Document:

exv10w61

 

Exhibit 10.61

PREPARED BY AND UPON RECORDATION

RETURN TO:

Moore & Van Allen PLLC

100 North Tryon Street, Suite 4700

Charlotte, North Carolina 28202-4003

Attention: Timothy W. Gilbert, Esq.

			
	 	 	 
	Loan No.: 50-2858925
	 	239 Greenwich Avenue

 

239 GREENWICH ASSOCIATES LIMITED PARTNERSHIP,

as Borrower

to

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Lender

 

MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING

 

Dated as of January      , 2007

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	       
            REPRESENTATIONS AND WARRANTIES OF BORROWER	 	 	5	 
	 
	 	 	 	 	 	 
	Section 1.1
	 	Organization; Special Purpose	 	 	5	 
	Section 1.2
	 	Title	 	 	5	 
	Section 1.3
	 	No Bankruptcy Filing	 	 	6	 
	Section 1.4
	 	Full and Accurate Disclosure	 	 	6	 
	Section 1.5
	 	Proceedings; Enforceability	 	 	6	 
	Section 1.6
	 	No Conflicts	 	 	6	 
	Section 1.7
	 	Federal Reserve Regulations; Investment Company Act	 	 	7	 
	Section 1.8
	 	Taxes	 	 	7	 
	Section 1.9
	 	ERISA	 	 	7	 
	Section 1.10
	 	Property Compliance	 	 	8	 
	Section 1.11
	 	Utilities	 	 	8	 
	Section 1.12
	 	Public Access	 	 	8	 
	Section 1.13
	 	Litigation; Agreements	 	 	8	 
	Section 1.14
	 	Physical Condition	 	 	9	 
	Section 1.15
	 	Contracts	 	 	9	 
	Section 1.16
	 	Leases	 	 	9	 
	Section 1.17
	 	Foreign Person	 	 	10	 
	Section 1.18
	 	Management Agreement	 	 	10	 
	Section 1.19
	 	Fraudulent Transfer	 	 	10	 
	Section 1.20
	 	Backward Representations	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE II
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	       
            COVENANTS OF BORROWER	 	 	13	 
	 
	 	 	 	 	 	 
	Section 2.1
	 	Defense of Title	 	 	13	 
	Section 2.2
	 	Performance of Obligations	 	 	13	 
	Section 2.3
	 	Insurance	 	 	14	 
	Section 2.4
	 	Payment of Taxes	 	 	18	 
	Section 2.5
	 	Casualty and Condemnation	 	 	18	 
	Section 2.6
	 	Construction Liens	 	 	21	 
	Section 2.7
	 	Rents and Profits	 	 	21	 
	Section 2.8
	 	Leases	 	 	22	 
	Section 2.9
	 	Alienation and Further Encumbrances	 	 	25	 
	Section 2.10
	 	Payment of Utilities, Assessments, Charges, Etc.	 	 	30	 
	Section 2.11
	 	Access Privileges and Inspections	 	 	31	 
	Section 2.12
	 	Waste; Alteration of Improvements	 	 	31	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 2.13
	 	Zoning	 	 	31	 
	Section 2.14
	 	Financial Statements and Books and Records	 	 	32	 
	Section 2.15
	 	Further Assurances	 	 	33	 
	Section 2.16
	 	Payment of Costs; Reimbursement to Lender	 	 	34	 
	Section 2.17
	 	Security Interest	 	 	35	 
	Section 2.18
	 	Security Agreement	 	 	36	 
	Section 2.19
	 	Easements and Rights-of-Way	 	 	37	 
	Section 2.20
	 	Compliance with Laws	 	 	37	 
	Section 2.21
	 	Additional Taxes	 	 	38	 
	Section 2.22
	 	Secured Indebtedness	 	 	38	 
	Section 2.23
	 	Borrower’s Waivers	 	 	38	 
	Section 2.24
	 	SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL	 	 	39	 
	Section 2.25
	 	Attorney-in-Fact Provisions	 	 	40	 
	Section 2.26
	 	Management	 	 	40	 
	Section 2.27
	 	Hazardous Waste and Other Substances	 	 	41	 
	Section 2.28
	 	Indemnification; Subrogation	 	 	45	 
	Section 2.29
	 	Covenants with Respect to Existence, Indebtedness, Operations, Fundamental Changes of Borrower	 	 	46	 
	Section 2.30
	 	Embargoed Person	 	 	50	 
	Section 2.31
	 	Anti-Money Laundering	 	 	51	 
	Section 2.32
	 	ERISA	 	 	51	 
	Section 2.33
	 	Opinion Assumptions	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE III
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	       
            RESERVES AND CASH MANAGEMENT	 	 	52	 
	 
	 	 	 	 	 	 
	Section 3.1
	 	Reserves Generally	 	 	52	 
	Section 3.2
	 	Payment Reserve	 	 	53	 
	Section 3.3
	 	Impound Account	 	 	54	 
	Section 3.4
	 	Immediate Repair Reserve	 	 	55	 
	Section 3.5
	 	Replacement Reserve	 	 	56	 
	 
	 	 	 	 	 	 
	ARTICLE IV
	 	 	 	 	 	 
	       
            EVENTS OF DEFAULT	 	 	57	 
	 
	 	 	 	 	 	 
	Section 4.1
	 	Events of Default	 	 	57	 
	 
	 	 	 	 	 	 
	ARTICLE V
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	       
            REMEDIES	 	 	59	 
	 
	 	 	 	 	 	 
	Section 5.1
	 	Remedies Available	 	 	59	 
	Section 5.2
	 	Application of Proceeds	 	 	60	 

 

 

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 5.3
	 	Right and Authority of Receiver or Lender in the Event of Default; Power of Attorney	 	 	61	 
	Section 5.4
	 	Occupancy After Foreclosure	 	 	62	 
	Section 5.5
	 	Notice to Account Debtors	 	 	62	 
	Section 5.6
	 	Cumulative Remedies	 	 	63	 
	Section 5.7
	 	Payment of Expenses	 	 	63	 
	 
	 	 	 	 	 	 
	ARTICLE VI
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	       
            MISCELLANEOUS TERMS AND CONDITIONS	 	 	63	 
	 
	 	 	 	 	 	 
	Section 6.1
	 	Time of Essence	 	 	63	 
	Section 6.2
	 	Release of Mortgage	 	 	63	 
	Section 6.3
	 	Certain Rights of Lender	 	 	63	 
	Section 6.4
	 	Waiver of Certain Defenses	 	 	63	 
	Section 6.5
	 	Notices	 	 	64	 
	Section 6.6
	 	Successors and Assigns; Joint and Several Liability	 	 	64	 
	Section 6.7
	 	Severability	 	 	64	 
	Section 6.8
	 	Gender	 	 	64	 
	Section 6.9
	 	Waiver; Discontinuance of Proceedings	 	 	64	 
	Section 6.10
	 	Section Headings	 	 	65	 
	Section 6.11
	 	GOVERNING LAW	 	 	65	 
	Section 6.12
	 	Counting of Days	 	 	65	 
	Section 6.13
	 	Relationship of the Parties	 	 	65	 
	Section 6.14
	 	Application of the Proceeds of the Note	 	 	66	 
	Section 6.15
	 	Unsecured Portion of Indebtedness	 	 	66	 
	Section 6.16
	 	Cross Default	 	 	66	 
	Section 6.17
	 	Interest After Sale	 	 	66	 
	Section 6.18
	 	Inconsistency with Other Loan Documents	 	 	66	 
	Section 6.19
	 	Construction of this Document	 	 	66	 
	Section 6.20
	 	No Merger	 	 	66	 
	Section 6.21
	 	Rights With Respect to Junior Encumbrances	 	 	66	 
	Section 6.22
	 	Lender May File Proofs of Claim	 	 	67	 
	Section 6.23
	 	Fixture Filing	 	 	67	 
	Section 6.24
	 	After-Acquired Property	 	 	67	 
	Section 6.25
	 	No Representation	 	 	67	 
	Section 6.26
	 	Counterparts	 	 	67	 
	Section 6.27
	 	Personal Liability	 	 	68	 
	Section 6.28
	 	Recording and Filing	 	 	68	 
	Section 6.29
	 	Entire Agreement and Modifications	 	 	68	 
	Section 6.30
	 	Intentionally Reserved	 	 	68	 
	Section 6.31
	 	Secondary Market	 	 	68	 
	Section 6.32
	 	Dissemination of Information	 	 	68	 
	Section 6.33
	 	Certain Matters Relating to Property Located in the State of Connecticut	 	 	69	 
	Section 6.34
	 	REMIC Opinions	 	 	70	 
	Section 6.35
	 	Splitting the Loan	 	 	70	 

 

 

MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING

          THIS MORTGAGE, SECURITY AGREEMENT AND FIXTURE FILING (as the same may be from time to time
amended, consolidated, renewed or replaced, this “Mortgage”) is made as of January ___,
2007 by 239 GREENWICH ASSOCIATES LIMITED PARTNERSHIP, a Connecticut limited partnership, as grantor
(“Borrower”), whose address is c/o Acadia Realty Trust, 1311 Mamaroneck Avenue, White
Plains, New York 10605, to WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
beneficiary (together with its successors and assigns, “Lender”), whose address is
Commercial Real Estate Services, 8739 Research Drive URP – 4, NC 1075, Charlotte, North Carolina
28262.

