incurred by the Indemnified Person in connection with the defense
thereof except as provided in the following sentence; provided, however, if the defendants in any
such action include both an Indemnifying Person, on the one hand, and one or more Indemnified
Persons on the other hand, and an Indemnified Person shall have reasonably concluded that there are
any legal defenses available to it and/or other Indemnified Persons that are different or in
addition to those available to the Indemnifying Person, the Indemnified Person or Persons shall
have the right to select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such Indemnified Person or Persons. The
Indemnified Person shall instruct its counsel to maintain reasonably detailed billing records for
fees and disbursements for which such Indemnified Person is seeking reimbursement hereunder and
shall submit copies of such detailed billing records to substantiate that such counsel’s fees and
disbursements are solely related to the
defense of a claim for which the Indemnifying Person is required hereunder to indemnify such
Indemnified Person. No Indemnifying Person shall be liable for the expenses of more than one (1)
such separate counsel unless such Indemnified Person shall have reasonably concluded that

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there may
be legal defenses available to it that are different from or additional to those available to
another Indemnified Person.

          (e) Without the prior written consent of BSCMI (which consent shall not be unreasonably
withheld or delayed), no Indemnifying Person shall settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless the Indemnifying Person shall
have given BSCMI reasonable prior written notice thereof and shall have obtained an unconditional
release of each Indemnified Person hereunder from all liability arising out of such claim, action,
suit or proceedings. As long as an Indemnifying Person has complied with its obligations to defend
and indemnify hereunder, such Indemnifying Person shall not be liable for any settlement made by
any Indemnified Person without the consent of such Indemnifying Person (which consent shall not be
unreasonably withheld or delayed).

          (f) The Indemnifying Persons agree that if any indemnification or reimbursement sought
pursuant to this Section 9.2 is finally judicially determined to be unavailable for any
reason or is insufficient to hold any Indemnified Person harmless (with respect only to the
Liabilities that are the subject of this Section 9.2), then the Indemnifying Persons, on
the one hand, and such Indemnified Person, on the other hand, shall contribute to the Liabilities
for which such indemnification or reimbursement is held unavailable or is insufficient: (x) in
such proportion as is appropriate to reflect the relative benefits to the Indemnifying Persons, on
the one hand, and such Indemnified Person, on the other hand, from the transactions to which such
indemnification or reimbursement relates; or (y) if the allocation provided by clause (x)
above is not permitted by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause (x) but also the relative faults of the
Indemnifying Persons, on the one hand, and all Indemnified Persons, on the other hand, as well as
any other equitable considerations. Notwithstanding the provisions of this Section 9.2,
(A) no party found liable for a fraudulent misrepresentation shall be entitled to contribution from
any other party who is not also found liable for such fraudulent misrepresentation, and (B) the
Indemnifying Persons agree that in no event shall the amount to be contributed by the Indemnified
Persons collectively pursuant to this paragraph exceed the amount of the fees actually received by
the Indemnified Persons in connection with the closing of the Loan.

          (g) The Indemnifying Persons agree that the indemnification, contribution and reimbursement
obligations set forth in this Section 9.2 shall apply whether or not any Indemnified Person
is a formal party to any lawsuits, claims or other proceedings. The Indemnifying Persons further
agree that the Indemnified Persons are intended third party beneficiaries under this Section
9.2.

          (h) The liabilities and obligations of the Indemnified Persons and the Indemnifying Persons
under this Section 9.2 shall survive the termination of this Agreement and the satisfaction
and discharge of the Debt.

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          (i) Notwithstanding anything to the contrary contained herein, Borrower shall have no
obligation to act as depositor with respect to the Loan or an issuer or registrant with respect to
the Securities issued in any Securitization.