W I T N E S S E T H:

          THAT FOR AND IN CONSIDERATION OF THE SUM OF TEN AND NO/100 DOLLARS ($10.00), AND OTHER
VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, BORROWER
HEREBY IRREVOCABLY MORTGAGES, GRANTS, BARGAINS, SELLS, CONVEYS, TRANSFERS, PLEDGES, SETS OVER AND
ASSIGNS, with power of sale, all of Borrower’s estate, right, title and interest in, to and under
any and all of the following described property, whether now owned or hereafter acquired by
Borrower (collectively, the “Property”):

     (A) All that certain real property situated in the County of Fairfield, State of
Connecticut, more particularly described on Exhibit A attached hereto and
incorporated herein by this reference (the “Premises”), together with all of the
easements, rights, privileges, franchises, tenements, hereditaments and appurtenances now or
hereafter thereunto belonging or in any way appertaining thereto, and all of the estate,
right, title, interest, claim and demand whatsoever of Borrower therein or thereto, either
at law or in equity, in possession or in expectancy, now or hereafter acquired;

     (B) All structures, buildings and improvements of every kind and description now or at
any time hereafter located or placed on the Premises (the “Improvements”);

     (C) All furniture, furnishings, fixtures, goods, equipment, inventory or personal
property owned by Borrower and now or hereafter located on, attached to or used in and about
the Improvements, including, but not limited to, all machines, engines, boilers, dynamos,
elevators, stokers, tanks, cabinets, awnings, screens, shades, blinds, carpets, draperies,
lawn mowers, and all appliances, plumbing, heating, air conditioning, lighting, ventilating,
refrigerating, disposal and incinerating equipment, and all fixtures and appurtenances
thereto, and such other goods and chattels and personal property owned by Borrower as are
now or hereafter used or furnished in operating the Improvements, or the activities
conducted therein, and all building materials and equipment hereafter situated on or about
the Premises or Improvements, and all warranties and guaranties relating thereto, and all
additions thereto and substitutions and replacements therefor (exclusive of any of the
foregoing owned or leased by tenants of space in the Improvements);

 

 

     (D) All easements, rights-of-way, strips and gores of land, vaults, streets, ways,
alleys, passages, sewer rights, and other emblements now or hereafter located on the
Premises or under or above the same or any part or parcel thereof, and all estates, rights,
titles, interests, tenements, hereditaments and appurtenances, reversions and remainders
whatsoever, in any way belonging, relating or appertaining to the Property or any part
thereof, or which hereafter shall in any way belong, relate or be appurtenant thereto,
whether now owned or hereafter acquired by Borrower;

     (E) All water, ditches, wells, reservoirs and drains and all water, ditch, well,
reservoir and drainage rights which are appurtenant to, located on, under or above or used
in connection with the Premises or the Improvements, or any part thereof, whether now
existing or hereafter created or acquired;

     (F) All minerals, crops, timber, trees, shrubs, flowers and landscaping features now or
hereafter located on, under or above the Premises;

     (G) All cash funds, deposit accounts and other rights and evidence of rights to cash,
now or hereafter created or held by Lender pursuant to this Mortgage or any other of the
Loan Documents (as hereinafter defined), including, without limitation, all funds now or
hereafter on deposit in the Reserves (as hereinafter defined);

     (H) All leases (including, without limitation, oil, gas and mineral leases), licenses,
concessions and occupancy agreements of all or any part of the Premises or the Improvements
(each, a “Lease” and collectively, “Leases”), whether written or oral, now
or hereafter entered into and all rents, royalties, issues, profits, bonus money, revenue,
income, rights and other benefits (collectively, the “Rents and Profits”) of the
Premises or the Improvements, now or hereafter arising from the use or enjoyment of all or
any portion thereof or from any present or future Lease or other agreement pertaining
thereto or arising from any of the Leases or any of the General Intangibles (as hereinafter
defined) and all cash or securities deposited to secure performance by the tenants, lessees
or licensees (each, a “Tenant” and collectively, “Tenants”), as applicable,
of their obligations under any such Leases, whether said cash or securities are to be held
until the expiration of the terms of said Leases or applied to one or more of the
installments of rent coming due prior to the expiration of said terms, subject, however, to
the provisions contained in Section 2.7 hereinbelow;

     (I) All contracts and agreements now or hereafter entered into covering any part of the
Premises or the Improvements (collectively, the “Contracts”) and all revenue, income
and other benefits thereof, including, without limitation, management agreements, service
contracts, maintenance contracts, equipment leases, personal property leases and any
contracts or documents relating to construction on any part of the Premises or the
Improvements (including plans, drawings, surveys, tests, reports, bonds and governmental
approvals) or to the management or operation of any part of the Premises or the
Improvements;

2

 

     (J) All present and future monetary deposits given to any public or private utility
with respect to utility services furnished to any part of the Premises or the Improvements;

     (K) All present and future funds, accounts, instruments, accounts receivable,
documents, causes of action, claims, general intangibles (including, without limitation,
trademarks, trade names, service marks and symbols now or hereafter used in connection with
any part of the Premises or the Improvements, all names by which the Premises or the
Improvements may be operated or known, all rights to carry on business under such names, and
all rights, interest and privileges which Borrower has or may have as developer or declarant
under any covenants, restrictions or declarations now or hereafter relating to the Premises
or the Improvements) and all notes or chattel paper now or hereafter arising from or by
virtue of any transactions related to the Premises or the Improvements (collectively, the
“General Intangibles”);

     (L) All water taps, sewer taps, certificates of occupancy, permits, licenses,
franchises, certificates, consents, approvals and other rights and privileges now or
hereafter obtained in connection with the Premises or the Improvements and all present and
future warranties and guaranties relating to the Improvements or to any equipment, fixtures,
furniture, furnishings, personal property or components of any of the foregoing now or
hereafter located or installed on the Premises or the Improvements;

     (M) All building materials, supplies and equipment now or hereafter placed on the
Premises or in the Improvements and all architectural renderings, models, drawings, plans,
specifications, studies and data now or hereafter relating to the Premises or the
Improvements;

     (N) All right, title and interest of Borrower in any insurance policies or binders now
or hereafter relating to the Property, including any unearned premiums thereon;

     (O) All proceeds, products, substitutions and accessions (including claims and demands
therefor) of the conversion, voluntary or involuntary, of any of the foregoing into cash or
liquidated claims, including, without limitation, proceeds of insurance and condemnation
awards; and

     (P) All other or greater rights and interests of every nature in the Premises or the
Improvements and in the possession or use thereof and income therefrom, whether now owned or
hereafter acquired by Borrower.

     FOR THE PURPOSE OF SECURING:

     (1) The loan (the “Loan”) evidenced by that certain Promissory Note
(such Promissory Note, together with any and all renewals, amendments,
modifications, consolidations and extensions thereof, is hereinafter referred to as
the “Note”) of even date with this Mortgage, made by Borrower payable to the
order of Lender in the principal face amount of Twenty-Six Million and No/100
Dollars ($26,000,000.00), together with interest as therein provided;

3

 

     (2) The full and prompt payment and performance of all of the provisions,
agreements, covenants and obligations herein contained and contained in any other
agreements, documents or instruments now or hereafter evidencing, securing or
otherwise relating to the Debt (as hereinafter defined) including, but not limited
to, the Environmental Indemnity Agreement (as hereinafter defined) and the Indemnity
and Guaranty Agreement (as hereinafter defined) (the Note, this Mortgage, and such
other agreements, documents and instruments, together with any and all renewals,
amendments, extensions and modifications thereof, are hereinafter collectively
referred to as the “Loan Documents”) and the payment of all other sums
herein or therein covenanted to be paid;

     (3) Any and all additional advances made by Lender to protect or preserve the
Property or the lien or security interest created hereby on the Property, or for
taxes, assessments or insurance premiums as hereinafter provided or for performance
of any of Borrower’s obligations hereunder or under the other Loan Documents or for
any other purpose provided herein or in the other Loan Documents (whether or not the
original Borrower remains the owner of the Property at the time of such advances);
and

     (4) Any and all other indebtedness now owing or which may hereafter be owing by
Borrower to Lender, including, without limitation, all prepayment fees, however and
whenever incurred or evidenced, whether express or implied, direct or indirect,
absolute or contingent, or due or to become due, and all renewals, modifications,
consolidations, replacements and extensions thereof, it being contemplated by
Borrower and Lender that Borrower may hereafter become so indebted to Lender.

(All of the sums referred to in Paragraphs (1) through (4) above are herein referred to as
the “Debt”).

          TO HAVE AND TO HOLD the Property unto Lender, its successors and assigns forever, and Borrower
does hereby bind itself, its successors and assigns, to WARRANT AND FOREVER DEFEND the title to the
Property, subject to the Permitted Encumbrances (as hereinafter defined), to Lender against every
person whomsoever lawfully claiming or to claim the same or any part thereof;

          PROVIDED, HOWEVER, that if the principal and interest and all other sums due or to become due
under the Note or under the other Loan Documents, including, without limitation, any prepayment
fees required pursuant to the terms of the Note, shall have been paid at the time and in the manner
stipulated therein and the Debt shall have been paid and all other covenants contained in the Loan
Documents shall have been performed, then, in such case, the liens, security interests, estates and
rights granted by this Mortgage shall be satisfied and the estate, right, title and interest of
Lender in the Property shall cease, and upon payment to Lender of all costs and expenses incurred
for the preparation of the release hereinafter referenced and all recording costs if allowed by
law, Lender shall promptly satisfy and release this Mortgage of record and the lien hereof by
proper instrument.

4

 

ARTICLE I

REPRESENTATIONS AND WARRANTIES OF BORROWER

          Borrower, for itself and its successors and assigns, does hereby represent, warrant and
covenant to and with Lender, its successors and assigns, that:

          Section 1.1 Organization; Special Purpose. Borrower and its general partner have been duly
organized and are each validly existing and in good standing under the laws of the state of its
formation, with requisite power and authority, and all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to own its properties and to transact the
business in which it is now engaged. Borrower and its general partner are each 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, business and operations. Borrower possesses all franchises,
patents, copyrights, trademarks, trade names, licenses and permits necessary for the conduct of its
business substantially as now conducted. Borrower and its general partner are each a
Single-Purpose Entity in compliance with the provisions of Section 2.29 hereof.

          Section 1.2 Title. Borrower has good, marketable and indefeasible fee simple title to
the Property, subject only to those matters expressly set forth as exceptions to or subordinate
matters in the title insurance policy insuring the lien of this Mortgage delivered as of the date
hereof which Lender has agreed to accept, excepting therefrom all preprinted and/or standard
exceptions (such items being the “Permitted Encumbrances”), and has full power and lawful authority
to grant, bargain, sell, convey, assign, transfer, encumber and mortgage its interest in the
Property in the manner and form hereby done or intended. Borrower will preserve its interest in
and title to the Property and will forever warrant and defend the same to Lender against any and
all claims whatsoever and will forever warrant and defend the validity and priority of the lien and
security interest created herein against the claims of all persons and parties whomsoever, subject
to the Permitted Encumbrances. This Mortgage creates (i) a valid, perfected lien on the Premises,
subject only to Permitted Encumbrances and the liens created by the Loan Documents and (ii)
perfected security interests in and to, and perfected collateral assignments of, all personalty,
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 security agreements or financing statements affecting
all or any portion of the Property other than (i) as disclosed in writing by Borrower to Lender
prior to the date hereof and (ii) the security agreements and financing statements created in favor
of Lender. There are no claims for payment for work, labor or materials affecting the Premises
which are or may become a lien prior to, or of equal priority with, the liens created by the Loan
Documents. None of the Permitted Encumbrances, individually or in the aggregate, materially
interfere with the benefits of the security intended to be provided by this Mortgage, materially
and adversely affect the value of the Premises, impair the use or operations of the Premises or
impair Borrower’s ability to pay its obligations in a timely manner. The foregoing warranty of
title shall survive the foreclosure of this Mortgage and shall inure to the benefit of and be
enforceable by Lender in the event Lender acquires title to the Property pursuant to any
foreclosure.

5

 

          Section 1.3 No Bankruptcy Filing.  No bankruptcy, insolvency proceedings or
liquidation of all or a substantial portion of the Property is pending or contemplated by Borrower
or, to the best knowledge of Borrower, against Borrower or by or against any endorser or cosigner
of the Note or of any portion of the Debt, or any guarantor or indemnitor under any guaranty or
indemnity agreement, including, without limitation, that certain Indemnity and Guaranty Agreement,
dated the date hereof, executed by Acadia Realty Limited Partnership, a Delaware limited
partnership, in favor of Lender (the “Indemnity and Guaranty Agreement”), executed in connection
with the Note or the loan evidenced thereby and secured hereby (an
“Indemnitor”). No petition in
bankruptcy has been filed against Borrower or any general partner, manager, sole member, managing
member or majority shareholder of Borrower, as applicable (collectively, the “Borrower Parties”,
each a “Borrower Party”), and neither Borrower Party or any principal of a Borrower Party has ever
made an assignment for the benefit of creditors or taken advantage of any insolvency act for the
benefit of debtors.

          Section 1.4 Full and Accurate Disclosure. No statement of fact made by Borrower in
any Loan Documents contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained therein not misleading. There is no material fact
presently known to Borrower that has not been disclosed to Lender which adversely affects, or, as
far as Borrower can foresee, might adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower. All financial data, including the statements of
cash flow and income and operating expense, that have been delivered to Lender in respect of
Borrower and the Property (i) are true, complete and correct in all material respects, (ii)
accurately represent the financial condition of Borrower and the Property as of the date of such
reports, and (iii) to the extent prepared by an independent certified public accounting firm, have
been prepared in accordance with generally accepted accounting principles consistently applied
throughout the periods covered, except as disclosed therein. Borrower has no contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments, unrealized or
anticipated losses from any unfavorable commitments or any liabilities or obligations not expressly
permitted by this Mortgage. Since the date of such financial statements, there has been no
materially adverse change in the financial condition, operations or business of Borrower or the
Property from that set forth in said financial statements.

          Section 1.5 Proceedings; Enforceability. The execution, delivery and performance of
this Mortgage, the Note and all of the other Loan Documents have been duly authorized by all
necessary action to be, and are, binding and enforceable against Borrower in accordance with the
respective terms thereof and do not contravene, result in a breach of or constitute a default (nor
upon the giving of notice or the passage of time or both will same constitute a default) under the
partnership agreement, articles of incorporation, operating agreement or other organizational
documents of Borrower or any contract or agreement of any nature to which Borrower is a party or by
which Borrower or any of its property may be bound and do not violate or contravene any law, order,
decree, rule or regulation to which Borrower is subject. The Loan Documents are not subject to,
and Borrower has not asserted, any right of rescission, set-off, counterclaim or defense, including
the defense of usury.

          Section 1.6 No Conflicts. Borrower is not required to obtain any consent, approval or
authorization from or to file any declaration or statement with, any governmental

6

 

authority or agency in connection with or as a condition to the execution, delivery or
performance of this Mortgage, the Note or the other Loan Documents which has not been so obtained
or filed. Borrower has obtained or made all necessary (i) consents, approvals and authorizations
and registrations and filings of or with all governmental authorities or agencies and (ii)
consents, approvals, waivers and notifications of partners, stockholders, members, creditors,
lessors and other non-governmental persons and/or entities, in each case, which are required to be
obtained or made by Borrower in connection with the execution and delivery of, and the performance
by Borrower of its obligations under, the Loan Documents.

          Section 1.7 Federal Reserve Regulations; Investment Company Act. 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 T, U or X of the Board of Governors of the Federal Reserve System
or for any other purpose that would be inconsistent with such Regulation T, U or X or any other
regulation of such Board of Governors, or for any purpose prohibited by law or any Loan Document.
Borrower is not (i) an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended; (ii) 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 (iii) subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

          Section 1.8 Taxes. Borrower and any general partner or managing member of Borrower,
if any, has filed all federal, state and local tax returns required to be filed as of the date
hereof and has paid or made adequate provision for the payment of all federal, state and local
taxes, charges and assessments payable by Borrower and any general partner or managing member, if
any, as of the date hereof. Borrower and any general partner or managing member, if any, believe
that their respective tax returns properly reflect the income and taxes of Borrower and said
general partner or managing member, if any, for the periods covered thereby, subject only to
reasonable adjustments required by the Internal Revenue Service or other applicable tax authority
upon audit. Borrower and the Property are free from any past due obligations for sales and payroll
taxes.

          Section 1.9 ERISA. Borrower (i) has no knowledge of any material liability that has
been incurred or is expected to be incurred by Borrower that is or remains unsatisfied for any
taxes or penalties with respect to any “employee benefit plan”, as defined in section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or any “plan” within the
meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the “Code”) or any
other benefit plan (other than a multi-employer plan) maintained, contributed to, or required to be
contributed to by Borrower or by any entity that is under the common control with Borrower within
the meaning of ERISA Section 4001(a)(14) (collectively, a “Plan”) or any plan that would be a Plan
but for the fact that it is a multi-employer plan within the meaning of ERISA Section 3(37) and
(ii) has made and shall continue to make when due all required contributions to all such Plans, if
any. Each such Plan, if any, has been and will be administered in compliance with its terms and
the applicable provisions of ERISA, the Code and any other applicable Federal or state law and no
action shall be taken or fail to be taken that would result in the disqualification or loss of the
tax-exempt status of any such Plan, if any, intended to be

7

 

qualified or tax-exempt. The assets of Borrower do not constitute “plan assets” of one or
more such plans within the meaning of 29 C.F.R. Section 2510.3-101.

          Section 1.10 Property Compliance. The Premises and the Improvements and the current
intended use thereof by Borrower comply in all material respects with all applicable restrictive
covenants, zoning ordinances, subdivision and building codes, flood disaster laws, health and
environmental laws and regulations and all other ordinances, orders or requirements issued by any
state, federal or municipal authorities having or claiming jurisdiction over the Property. In the
event that all or any part of the Improvements are destroyed or damaged, said Improvements can be
legally reconstructed to their condition prior to such damage or destruction, and thereafter exist
for the same use without violating any zoning or other ordinances applicable thereto and without
the necessity of obtaining any variances or special permits. No legal proceedings are pending or,
to the knowledge of Borrower, threatened with respect to the zoning of the Premises. Neither the
zoning nor any other right to construct, use or operate the Premises is in any way dependent upon
or related to any property other than the Premises. All certifications, permits, licenses and
approvals, including certificates of completion and occupancy permits required for the legal use,
occupancy and operation of the Premises have been obtained and are in full force and effect. The
Premises and Improvements constitute one or more separate tax parcels for purposes of ad valorem
taxation. The Premises and Improvements do not require any rights over, or restrictions against,
other property in order to comply with any of the aforesaid governmental ordinances, orders or
requirements.

          Section 1.11 Utilities. All utility services necessary and sufficient for the full
use, occupancy, operation and disposition of the Premises and the Improvements for their intended
purposes are available to the Property, including water, storm sewer, sanitary sewer, gas,
electric, cable and telephone facilities, through public rights-of-way or perpetual private
easements approved by Lender. The Property is free from delinquent water charges, sewer rents,
taxes and assessments.

          Section 1.12 Public Access. All streets, roads, highways, bridges and waterways
necessary for access to and full use, occupancy, operation and disposition of the Premises and the
Improvements have been completed, have been dedicated to and accepted by the appropriate municipal
authority and are open and available to the Premises and the Improvements without further condition
or cost to Borrower. All curb cuts, driveways and traffic signals shown on the survey delivered to
Lender prior to the execution and delivery of this Mortgage are existing and have been fully
approved by the appropriate governmental authority.

          Section 1.13 Litigation; Agreements. There are no judicial, administrative, mediation
or arbitration actions, suits or proceedings pending or threatened against or affecting Borrower
(or, if Borrower is a partnership or a limited liability company, any of its general partners or
members) or the Property which, if adversely determined, would materially impair either the
Property or Borrower’s ability to perform the covenants or obligations required to be performed
under the Loan Documents. Borrower is not a party to any agreement or instrument or subject to any
restriction which might adversely affect Borrower or the Property, or Borrower’s business,
properties, 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

8

 

obligations, covenants or conditions contained in any Permitted Encumbrance or any other
agreement or instrument to which it is a party or by which it or the Property is bound.

          Section 1.14 Physical Condition. As of the date of this Mortgage, (i) the Property is
free from unrepaired damage caused by fire, flood, accident or other casualty, (ii) no part of the
Premises or the Improvements has been taken in condemnation, eminent domain or like proceeding nor
is any such proceeding pending or, to Borrower’s knowledge and belief, threatened or contemplated,
(iii) except as may otherwise be disclosed in that certain Property Condition Report (the “Property
Condition Report”) dated January 4, 2007 and prepared by IVI Due Diligence Services, Inc., the
Improvements are structurally sound, in good repair and free of defects in materials and
workmanship and have been constructed and installed in substantial compliance with the plans and
specifications relating thereto, and (iv) all major building systems located within the
Improvements, including, without limitation, the heating and air conditioning systems and the
electrical and plumbing systems, are in good working order and condition.

          Section 1.15 Contracts. Borrower has delivered to Lender true, correct and complete
copies of all Contracts and all amendments thereto or modifications thereof. Each Contract
constitutes the legal, valid and binding obligation of Borrower and, to the best of Borrower’s
knowledge and belief, is enforceable against any other party thereto. No default exists, or with
the passing of time or the giving of notice or both would exist, under any Contract which would, in
the aggregate, have a material adverse effect on Borrower or the Property. No Contract provides
any party with the right to obtain a lien or encumbrance upon the Property superior to the lien of
this Mortgage. All Contracts affecting the Property have been entered into at arms-length in the
ordinary course of Borrower’s business and provide for the payment of fees in amounts and upon
terms comparable to existing market rates.