     Section 9.3 Exculpation. Subject to the qualifications below, Lender shall not
enforce the liability and obligation of Borrower to perform and observe the obligations contained
in the Note, this Agreement, the Mortgage or the other Loan Documents by any action or proceeding
wherein a money judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, an action for specific performance or any other appropriate action or
proceeding to enable Lender to enforce and realize upon its interest under the Note, this
Agreement, the Mortgage and the other Loan Documents, or in the Property, the Rents, or any other
collateral given to Lender pursuant to the Loan Documents; provided, however, that, except as
specifically provided herein, any judgment in any such action or proceeding shall be enforceable
against Borrower only to the extent of Borrower’s interest in the Property, in the Rents and in any
other collateral given to Lender, and Lender, by accepting the Note, this Agreement, the Mortgage
and the other Loan Documents, agrees that it shall not sue for, seek or demand any deficiency
judgment against Borrower in any such action or proceeding under or by reason of or under or in
connection with the Note, this Agreement, the Mortgage or the other Loan Documents. The provisions
of this Section shall not, however, (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by any of the Loan Documents; (b) impair the right of Lender to
name Borrower as a party defendant in any action or suit for foreclosure and sale under the
Mortgage; (c) affect the validity or enforceability of or any guaranty made in connection with the
Loan or any of the rights and remedies of Lender thereunder; (d) impair the right of Lender to
obtain the appointment of a receiver; (e) impair the enforcement of the Assignment of Leases; (f)
constitute a prohibition against Lender to seek a deficiency judgment against Borrower in order to
fully realize the security granted by the Mortgage or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against the Property; or (g) constitute a
waiver of the right of Lender to enforce the liability and obligation of Borrower, by money
judgment or otherwise, to the extent of any loss, damage, cost, expense, liability, claim or other
obligation incurred by Lender (including attorneys’ fees and costs reasonably incurred) arising out
of or in connection with the following:

     (i) fraud or intentional misrepresentation by Borrower or Guarantor in
connection with the Loan;

     (ii) the gross negligence or willful misconduct of Borrower;

     (iii) the breach of any representation, warranty, covenant or indemnification
provision in the Environmental Indemnity Agreement or in the Mortgage concerning
environmental laws, hazardous substances and asbestos and any indemnification of
Lender with respect thereto in either document;

     (iv) the removal or disposal of any portion of the Property after an Event of
Default;

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     (v) the misapplication or conversion by Borrower of (A) any Insurance
Proceeds paid by reason of any loss, damage or destruction to the Property, (B)
any Awards received in connection with a Condemnation of all or a portion of the
Property, (C) any Rents following an Event of Default, or (D) any Rents paid more
than one month in advance;

     (vi) failure to pay charges for labor or materials or other charges that can
create Liens on any portion of the Property;

     (vii) any security deposits, advance deposits or any other deposits collected
with respect to the Property which are not delivered to Lender upon a foreclosure
of the Property or action in lieu thereof, except to the extent any such security
deposits were applied in accordance with the terms and conditions of any of the
Leases prior to the occurrence of the Event of Default that gave rise to such
foreclosure or action in lieu thereof; or

     (viii) the breach of any representation, warranty, covenant or
indemnification provision in the Guaranty of Completion or Guaranty of Recourse
Carveouts;

     (ix) if (A) a breach or default by Borrower under any condition or obligation
contained in the Ground Lease is not cured within any applicable cure period
provided therein, (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, or
(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; or

     (x) if (A) a breach or default by Borrower or Storage Facility Tenant under
any condition or obligation contained in the Storage Facility Master Lease occurs,
(B) there occurs any event or condition that gives the Borrower or 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 without the prior
written consent of Lender, 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.