          Section 1.16 Leases. Borrower has delivered (i) a true, correct and complete schedule
(the “Rent Roll”) of all Leases affecting the Property as of the date hereof, which accurately and
completely sets forth in all material respects for each such Lease, the following: the name of the
Tenant, the Lease expiration date, extension and renewal provisions, the base rent payable, the
security deposit held thereunder and any other material provisions of such Lease and (ii) true,
correct and complete copies of all Leases described in the Rent Roll. Each Lease constitutes the
legal, valid and binding obligation of Borrower and, to the best of Borrower’s knowledge and
belief, is enforceable against the Tenant thereof. No default exists, or with the passing of time
or the giving of notice or both would exist, under any Lease which would, in the aggregate, have a
material adverse effect on Borrower or the Property. No Tenant under any Lease has, as of the date
hereof, paid rent more than thirty (30) days in advance, and the rents under such Leases have not
been waived, released, or otherwise discharged or compromised. All security deposits required
under such Leases have been fully funded and are held by Borrower in a separate segregated account
or as otherwise required by applicable law. All work to be performed by Borrower under the Leases
has been substantially performed, all contributions to be made by Borrower to the Tenants
thereunder have been made and all other conditions precedent to each such Tenant’s obligations
thereunder have been satisfied. Each Tenant under a Lease has entered into occupancy of the
demised premises. To the best of Borrower’s knowledge and belief, each Tenant is free from
bankruptcy, reorganization or arrangement proceedings or a general assignment for the benefit of
creditors. No Lease provides

9

 

any party with the right to obtain a lien or encumbrance upon the Property superior to the
lien of this Mortgage.

          Section 1.17 Foreign Person. Borrower is not a “foreign person” within the meaning of
§1445(f)(3) of the Code, and the related Treasury Department regulations, including temporary
regulations.

          Section 1.18 Management Agreement. The property management agreement relating to the
Premises (the “Management Agreement”) is in full force and effect and to the best of Borrower’s
knowledge, there is no default, breach or violation existing thereunder by any party thereto beyond
the expiration of applicable notice and grace periods thereunder and no event has occurred (other
than payments due but not yet delinquent) that, with the passage of time or the giving of notice,
or both, would constitute a default, breach or violation by any party thereunder. The fee due
under the Management Agreement, and the terms and provisions of the Management Agreement, are
subordinate to this Mortgage.

          Section 1.19 Fraudulent Transfer. Borrower has not entered into the Loan or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor, and Borrower has
received reasonably equivalent value in exchange for its obligations under the Loan Documents.
Giving effect to the transactions contemplated by the Loan Documents, the fair saleable value of
Borrower’s assets exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower’s total liabilities, including subordinated, unliquidated, disputed or
contingent liabilities, including the maximum amount of its contingent liabilities or its debts as
such debts become absolute and matured. Borrower’s assets do not and, immediately following the
execution and delivery of the Loan Documents 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 debts and liabilities (including contingent liabilities
and other commitments) beyond its ability to pay such debts as they mature (taking into account the
timing and amounts to be payable on or in respect of obligations of Borrower).

          Section 1.20 Backward Representations.

     (a) Borrower. Borrower hereby represents that Borrower:

	 	(i)	 	is and always has been duly formed, validly existing, and in
good standing in the state of its formation and in all other jurisdictions
where it is qualified to do business;
	 
	 	(ii)	 	has no judgments or liens of any nature against it except for
tax liens not yet due;
	 
	 	(iii)	 	is in compliance with all laws, regulations, and orders
applicable to it and, except as otherwise disclosed in this Mortgage, has
received all permits necessary for it to operate;
	 
	 	(iv)	 	is not involved in any dispute with any taxing authority;

10

 

	 	(v)	 	has paid all taxes which it owes;
	 
	 	(vi)	 	has never owned any real property other than the Property and
personal property necessary or incidental to its ownership or operation of the
Property and has never engaged in any business other than the ownership and
operation of the Property;
	 
	 	(vii)	 	is not now, nor has ever been, party to any lawsuit,
arbitration, summons, or legal proceeding that is still pending or that
resulted in a judgment against it that has not been paid in full;
	 
	 	(viii)	 	has provided Lender with complete financial statements that reflect a fair
and accurate view of the entity’s financial condition; and
	 
	 	(ix)	 	has no material contingent or actual obligations not related to
the Property.

     (b) Separateness. Borrower hereby represents that, from the date of Borrower’s
formation to the date of this Mortgage, Borrower:

	 	(i)	 	has not entered into any contract or agreement with any of its
Affiliates, constituents, or owners, or any guarantors of any of its
obligations or any Affiliate of any of the foregoing (individually, a
“Related Party” and collectively, the “Related Parties”),
except upon terms and conditions that are commercially reasonable and
substantially similar to those available in an arm’s-length transaction with an
unrelated party;
	 
	 	(ii)	 	has paid all of its debts and liabilities from its assets;
	 
	 	(iii)	 	has done or caused to be done all things necessary to observe
all organizational formalities applicable to it and to preserve its existence;
	 
	 	(iv)	 	has maintained all of its books, records, financial statements
and bank accounts separate from those of any other Person;
	 
	 	(v)	 	has not had its assets listed as assets on the financial
statement of any other Person;
	 
	 	(vi)	 	has filed its own tax returns (except to the extent that it has
been a tax-disregarded entity not required to file tax returns under applicable
law) and, if it is a corporation, has not filed a consolidated federal income
tax return with any other Person;
	 
	 	(vii)	 	has been, and at all times has held itself out to the public
as, a legal entity separate and distinct from any other Person (including any
Affiliate or other Related Party);
	 
	 	(viii)	 	has corrected any known misunderstanding regarding its status as a separate
entity;

11

 

	 	(ix)	 	has conducted all of its business and held all of its assets in
its own name;
	 
	 	(x)	 	has not identified itself or any of its Affiliates as a
division or part of the other;
	 
	 	(xi)	 	has maintained and utilized separate invoices and checks
bearing its own name;
	 
	 	(xii)	 	has not commingled its assets with those of any other Person
and has held all of its assets in its own name;
	 
	 	(xiii)	 	has not guaranteed or become obligated for the debts of any other Person;
	 
	 	(xiv)	 	has not held itself out as being responsible for the debts or
obligations of any other Person;
	 
	 	(xv)	 	has allocated fairly and reasonably any overhead expenses that
have been shared with an Affiliate, including paying for office space and
services performed by any employee of an Affiliate or Related Party;
	 
	 	(xvi)	 	has not pledged its assets to secure the obligations of any
other Person and no such pledge remains outstanding except in connection with
the loan secured hereby;
	 
	 	(xvii)	 	has maintained adequate capital in light of its contemplated business
operations;
	 
	 	(xviii)	 	has maintained a sufficient number of employees in light of its contemplated
business operations and has paid the salaries of its own employees from its own
funds;
	 
	 	(xix)	 	has not owned any subsidiary or any equity interest in any
other entity;
	 
	 	(xx)	 	has not incurred any indebtedness that is still outstanding
other than indebtedness that is permitted under the Loan Documents; and
	 
	 	(xxi)	 	has not had any of its obligations guaranteed by an Affiliate,
except for guarantees that have been either released or discharged (or that
will be discharged as a result of the closing of the loan secured hereby) or
guarantees that are expressly contemplated by the Loan Documents.

     (c) Tenants. None of the tenants holding leasehold interests with respect to the
Property are affiliated with the Borrower.

     For purposes of this Section 1.20, “Affiliate” means, with respect to any Person, any
other Person directly or indirectly Controlling or Controlled by or under direct or indirect common
Control with such Person.

12

 

     For purposes of this Section 1.20, “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities or general partnership or managing
member interests, by contract or otherwise. “Controlling” and “Controlled” shall have correlative
meanings. Without limiting the generality of the foregoing, a Person shall be deemed to Control
any other Person in which it owns, directly or indirectly, a majority of the ownership interests.

     For purposes of this Section 1.20, “Person” means any individual, corporation,
partnership, joint venture, limited liability company, limited liability partnership, association,
joint stock company, trust, unincorporated organization, or other organization, whether or not a
legal entity, and any governmental authority.

All of the representations and warranties in this Article I and elsewhere in the Loan
Documents (i) shall survive for so long as any portion of the Debt remains owing to Lender and (ii)
shall be deemed to have been relied upon by Lender notwithstanding any investigation heretofore or
hereafter made by Lender or on its behalf.

ARTICLE II

COVENANTS OF BORROWER

          For the purposes of further securing the Debt and for the protection of the security of this
Mortgage, for so long as the Debt or any part thereof remains unpaid, Borrower covenants and agrees
as follows:

          Section 2.1 Defense of Title. If, while this Mortgage is in force, the title to the
Property or the interest of Lender therein shall be the subject, directly or indirectly, of any
action at law or in equity, or be attached directly or indirectly, or endangered, clouded or
adversely affected in any manner, Borrower, at Borrower’s expense, shall take all necessary and
proper steps for the defense of said title or interest, including the employment of counsel
approved by Lender, the prosecution or defense of litigation, and the compromise or discharge of
claims made against said title or interest. Notwithstanding the foregoing, in the event that
Lender determines that Borrower is not adequately performing its obligations under this Section,
Lender may, without limiting or waiving any other rights or remedies of Lender hereunder, take such
steps with respect thereto as Lender shall deem necessary or proper and any and all costs and
expenses incurred by Lender in connection therewith, together with interest thereon at the Default
Interest Rate (as defined in the Note) from the date incurred by Lender until actually paid by
Borrower, shall be immediately paid by Borrower on demand and shall be secured by this Mortgage and
by all of the other Loan Documents securing all or any part of the indebtedness evidenced by the
Note.

          Section 2.2 Performance of Obligations. Borrower shall pay when due the principal of
and the interest on the Debt in accordance with the terms of the Note. Borrower shall also pay all
charges, fees and other sums required to be paid by Borrower as provided in the Loan Documents, in
accordance with the terms of the Loan Documents, and shall observe, perform and discharge all
obligations, covenants and agreements to be observed, performed or discharged by Borrower set forth
in the Loan Documents in accordance with their terms.

13

 

Further, Borrower shall promptly and strictly perform and comply with all covenants,
conditions, obligations and prohibitions required of Borrower in connection with any other document
or instrument affecting title to the Property, or any part thereof, regardless of whether such
document or instrument is superior or subordinate to this Mortgage.