          Notwithstanding anything to the contrary in this Agreement, the Note or any of the Loan
Documents, (A) Lender shall not be deemed to have waived any right which Lender may have under
Section 506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy Code to file a claim for
the full amount of the Debt secured by the Mortgage or to require that all collateral shall
continue to secure all of the Debt owing to Lender in accordance with the Loan

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Documents, and (B) the Debt shall be fully recourse to Borrower (i) in the event of: (a)
Borrower filing a voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (b) the filing of an involuntary petition against Borrower under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law, in which Borrower
colludes with, or otherwise assists such Person, or solicits or causes to be solicited petitioning
creditors for any involuntary petition against Borrower from any Person; (c) Borrower filing an
answer consenting to or otherwise acquiescing in or joining in any involuntary petition filed
against it, by any other Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law; (d) Borrower consenting to or acquiescing in or joining in an application for
the appointment of a custodian, receiver, trustee, or examiner for Borrower or any portion of the
Property; or (e) Borrower making an assignment for the benefit of creditors, or admitting, in
writing or in any legal proceeding, its insolvency or inability to pay its debts as they become
due; (ii) if the first full monthly payment of interest on the Note is not paid when due; ; (iii)
if Borrower fails to maintain its status as a Single Purpose Entity, after the Guaranty Notice (as
defined in the Guaranty of Recourse Carveouts) if Borrower fails to permit on-site inspections of
the Property, fails to provide financial information, or fails to appoint a new property manager
upon the request of Lender as permitted under this Agreement, each as required by, and in
accordance with, the terms and provisions of this Agreement or the Mortgage; (iv) if Borrower fails
to obtain Lender’s prior written consent to any Indebtedness or voluntary Lien encumbering the
Property; or (v) if Borrower fails to obtain Lender’s prior written consent to any Transfer as
required by this Agreement or the Mortgage.

     Section 9.4 Intentionally Omitted.

     Section 9.5 Servicer. At the option of Lender, the Loan may be serviced by a
servicer/trustee (any such servicer/trustee, together with its agents, nominees or designees, are
collectively referred to as “Servicer”) selected by Lender and Lender may delegate all or any
portion of its responsibilities under this Agreement and the other Loan Documents to Servicer
pursuant to a servicing agreement (the “Servicing Agreement”) between Lender and Servicer.
Borrower shall not be responsible for any set-up fees or any other initial costs relating to or
arising under the Servicing Agreement or the monthly servicing fee due to Servicer under the
Servicing Agreement; provided, however, that Borrower shall be responsible for expenses incurred by
Lender or Servicer as set forth in Section 10.13 hereof.

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.

               (B) 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.

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

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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

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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.

     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.

     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

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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

153

 

portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.

          (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
hereto 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.

154

 

     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 Conflict; Construction of Documents; Reliance. 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.

     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,

155

 

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 BUILDING 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:  	 	, 
	 	 	Name:  	Robert Masters 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	LENDER

BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	Authorized Signatory 	 
	 

157exv10w73

 

Exhibit 10.73

PROJECT LOAN AGREEMENT

Dated as of December 26, 2007

Between

ACADIA ATLANTIC AVENUE LLC,

as Borrower

and

BEAR STEARNS COMMERCIAL MORTGAGE, INC.,

as Lender

MERS MIN: 8000101-0000007166-1

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION
	 	 	1	 
	Section 1.1
	 	Definitions	 	 	1	 
	Section 1.2
	 	Principles of Construction	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE II. GENERAL TERMS	 	 	6	 
	Section 2.1
	 	Loan Commitment; Disbursement to Borrower	 	 	6	 
	Section 2.2
	 	Interest Rate	 	 	9	 
	Section 2.3
	 	Loan Payment	 	 	10	 
	Section 2.4
	 	Prepayments	 	 	11	 
	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	 	 	18	 
	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	 	 	27	 
	Section 6.1
	 	Insurance	 	 	27	 
	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	 

 

 

	 	 	 	 	 	 	 
	Section 8.2
	 	Remedies	 	 	32	 
	Section 8.3
	 	Remedies Cumulative; Waivers	 	 	33	 
	 
	 	 	 	 	 	 
	ARTICLE IX. SPECIAL PROVISIONS	 	 	34	 
	 
	 	 	 	 	 	 
	ARTICLE X. MISCELLANEOUS	 	 	34	 
	Section 10.1
	 	Survival	 	 	34	 
	Section 10.2
	 	Lender’s Discretion	 	 	34	 
	Section 10.3
	 	Governing Law	 	 	34	 
	Section 10.4
	 	Modification, Waiver in Writing	 	 	36	 
	Section 10.5
	 	Delay Not a Waiver	 	 	36	 
	Section 10.6
	 	Notices	 	 	36	 
	Section 10.7
	 	Trial by Jury	 	 	37	 
	Section 10.8
	 	Headings	 	 	37	 
	Section 10.9
	 	Severability	 	 	37	 
	Section 10.10
	 	Preferences	 	 	37	 
	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	 	 	39	 
	Section 10.15
	 	Offsets, Counterclaims and Defenses	 	 	39	 
	Section 10.16
	 	No Joint Venture or Partnership; No Third Party Beneficiaries	 	 	39	 
	Section 10.17
	 	Publicity	 	 	40	 
	Section 10.18
	 	Waiver of Marshalling of Assets	 	 	40	 
	Section 10.19
	 	Waiver of Counterclaim	 	 	40	 
	Section 10.20
	 	Identical Obligations; Conflict; Construction of Documents; Reliance	 	 	40	 
	Section 10.21
	 	Brokers and Financial Advisors	 	 	41	 
	Section 10.22
	 	Prior Agreements	 	 	41	 
	Section 10.23
	 	Joint and Several Liability	 	 	41	 
	Section 10.24
	 	Certain Additional Rights of Lender (VCOC)	 	 	41	 
	Section 10.25
	 	MERS	 	 	42	 

2

 

PROJECT LOAN AGREEMENT

          THIS PROJECT LOAN AGREEMENT, dated as of December 26, 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
ACADIA ATLANTIC AVENUE 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”).

WITNESSETH:

          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.

 

 

          “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.

2

 

          “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 forty-four one-thousandths percent (7.144%),
provided, however, in the event that on or before January 1, 2011, the Property shall have achieved
a Debt Service Coverage Ratio as determined by Lender of 1.15 to 1.0 using a debt service constant
of 7.50%, 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 75% 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 seven hundred ninety-four one-thousandths percent (5.794%), 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 after
the expiration of the Construction Term and prior to a Securitization of the Loan, to increase the
Interest Rate by up to two-tenths of one percent (0.20%).

          “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

3

 

Guaranty of Recourse
Carveouts, the Cash Management Agreement, the Clearing Account Agreement, 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.

          “MERS” shall have the meaning set forth in Section 10.25 hereof.

          “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, 2015, and (b) a constant monthly
payment of $33,215.06 commencing with the Payment Date occurring in February, 2015 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.

          “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.

          “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 Four Million, Nine Hundred Twenty Thousand, Seven Hundred
Thirty-Nine and 67/100 Dollars ($4,920,739.67).

          “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.

4

 

          “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 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.

          “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.

          “Unsatisfied Initial Advance Conditions” shall have the meaning set forth in Section
2.1.20.

     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

5

 

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).

          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

6

 

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.

          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

7

 

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.

8

 

          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.

     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.

9

 

          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.

     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

10

 

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.

          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

11

 

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.

          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

12

 

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;

     (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;

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     (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.

          (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.

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          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.

          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.

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          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 Advance The 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.

          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;

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          (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 75%.

          (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.

          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 Initial Reserve Deposits Borrower 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.

          2.10.9 Satisfaction of Initial Advance Conditions. . Borrower acknowledge that certain
Initial Advance Conditions, including, without limitation, [SUBJECT TO REVIEW BY LENDER] [(i)
delivery to and approval by Lender of final Plans and Specifications, (ii) delivery to and approval
by Lender of the final Development Budget, Building Loan Budget, and Project Loan Budget, (iii)
delivery to Lender of all permits required for the demolition of the existing improvements on the
Property, (iv) delivery to Lender of evidence that Borrower maintains the Policies required under
this Agreement, and (v) delivery to Lender of Borrower’s Requisition and

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all required accompanying documents with respect to the Initial Advance in accordance with
Section 2.14.1 of this Agreement (the “Unsatisfied 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, including, without limitation, the
Unsatisfied 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.