          Section 2.3 Insurance. Borrower shall, at Borrower’s expense, maintain in force and
effect on the Property at all times while this Mortgage continues in effect the following
insurance:

          (a) Insurance against loss or damage to the Property by fire, lightning, windstorm, tornado,
hail, terrorism, riot and civil commotion, vandalism, malicious mischief, burglary and theft and
against loss and damage by such other, further and additional risks as may be now or hereafter
embraced by a “special causes of loss” type of insurance policy. The amount of such insurance
shall be not less than one hundred percent (100%) of the full replacement cost (insurable value) of
the Improvements (as established by a Member of the Appraisal Institute appraisal), without
reduction for depreciation. The determination of the replacement cost amount shall be adjusted
annually to comply with the requirements of the insurer issuing such coverage or, at Lender’s
election, by reference to such indices, appraisals or information as Lender determines in its
reasonable discretion in order to reflect increased value due to inflation. Absent such annual
adjustment, each policy shall contain inflation guard coverage insuring that the policy limit will
be increased over time to reflect the effect of inflation. “Full replacement cost,” as used herein
and elsewhere in this Section 2.3, means, with respect to the Improvements, the cost of
replacing the Improvements without regard to deduction for depreciation, exclusive of the cost of
excavations, foundations and footings below the lowest basement floor. Borrower shall also
maintain insurance against loss or damage to furniture, furnishings, fixtures, equipment and other
items (whether personalty or fixtures) included in the Property and owned by Borrower from time to
time to the extent applicable. Each policy shall contain a replacement cost endorsement and either
an agreed amount endorsement (to avoid the operation of any co-insurance provisions) or a waiver of
any co-insurance provisions, all subject to Lender’s approval. The maximum deductible shall be
$25,000.00.

          (b) If the “special causes of loss” policy required in subsection (a) above excludes coverage
for wind damage, Borrower shall maintain separate coverage for such risk. Furthermore, if the
Property is located in the State of Florida, or within twenty five (25) miles of the ocean coast of
the states of Texas, Louisiana, Mississippi, Alabama, Georgia, North Carolina, Hawaii or South
Carolina, windstorm insurance must be maintained in an amount equal to the lesser of (i) the full
replacement cost of the Property or (ii) the maximum limit of coverage available with respect to
the Improvements and Equipment. If available, a minimum of eighteen (18) months general business
income coverage specifically relating to wind damage shall be required. The maximum deductible
shall be $25,000.00.

          (c) Ordinance and law insurance is required if the Property is “non-conforming” with respect
to any zoning requirements. Borrower shall maintain “Coverage A” against loss on value to the
undamaged portion of the Improvements for the full replacement cost of the Improvements. Borrower
shall also maintain “Coverage B” against the cost of demolition in an amount equal to ten percent
(10%) of the total value of the Improvements and “Coverage

14

 

C” against increased cost of reconstruction in an amount equal to twenty percent (20%) of the
total value of the Improvements. The maximum deductible shall be $25,000.00.

          (d) Commercial General Liability Insurance against claims for personal injury, bodily injury,
death and property damage occurring on, in or about the Premises or the Improvements in amounts not
less than $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate plus umbrella coverage in
an amount not less than $25,000,000. Lender hereby retains the right to periodically review the
amount of said liability insurance being maintained by Borrower and to require an increase in the
amount of said liability insurance should Lender deem an increase to be reasonably prudent under
then existing circumstances. The maximum deductible shall be $25,000.00.

          (e) Equipment breakdown (also known as boiler and machinery) insurance is required if steam
boilers or other pressure-fired vessels are in operation at the Premises. Minimum liability
coverage per accident must equal the greater of the replacement cost (insurable value) of the
Improvements housing such boiler or pressure-fired machinery or $2,000,000.00. If one or more
large HVAC units is in operation at the Premises, “Systems Breakdowns” coverage shall be required,
as determined by Lender. Minimum liability coverage per accident must equal the value of such
unit(s). If available, a minimum of eighteen (18) months general business income coverage
specifically relating to boiler and machinery damage shall be required. The maximum deductible
shall be $25,000.00. Co-insurance is prohibited.

          (f) If the Improvements or any part thereof is situated in an area designated by the Federal
Emergency Management Agency (“FEMA”) as a special flood hazard area (Zone A or Zone V),
flood insurance in an amount equal to the lesser of: (i) the minimum amount required, under the
terms of coverage, to compensate for any damage or loss on a replacement basis (or the unpaid
balance of the Debt if replacement cost coverage is not available for the type of building
insured), or (ii) the maximum insurance available under the appropriate National Flood Insurance
Administration program. If available, a minimum of eighteen (18) months general business income
coverage specifically relating to flood damage shall be required. The maximum deductible shall be
$3,000.00 per building or a higher minimum amount as required by FEMA or other applicable law.

          (g) If the Property is situated in an area designated by FEMA as a high probability earthquake
area (Zone 2b or greater), Lender may require a Probable Maximum Loss (“PML”) study to be
conducted at the Property. If the PML study reveals a PML equal to or exceeding twenty percent
(20%) of the full replacement cost of the Improvements, Borrower shall be required to maintain
earthquake insurance in an amount equal to the PML percentage of full replacement cost of the
Improvements. If available, a minimum of eighteen (18) months Business Income coverage
specifically relating to earthquake damage shall be required. The maximum deductible shall be no
more than five percent (5%) of the value at risk or the lowest deductible available in the State in
which the Property is located.

          (h) During the period of any construction, renovation or alteration of the existing
Improvements which exceeds the lesser of 10% of the principal amount of the Note or $750,000, at
Lender’s request, a completed value, “All Risk” Builder’s Risk form or “Course of Construction”
insurance policy in non-reporting form, in an amount approved by Lender, may be

15

 

required. During the period of any construction of any addition to the existing Improvements,
a completed value, “All Risk” Builder’s Risk form or “Course of Construction” insurance policy in
non-reporting form, in an amount approved by Lender, shall be required. The maximum deductible
shall be $25,000.00.

          (i) When required by applicable law, ordinance or other regulation, Worker’s Compensation and
Employer’s Liability Insurance covering all persons subject to the worker’s compensation laws of
the state in which the Property is located. Additionally, if Borrower has direct employees, Hired
and Non-Owned Auto Insurance is required in an amount equal to $1,000,000 per occurrence. The
maximum deductible shall be $25,000.00.

          (j) In addition to the specific risk coverages required herein, general business income (loss
of rents) insurance in amounts sufficient to compensate Borrower for all Rents and Profits or
income during a period of not less than eighteen (18) months. The “actual loss” amount of
coverage shall be adjusted annually to reflect the greater of (i) estimated Rents and Profits or
income payable during the succeeding eighteen (18) month period or (ii) the projected operating
expenses, capital expenses and debt service for the Property as approved by Lender in its sole
discretion. Additionally, Lender, in its sole discretion, may require an “Extended Period of
Indemnity” endorsement for an additional six (6) months to allow for re-leasing of the Property.
The maximum deductible shall be $25,000.00.

          (k) Such other insurance on the Property or on any replacements or substitutions thereof or
additions thereto as may from time to time be required by Lender against other insurable hazards or
casualties which at the time are commonly insured against in the case of property similarly
situated including, without limitation, Sinkhole, Mine Subsidence and Environmental insurance, due
regard being given to the height and type of buildings, their construction, location, use and
occupancy.

          All such insurance shall (i) be with insurers fully licensed and authorized to do business in
the state within which the Premises is located and who have and maintain a rating of at least (A) A
or higher from Standard & Poors and (B) AIX or higher from A.M. Best, (ii) contain the complete
address of the Premises (or a complete legal description), (iii) be for terms of at least one year,
with premium prepaid, and (iv) be subject to the approval of Lender as to insurance companies,
amounts, content, forms of policies, method by which premiums are paid and expiration dates, and
(v) include a standard, non-contributory, mortgagee clause naming EXACTLY:

Wachovia Bank, National Association,

its Successors and Assigns ATIMA

c/o Wachovia Bank, National Association, as Servicer

P.O. Box 563956

Charlotte, North Carolina 28256-3956

(A) as an additional insured under all liability insurance policies, (B) as the first
mortgagee on all property insurance policies and (C) as the loss payee on all loss of
rents or loss of business income insurance policies.

16

 

          Borrower shall, as of the date hereof, deliver to Lender evidence that said insurance policies
have been prepaid as required above and certified copies of such insurance policies and original
certificates of insurance signed by an authorized agent of the applicable insurance companies
evidencing such insurance satisfactory to Lender. Borrower shall renew all such insurance and
deliver to Lender an Acord 28 certificate for proof of commercial property insurance and an Acord
25 certificate for proof of liability insurance, together with such other certificates reasonably
requested by Lender. Borrower further agrees that each such insurance policy: (i) shall provide
for at least thirty (30) days’ prior written notice to Lender prior to any policy reduction or
cancellation for any reason other than non-payment of premium and at least ten (10) days’ prior
written notice to Lender prior to any cancellation due to non-payment of premium; (ii) shall
contain an endorsement or agreement by the insurer that any loss shall be payable to Lender in
accordance with the terms of such policy notwithstanding any act or negligence of Borrower which
might otherwise result in forfeiture of such insurance; (iii) shall waive all rights of subrogation
against Lender; and (iv) may be in the form of a blanket policy provided that, in the event
that any such coverage is provided in the form of a blanket policy, Borrower hereby acknowledges
and agrees that failure to pay any portion of the premium therefor which is not allocable to the
Property or by any other action not relating to the Property which would otherwise permit the
issuer thereof to cancel the coverage thereof, would require the Property to be insured by a
separate, single-property policy. The blanket policy must properly identify and fully protect the
Property as if a separate policy were issued for 100% of Replacement Cost at the time of loss and
otherwise meet all of Lender’s applicable insurance requirements set forth in this Section
2.3. The delivery to Lender of the insurance policies or the certificates of insurance as
provided above shall constitute an assignment of all proceeds payable under such insurance policies
relating to the Property by Borrower to Lender as further security for the Debt. In the event of
foreclosure of this Mortgage, or other transfer of title to the Property in extinguishment in whole
or in part of the Debt, all right, title and interest of Borrower in and to all proceeds payable
under such policies then in force concerning the Property shall thereupon vest in the purchaser at
such foreclosure, or in Lender or other transferee in the event of such other transfer of title.
Approval of any insurance by Lender shall not be a representation of the solvency of any insurer or
the sufficiency of any amount of insurance. In the event Borrower fails to provide, maintain, keep
in force or deliver and furnish to Lender the policies of insurance required by this Mortgage or
evidence of their renewal as required herein, Lender may, but shall not be obligated to, procure
such insurance and Borrower shall pay all amounts advanced by Lender therefor, together with
interest thereon at the Default Interest Rate from and after the date advanced by Lender until
actually repaid by Borrower, promptly upon demand by Lender. Any amounts so advanced by Lender,
together with interest thereon, shall be secured by this Mortgage and by all of the other Loan
Documents securing all or any part of the Debt. Lender shall not be responsible for nor incur any
liability for the insolvency of the insurer or other failure of the insurer to perform, even though
Lender has caused the insurance to be placed with the insurer after failure of Borrower to furnish
such insurance. Borrower shall not obtain insurance for the Property in addition to that required
by Lender without the prior written consent of Lender, which consent will not be unreasonably
withheld provided that (i) Lender is a named insured on such insurance, (ii) Lender
receives complete copies of all policies evidencing such insurance, and (iii) such insurance
complies with all of the applicable requirements set forth herein.

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          Section 2.4 Payment of Taxes. Borrower shall pay or cause to be paid, except to the
extent provision is actually made therefor pursuant to Section 3.3 of this Mortgage, all taxes and
assessments which are or may become a lien on the Property or which are assessed against or imposed
upon the Property. Borrower shall furnish Lender with receipts (or if receipts are not immediately
available, with copies of canceled checks evidencing payment with receipts to follow promptly after
they become available) showing payment of such taxes and assessments at least fifteen (15) days
prior to the applicable delinquency date therefor. Notwithstanding the foregoing, Borrower may, in
good faith, by appropriate proceedings and upon notice to Lender, contest the validity,
applicability or amount of any asserted tax or assessment so long as (a) such contest is diligently
pursued, (b) Lender determines, in its subjective opinion, that such contest suspends the
obligation to pay the tax and that nonpayment of such tax or assessment will not result in the
sale, loss, forfeiture or diminution of the Property or any part thereof or any interest of Lender
therein, and (c) prior to the earlier of the commencement of such contest or the delinquency date
of the asserted tax or assessment, Borrower deposits in the Impound Account (as hereinafter
defined) an amount determined by Lender to be adequate to cover the payment of such tax or
assessment and a reasonable additional sum to cover possible interest, costs and penalties;
provided, however, that Borrower shall promptly cause to be paid any amount adjudged by a court of
competent jurisdiction to be due, with all interest, costs and penalties thereon, promptly after
such judgment becomes final; and provided further that in any event each such contest shall be
concluded and the taxes, assessments, interest, costs and penalties shall be paid prior to the date
any writ or order is issued under which the Property may be sold, lost or forfeited.

          Section 2.5 Casualty and Condemnation. Borrower shall give Lender prompt written
notice of (i) the occurrence of any casualty affecting the Property or any portion thereof, (ii)
the institution of any proceedings for eminent domain or for the condemnation of the Property or
any portion thereof or (iii) any written notification threatening the institution of any
proceedings for eminent domain or for the condemnation of the Property or any portion thereof or
any written request to execute a deed in lieu of condemnation affecting the Property or any portion
thereof. All insurance proceeds on the Property, and all causes of action, claims, compensation,
awards and recoveries for any damage, condemnation or taking, or any deed in lieu of condemnation,
affecting all or any part of the Property or for any damage or injury to it for any loss or
diminution in value of the Property, are hereby assigned to and shall be paid to Lender. Lender
may participate in any suits or proceedings relating to any such proceeds, causes of action,
claims, compensation, awards or recoveries, and Lender is hereby authorized, in its own name or in
Borrower’s name, to adjust any loss covered by insurance or any condemnation claim or cause of
action, and to settle or compromise any claim or cause of action in connection therewith, and
Borrower shall from time to time deliver to Lender any instruments required to permit such
participation; provided, however, that, so long as no Event of Default has occurred, and no event
has occurred or failed to occur which with the passage of time, the giving of notice, or both would
constitute an Event of Default (a “Default”), Lender shall not have the right to participate in the
adjustment of any loss which is not in excess of the lesser of (i) five percent (5%) of the then
outstanding principal balance of the Note and (ii) $100,000. Lender shall apply any sums received
by it under this Section first to the payment of all of its costs and expenses
(including, but not limited to, reasonable legal fees and disbursements) incurred in obtaining
those sums, and then, as follows:

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          (a) In the event that less than (x) fifteen percent (15%), in the case of condemnation, or
thirty percent (30%), in the case of casualty, of the fair market value or net rentable square
footage of the Improvements located on the Premises have been taken or destroyed and (y) Leases
covering in the aggregate at least sixty-five percent (65%) 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, and each Major Lease (as
hereinafter defined) in effect as of such date shall remain in full force and effect during and
after the completion of the restoration without abatement of rent beyond the time required for
restoration, then if and so long as:

     (1) no Default or Event of Default has occurred hereunder or under any of the other
Loan Documents, and

     (2) the Property can, in Lender’s judgment, with diligent restoration or repair, be
returned to a condition at least equal to the condition thereof that existed prior to the
casualty or partial taking causing the loss or damage within the earlier to occur of (A)
nine (9) months after the initial receipt of any insurance proceeds or condemnation awards
by either Borrower or Lender but in any event prior to the expiration or lapse of rent loss
or general business income necessary to satisfy current obligations of the Loan, and (B) six
(6) months prior to the stated maturity date of the Note, and

     (3) all necessary governmental approvals can be obtained to allow the rebuilding and
reoccupancy of the Property as described in Section (a)(2) above, and

     (4) there are sufficient sums available (through insurance proceeds or condemnation
awards and contributions by Borrower, the full amount of which shall, at Lender’s option,
have been deposited with Lender) for such restoration or repair (including, without
limitation, for any costs and expenses of Lender to be incurred in administering said
restoration or repair) and for payment of principal and interest to become due and payable
under the Note during such restoration or repair, and

     (5) the economic feasibility of the Improvements after such restoration or repair will
be such that income from their operation is reasonably anticipated to be sufficient to pay
operating expenses of the Property and debt service on the Debt in full with the same
coverage ratio considered by Lender in its determination to make the loan secured hereby,
and

     (6) in the event that the insurance proceeds or condemnation awards received as a
result of such casualty or partial taking exceed the lesser of (i) five percent (5%) of the
then outstanding principal balance of the Note and (ii) $150,000, Borrower shall have
delivered to Lender, at Borrower’s sole cost and expense, an appraisal report in form and
substance satisfactory to Lender appraising the value of the Property as proposed to be
restored or repaired to be not less than the appraised value of the Property considered by
Lender in its determination to make the loan secured hereby, and

     (7) Borrower so elects by written notice delivered to Lender within five (5) days after
settlement of the aforesaid insurance or condemnation claim.

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Lender shall, solely for the purposes of such restoration or repair, advance so much of the
remainder of such sums as may be required for such restoration or repair, and any funds
deposited by Borrower therefor, to Borrower in the manner and upon such terms and conditions
as would be required by a prudent interim construction lender, including, but not limited
to, the prior approval by Lender of plans and specifications, contractors and form of
construction contracts and the furnishing to Lender of permits, bonds, lien waivers,
invoices, receipts and affidavits from contractors and subcontractors, in form and substance
satisfactory to Lender in its discretion, with any remainder being applied by Lender for
payment of the Debt in whatever order Lender directs in its absolute sole discretion, or at
the discretion of Lender, the same may be paid, either in whole or in part, to, or for the
benefit of, Borrower for such purposes as Lender shall designate in its discretion.

          (b) In all other cases, namely, in the event that (x) more than fifteen percent (15%), in the
case of condemnation, or thirty percent (30%), in the case of casualty, of the fair market value or
net rentable square footage of the Improvements located on the Premises have been taken or
destroyed, (y) Leases covering in the aggregate at least sixty-five percent (65%) 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, and
each Major Lease (as hereinafter defined) in effect as of such date will not remain in full force
and effect during and after the completion of the restoration without abatement of rent beyond the
time required for restoration, or (z) Borrower does not elect to restore or repair the Property
pursuant to clause (a) above or otherwise fails to meet the requirements of clause
(a) above, then, in any of such events, Lender shall elect, in Lender’s absolute discretion and
without regard to the adequacy of Lender’s security to do either of the following: (1) accelerate
the maturity date of the Note and declare any and all of the Debt to be immediately due and payable
and apply the remainder of such sums received pursuant to this Section to the payment of the Debt
in whatever order Lender directs in its absolute discretion, with any remainder being paid to
Borrower, or (2) notwithstanding that Borrower may have elected not to restore or repair the
Property pursuant to the provisions of Section 2.5(a)(7) above, so long as the proceeds of
any such award with respect to any casualty or condemnation are made available to the Borrower for
restoration, require Borrower to restore or repair the Property in the manner and upon such terms
and conditions as would be required by a prudent interim construction lender, including, but not
limited to, the deposit by Borrower with Lender, within thirty (30) days after demand therefor, of
any deficiency reasonably determined by Lender to be necessary in order to assure the availability
of sufficient funds to pay for such restoration or repair, including Lender’s costs and expenses to
be incurred in connection therewith, the prior approval by Lender of plans and specifications,
contractors and form of construction contracts and the furnishing to Lender of permits, bonds, lien
waivers, invoices, receipts and affidavits from contractors and subcontractors, in form and
substance satisfactory to Lender in its discretion, and apply the remainder of such sums toward
such restoration and repair, with any balance thereafter remaining being applied by Lender for
payment of the Debt in whatever order Lender directs in its absolute sole discretion, or at the
discretion of Lender, the same may be paid, either in whole or in part, to, or for the benefit of, Borrower for such purposes as
Lender shall designate in its discretion.

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Any reduction in the Debt resulting from Lender’s application of any sums received by it hereunder
shall take effect only when Lender actually receives such sums and elects to apply such sums to the
Debt and, in any event, the unpaid portion of the Debt shall remain in full force and effect and
Borrower shall not be excused in the payment thereof. Partial payments received by Lender, as
described in the preceding sentence, shall be applied first to the final payment due under the Note
and thereafter to installments due under the Note in the inverse order of their due date. If
Borrower elects or Lender directs Borrower to restore or repair the Property after the occurrence
of a casualty or partial taking of the Property as provided above, Borrower shall promptly and
diligently, at Borrower’s sole cost and expense and regardless of whether the insurance proceeds or
condemnation award, as appropriate, shall be sufficient for the purpose, restore, repair, replace
and rebuild the Property as nearly as possible to its value, condition and character immediately
prior to such casualty or partial taking in accordance with the foregoing provisions and Borrower
shall pay to Lender all costs and expenses of Lender incurred in administering said rebuilding,
restoration or repair, provided that Lender makes such proceeds or award available for such
purpose. Borrower agrees to execute and deliver from time to time such further instruments as may
be requested by Lender to confirm the foregoing assignment to Lender of any award, damage,
insurance proceeds, payment or other compensation. Lender is hereby irrevocably constituted and
appointed the attorney-in-fact of Borrower (which power of attorney shall be irrevocable so long as
any portion of the Debt is outstanding, shall be deemed coupled with an interest, shall survive the
voluntary or involuntary dissolution of Borrower and shall not be affected by any disability or
incapacity suffered by Borrower subsequent to the date hereof), with full power of substitution,
subject to the terms of this Section, to settle for, collect and receive any such awards, damages,
insurance proceeds, payments or other compensation from the parties or authorities making the same,
to appear in and prosecute any proceedings therefor and to give receipts and acquittances therefor.