          2.10.10 Government Approvals. Borrower shall have delivered to Lender evidence satisfactory
to Lender that all Governmental Approvals necessary for the demolition of the existing improvements
as contemplated by the Plans and Specifications, have been obtained and are in full force and
effect.

     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

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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.

          (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.

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          (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.

          2.11.8
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.

          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.

20

 

          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 75%.

          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) $5,356,660.00 or (b) 25% of the Total Project Costs or (c)
the difference between the Development Budget and the maximum Loan amount of $16,150,000.00 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 $5,356,660.00 of cash equity in the Project through such Advance and (ii) the Debt
Service Coverage Ratio shall be equal to or greater than 1.70 to 1.0 assuming a fully advanced Loan
using a debt service constant of 7.50%, (iii) the Debt Service Coverage Ratio shall be equal to or
greater than 1.20 to 1.0 assuming a fully advanced Loan using a debt service constant of 10.65%,
and (iv) the loan-to-value ratio for the Property is greater than 75% 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, or (2) at Lender’s discretion, 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), (iii) and (iv) 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, or (2) at Lender’s discretion, 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.

          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
Government Approvals. Lender shall not be required to make Construction Advances for
any phase of the construction of the Project Improvements unless and until Borrower shall have
delivered to Lender evidence satisfactory to Lender that all Governmental Approvals necessary for
the construction of the phase of the Project

21

 

Improvements to be constructed by Borrower as contemplated by the Plans and Specifications
have been obtained and are in full force and effect, including, without limitation, the final
approval of the Plans and Specifications by the City of New York for the Project Improvements and a
building permit(s) covering the entire scope of work contemplated by the Project Improvements in
accordance with the approved Plans and Specification “lawfully issued” to Borrower within the
meaning of Section 11-31(a) of the Zoning Resolution of the City of New York (the “Zoning
Resolution).

     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.

          (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.

22

 

          (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.

          (m) ICIP Eligibility. Evidence satisfactory to Lender that Borrower has obtained a
Certificate of Eligibility under the Industrial and Commercial Incentive Program.

          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 75%, and a Debt Service Coverage Ratio
of 1.70 to 1.0, 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

23

 

assuming a thirty (30) year amortization schedule based upon a debt service constant equal to
the greater of the actual debt service constant and 7.50%, and a Debt Service Coverage Ratio of
1.20 to 1.0, calculated based upon Lender’s determination on a pro-forma basis of Lender’s
underwritten Net Operating Income 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 10.65%.

          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;

          (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;

24

 

          (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
$250,000.00.

          (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

25

 

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.

          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

26

 

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.

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.

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.

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     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;

29

 

     (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;

     (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

30

 

     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 Guarantor shall dissolve or cease to exist during the term of the
Loan, except in compliance with the provisions of Section 5.2.15 of the
Building Loan Agreement;

     (xxviii) if all of the Initial Advance Conditions, including, without
limitation, the Unsatisfied Initial Advance Conditions, are not satisfied by the
Required Initial Advance Date; or

     (xxix) 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)

31

 

to (xxviii) 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.

     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.

32

 

          (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.

     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.

33

 

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.

     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

34

 

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.

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.

35

 

     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.

     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:

	 	Acadia Atlantic Avenue LLC

c/o Acadia Realty Trust

1311 Mamaroneck Avenue, Suite 260

White Plains, New York 10605

36

 

	 	 	 
	 

	 	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.

     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.

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     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.

     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

38

 

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.

          (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

39

 

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.

     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

40

 

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.

     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 June 28, 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

41

 

          (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

ACADIA ATLANTIC AVENUE LLC,

a Delaware limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Robert Masters 	 
	 	 	Title:  	Senior Vice President 	 
	 

	 	 	 	 	 
	 	LENDER

BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York
corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	Authorized Signatory

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