          Section 2.6 Construction Liens. Borrower shall pay when due all claims and demands of
mechanics, materialmen, laborers and others for any work performed or materials delivered for the
Premises or the Improvements; provided, however, that, Borrower shall have the right to contest in
good faith any such claim or demand, so long as it does so diligently, by appropriate proceedings
and without prejudice to Lender and provided that neither the Property nor any interest therein
would be in any danger of sale, loss or forfeiture as a result of such proceeding or contest. In
the event Borrower shall contest any such claim or demand, Borrower shall promptly notify Lender of
such contest and thereafter shall, upon Lender’s request, promptly provide a bond, cash deposit or
other security satisfactory to Lender to protect Lender’s interest and security should the contest
be unsuccessful. If Borrower shall fail to immediately discharge or provide security against any
such claim or demand as aforesaid, Lender may do so and any and all expenses incurred by Lender,
together with interest thereon at the Default Interest Rate from the date incurred by Lender until
actually paid by Borrower, shall be immediately paid by Borrower on demand and shall be secured by
this Mortgage and by all of the other Loan Documents securing all or any part of the Debt.

          Section 2.7 Rents and Profits. As additional and collateral security for the payment
of the Debt and cumulative of any and all rights and remedies herein provided for,
Borrower hereby absolutely and presently assigns to Lender all existing and future Rents and
Profits. Borrower hereby grants to Lender the sole, exclusive and immediate right, without taking
possession of the Property, to demand, collect (by suit or otherwise), receive and give

21

 

valid and sufficient receipts for any and all of said Rents and Profits, for which purpose Borrower
does hereby irrevocably make, constitute and appoint Lender its attorney-in-fact with full power to
appoint substitutes or a trustee to accomplish such purpose (which power of attorney shall be
irrevocable so long as any portion of the Debt is outstanding, shall be deemed to be coupled with
an interest, shall survive the voluntary or involuntary dissolution of Borrower and shall not be
affected by any disability or incapacity suffered by Borrower subsequent to the date hereof).
Lender shall be without liability for any loss which may arise from a failure or inability to
collect Rents and Profits, proceeds or other payments. However, until the occurrence of an Event
of Default under this Mortgage or under any other of the Loan Documents, Borrower shall have a
license to collect, receive, use and enjoy the Rents and Profits when due and prepayments thereof
for not more than one (1) month prior to due date thereof. Upon the occurrence of an Event of
Default, Borrower’s license shall automatically terminate without notice to Borrower and Lender may
thereafter, without taking possession of the Property, collect the Rents and Profits itself or by
an agent or receiver. From and after the termination of such license, Borrower shall be the agent
of Lender in collection of the Rents and Profits, and all of the Rents and Profits so collected by
Borrower shall be held in trust by Borrower for the sole and exclusive benefit of Lender, and
Borrower shall, within one (1) business day after receipt of any Rents and Profits, pay the same to
Lender to be applied by Lender as hereinafter set forth. Neither the demand for or collection of
Rents and Profits by Lender shall constitute any assumption by Lender of any obligations under any
agreement relating thereto. Lender is obligated to account only for such Rents and Profits as are
actually collected or received by Lender. Borrower irrevocably agrees and consents that the
respective payors of the Rents and Profits shall, upon demand and notice from Lender of an Event of
Default, pay said Rents and Profits to Lender without liability to determine the actual existence
of any Event of Default claimed by Lender. Borrower hereby waives any right, claim or demand which
Borrower may now or hereafter have against any such payor by reason of such payment of Rents and
Profits to Lender, and any such payment shall discharge such payor’s obligation to make such
payment to Borrower. All Rents collected or received by Lender may be applied against all expenses
of collection, including, without limitation, reasonable attorneys’ fees, against costs of
operation and management of the Property and against the Debt, in whatever order or priority as to
any of the items so mentioned as Lender directs in its sole subjective discretion and without
regard to the adequacy of its security. Neither the exercise by Lender of any rights under this
Section nor the application of any Rents to the Debt shall cure or be deemed a waiver of any Event
of Default. The assignment of Rents and Profits hereinabove granted shall continue in full force
and effect during any period of foreclosure or redemption with respect to the Property. Borrower
has executed an Assignment of Leases and Rents dated of even date herewith (the “Lease Assignment”)
in favor of Lender covering all of the right, title and interest of Borrower, as landlord, lessor
or licensor, in and to any Leases. All rights and remedies granted to Lender under the Lease
Assignment shall be in addition to and cumulative of all rights and remedies granted to Lender
hereunder.

          Section 2.8 Leases.

          (a) Borrower covenants and agrees that it shall not enter into any retail Lease (i) affecting
5,000 square feet or more of the Property or (ii) having a term of ten (10) years or
more (inclusive of any renewals or extensions) (each, a “Major Lease”) without the
prior written approval of Lender, which approval shall not be unreasonably withheld. The request
for

22

 

approval of each such proposed new Lease shall be made to Lender in writing and shall state that,
pursuant to the terms of this Mortgage, failure to approve or disapprove such proposed Lease within
fifteen (15) business days is deemed approval and Borrower shall furnish to Lender (and any loan
servicer specified from time to time by Lender): (i) such biographical and financial information
about the proposed Tenant as Lender may require in conjunction with its review, (ii) a copy of the
proposed form of Lease, and (iii) a summary of the material terms of such proposed Lease
(including, without limitation, rental terms and the term of the proposed lease and any options).
It is acknowledged that Lender intends to include among its criteria for approval of any such
proposed Lease the following: (i) such Lease shall be with a bona-fide arm’s-length Tenant; (ii)
such Lease shall not contain any rental or other concessions which are not then customary and
reasonable for similar properties and Leases in the market area of the Premises; (iii) such Lease
shall provide that the Tenant pays for its expenses; (iv) the rental shall be at least at the
market rate then prevailing for similar properties and leases in the market areas of the Premises;
and (v) such Lease shall contain subordination and attornment provisions in form and content
acceptable to Lender. Failure of Lender to approve or disapprove any such proposed Lease within
fifteen (15) business days after receipt of such written request and all the documents and
information required to be furnished to Lender with such request shall be deemed approval,
provided that the written request for approval specifically mentioned the same.

          (b) Prior to execution of any Leases of space in the Improvements after the date hereof,
Borrower shall submit to Lender, for Lender’s prior approval, which approval shall not be
unreasonably withheld, a copy of the form Lease Borrower plans to use in leasing space in the
Improvements or at the Property in a form for commercial/retail leases as set forth on Exhibit
B-1 and for residential leases as set forth in Exhibit B-2, both attached hereto. All
such Leases of space in the Improvements or at the Property shall be on terms consistent with the
terms for similar leases in the market area of the Premises, shall provide for free rent only if
the same is consistent with prevailing market conditions and shall provide for market rents then
prevailing in the market area of the Premises. Such Leases shall also provide for security
deposits in reasonable amounts consistent with prevailing market conditions. Borrower shall also
submit to Lender for Lender’s approval, which approval shall not be unreasonably withheld, prior to
the execution thereof, any proposed Lease of the Improvements or any portion thereof that differs
materially and adversely from the aforementioned form Lease. Borrower shall not execute any Lease
for all or a substantial portion of the Property, except for an actual occupancy by the Tenant,
lessee or licensee thereunder, and shall at all times promptly and faithfully perform, or cause to
be performed, all of the covenants, conditions and agreements contained in all Leases with respect
to the Property, now or hereafter existing, on the part of the landlord, lessor or licensor
thereunder to be kept and performed. Borrower shall furnish to Lender, within ten (10) days after
a request by Lender to do so, but in any event by January 1 of each year, a current Rent Roll,
certified by Borrower as being true and correct, containing the names of all Tenants with respect
to the Property, the terms of their respective Leases, the spaces occupied and the rentals or fees
payable thereunder and the amount of each Tenant’s security deposit. Upon the request of Lender,
Borrower shall deliver to Lender a copy of each such Lease. Borrower shall not do or suffer to be
done any act, or omit to take any action, that might result in a default by the landlord, lessor or
licensor under any such Lease or allow the Tenant thereunder to withhold payment of rent or cancel
or terminate same and shall not further assign any such Lease or any such Rents and Profits. Borrower, at no cost or expense to Lender, shall enforce, short of
termination, the performance and observance of each and every condition and covenant of each

23

 

of the parties under such Leases and Borrower shall not anticipate, discount, release, waive,
compromise or otherwise discharge any rent payable under any of the Leases. Borrower shall not,
without the prior written consent of Lender, modify any of the Leases, terminate or accept the
surrender of any Leases, waive or release any other party from the performance or observance of any
obligation or condition under such Leases except, with respect only to Leases which are not Major
Leases, in the normal course of business in a manner which is consistent with sound and customary
leasing and management practices for similar properties in the community in which the Property is
located. Lender reserves the right to condition its consent to any termination or surrender of any
Lease upon the payment to Lender of any lease termination or other payment due from the applicable
tenant in connection with such termination or surrender. Borrower and Lender agree that all such
sums paid to Lender shall be held by Lender as a tenant improvement and leasing commission reserve
and shall be considered a “Reserve” as described in Section 3.1 hereof and all such
amounts shall be held, maintained, applied and disbursed in accordance with Lender’s standard
procedures relating to similar reserves. Borrower shall not permit the prepayment of any rents
under any of the Leases for more than one (1) month prior to the due date thereof.

          (c) Each Lease executed after the date hereof affecting any of the Premises or the
Improvements must provide, in a manner approved by Lender, that the Tenant will recognize as its
landlord, lessor or licensor, as applicable, and attorn to any person succeeding to the interest of
Borrower upon any foreclosure of this Mortgage or deed in lieu of foreclosure. Each such Lease
shall also provide that, upon request of said successor-in-interest, the Tenant shall execute and
deliver an instrument or instruments confirming its attornment as provided for in this Section;
provided, however, that neither Lender nor any successor-in-interest shall be bound
by any payment of rent for more than one (1) month in advance, or any amendment or modification of
said Lease made without the express written consent of Lender or said successor-in-interest.

          (d) Upon the occurrence of an Event of Default under this Mortgage, whether before or after
the whole principal sum secured hereby is declared to be immediately due or whether before or after
the institution of legal proceedings to foreclose this Mortgage, forthwith, upon demand of Lender,
Borrower shall surrender to Lender, and Lender shall be entitled to take actual possession of, the
Property or any part thereof personally, or by its agent or attorneys. In such event, Lender shall
have, and Borrower hereby gives and grants to Lender, the right, power and authority to make and
enter into Leases with respect to the Property or portions thereof for such rents and for such
periods of occupancy and upon conditions and provisions as Lender may deem desirable in its sole
discretion, and Borrower expressly acknowledges and agrees that the term of any such Lease may
extend beyond the date of any foreclosure sale of the Property, it being the intention of Borrower
that in such event Lender shall be deemed to be and shall be the attorney-in-fact of Borrower for
the purpose of making and entering into Leases of parts or portions of the Property for the rents
and upon the terms, conditions and provisions deemed desirable to Lender in its sole discretion and
with like effect as if such Leases had been made by Borrower as the owner in fee simple of the
Property free and clear of any conditions or limitations established by this Mortgage. The power
and authority hereby given and granted by Borrower to Lender shall be deemed to be coupled with an
interest, shall not be revocable by Borrower so long as any portion of the Debt is outstanding,
shall survive the voluntary or involuntary dissolution of Borrower and shall not be affected by any disability or incapacity
suffered by Borrower subsequent to the date hereof. In connection with any action taken by

24

 

Lender pursuant to this Section, Lender shall not be liable for any loss sustained by Borrower
resulting from any failure to let the Property, or any part thereof, or from any other act or
omission of Lender in managing the Property, nor shall Lender be obligated to perform or discharge
any obligation, duty or liability under any Lease covering the Property or any part thereof or
under or by reason of this instrument or the exercise of rights or remedies hereunder. Borrower
shall, and does hereby, indemnify Lender for, and hold Lender harmless from, any and all claims,
actions, demands, liabilities, loss or damage which may or might be incurred by Lender under any
such Lease or under this Mortgage or by the exercise of rights or remedies hereunder and from any
and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the terms, covenants or
agreements contained in any such Lease other than those finally determined by a court of competent
jurisdiction to have resulted solely from the gross negligence or willful misconduct of Lender.
Should Lender incur any such liability, the amount thereof, including, without limitation, costs,
expenses and reasonable attorneys’ fees, together with interest thereon at the Default Interest
Rate from the date incurred by Lender until actually paid by Borrower, shall be immediately due and
payable to Lender by Borrower on demand and shall be secured hereby and by all of the other Loan
Documents securing all or any part of the Debt. Nothing in this Section shall impose on Lender any
duty, obligation or responsibility for the control, care, management or repair of the Property, or
for the carrying out of any of the terms and conditions of any such Lease, nor shall it operate to
make Lender responsible or liable for any waste committed on the Property by the Tenants or by any
other parties or for any dangerous or defective condition of the Property, or for any negligence in
the management, upkeep, repair or control of the Property. Borrower hereby assents to, ratifies
and confirms any and all actions of Lender with respect to the Property taken under this Section.

          (e) If requested by Lender, Borrower shall furnish, or shall cause the applicable tenant to
furnish, to Lender financial data and/or financial statements in accordance with Regulation AB (as
defined herein) for any tenant of any Property if, in connection with a securitization, Lender
expects there to be, with respect to such tenant or group of affiliated tenants, a concentration
within all of the mortgage loans included or expected to be included, as applicable, in such
securitization such that such tenant or group of affiliated tenants would constitute a Significant
Obligor (as defined herein); provided, however, that in the event the related lease does not
require the related tenant to provide the foregoing information, Borrower shall use commercially
reasonable efforts to cause the applicable tenant to furnish such information.

          Section 2.9 Alienation and Further Encumbrances.

          (a) Borrower acknowledges that Lender has relied upon the principals of Borrower and their
experience in owning and operating the Property and properties similar to the Property in
connection with the closing of the loan evidenced by the Note. Accordingly, except as specifically
allowed hereinbelow in this Section and notwithstanding anything to the contrary contained in
Section 6.6 hereof, in the event that the Property or any part thereof or direct or
indirect interest therein or direct or indirect interest in Borrower shall be sold, conveyed,
disposed of, alienated, hypothecated, leased (except to Tenants of space in the Improvements in
accordance with the provisions of Section 2.8 hereof), assigned, pledged, mortgaged,
further encumbered or otherwise transferred or Borrower shall be divested of its title to the
Property or

25

 

any direct or indirect interest therein, in any manner or way, whether voluntarily or involuntarily
(each, a “Transfer”), without the prior written consent of Lender being first obtained,
which consent may be withheld in Lender’s sole discretion, then the same shall constitute an Event
of Default and Lender shall have the right, at its option, to declare any or all of the Debt,
irrespective of the maturity date specified in the Note, immediately due and payable and to
otherwise exercise any of its other rights and remedies contained in Article V hereof.

          (b) A Transfer within the meaning of this Section 2.9 shall be deemed to include,
among other things: (i) an installment sales agreement wherein Borrower agrees to sell the Property
or any part thereof for a price to be paid in installments; and (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 and Profits.

          (c) Notwithstanding the foregoing, the following Transfers shall be permitted under this
Section 2.9 without the prior consent of Lender: (i) a Transfer of corporate stock,
partnership interests (other than the general partner’s direct interests in Borrower owned by any
SPE Equity Owner) and/or membership interests (other than the managing member’s direct interests in
Borrower owned by any SPE Equity Owner) in Borrower, or in any partner or member of Borrower, or
any direct or indirect legal or beneficial owner of Borrower, so long as following such Transfer
(whether in one or a series of transactions) or, with respect to any creation or issuance of new
limited partnership interests or membership interests, not more than 49% of the beneficial economic
interest in Borrower (whether directly or indirectly) has been transferred in the aggregate and
there is no Change of Control and the persons responsible for the day to day management of the
Property and Borrower remain unchanged following such Transfer, (ii) any involuntary Transfer
caused by the death of Borrower, or any partner, shareholder, joint venturer, member or beneficial
owner of a trust, or any direct or indirect legal or beneficial owner of Borrower, so long as
Borrower is promptly reconstituted, if required, following such death and so long as there is no
Change of Control and those persons responsible for the day to day management of the Property and
Borrower remain unchanged as a result of such death or any replacement management or controlling
parties are approved by Lender, (iii) a Transfer comprised of gifts for estate planning purposes of
any individual’s interests in Borrower, or in any of Borrower’s partners, members, shareholders,
beneficial owners of a trust or joint venturers, or any direct or indirect legal or beneficial
owner of Borrower, 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 is
reconstituted promptly, if required, following such gift and so long as there is no Change of
Control and those persons responsible for the day to day management of the Property and Borrower
remain unchanged following such gift, (iv) transfers of stock in Acadia Realty Trust as traded on
the New York Stock Exchange, (v) a Transfer of 100% of the membership interests of Acadia Realty
Limited Partnership in Borrower and Acadia 239 Greenwich Avenue, LLC, the sole general partner of
Borrower (“Sole General Partner”), to Aberdeen-239, LLC, a Connecticut limited liability
company (“Aberdeen”), provided prior to the consummation of such Transfer Lender has
obtained satisfactory legal due diligence searches on James Cummings, including, but not limited
to, credit, bankruptcy, litigation, tax lien, judgment and UCC searches at Borrower’s expense,
which searches must be satisfactory to Lender in all respects before any such Transfer under
this Section 2.9(c)(v) may be consummated and provided further that after such Transfer James

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Cummings owns 50% or more of the membership interests in Aberdeen and controls the management of
Aberdeen, (vi) a Transfer by Aberdeen of 100% of its partnership interest in Borrower to General
Partner or a related subsidiary or parent of General Partner, (vii) a transfer by General Partner
of 100% of its partnership interest in Borrower to Aberdeen provided prior to the consummation of
such Transfer Lender has obtained satisfactory legal due diligence searches on James Cummings,
including, but not limited to, credit, bankruptcy, litigation, tax lien, judgment and UCC searches
at Borrower’s expense, which searches must be satisfactory to Lender in all respects before any
such Transfer under this Section 2.9(c)(vii) may be consummated and provided further that after
such Transfer James Cummings owns 50% or more of the membership interests in Aberdeen and controls
the management of Aberdeen and (viii) one or more Transfers of the membership interests in Aberdeen
provided after each such Transfer James Cummings owns 50% or more of the membership interests in
Aberdeen and controls the management of Aberdeen. Notwithstanding any provision of this Mortgage
to the contrary, and except as provided in Section 2.9(c), (iv), (v), (vi), (vii) and (viii) above,
no person or entity may become an owner of a direct or indirect interest in Borrower, which
interest exceeds forty-nine (49%) percent, without Lender’s prior written consent unless Borrower
has complied with the provisions set forth in Section 2.9(d) below. For purposes of this
Section 2.9(c), “Change of Control” shall mean a change in the identity of the
individual or entities or group of individuals or entities who have the right, by virtue of any
partnership agreement, articles of incorporation, by-laws, articles of organization, operating
agreement or any other agreement, with or without taking any formative action, to cause Borrower to
take some action or to prevent, restrict or impede Borrower from taking some action which, in
either case, Borrower could take or could refrain from taking were it not for the rights of such
individuals. “Control” shall mean the right, by virtue of any partnership agreement,
articles of incorporation, by-laws, articles of organization, operating agreement or any other
agreement, with or without taking any formative action, to cause Borrower to take some action or to
prevent, restrict or impede Borrower from taking some action which, in either case, Borrower could
take or could refrain from taking were it not for the rights of such individuals. No fees, legal
opinions or No-Downgrade Confirmations (as hereinafter defined) shall be required for any of the
permitted transfers in this Section 2.9(c).

          (d) Notwithstanding the foregoing provisions of this Section, Lender shall consent to (x) one
or more Transfers of the Property in its entirety, or (y) one or more Transfers of direct or
indirect interests in the Borrower for which consent is required under this Section 2.9
(any such hereinafter, a “Sale”) to any person or entity provided that, for each
Sale, each of the following terms and conditions are satisfied:

     (1) No Default and no Event of Default is then continuing hereunder or under any of the
other Loan Documents;

     (2) Borrower gives Lender written notice of the terms of such prospective Sale not less
than sixty (60) days before the date on which such Sale is scheduled to close and,
concurrently therewith, gives Lender all such information concerning the proposed transferee
of the Property or the proposed owner of the direct or indirect interest in the Borrower for
which consent is required under this Section 2.9, as applicable (hereinafter,
“Buyer”) as Lender would require in evaluating an initial extension of credit
to a borrower (it being acknowledged and agreed that (x) such information required to be

27

 

delivered with respect to the related Buyer shall not be materially more extensive than the
corresponding information provided by the initial Borrower and initial Indemnitor and (y)
the initial Borrower and initial Indemnitor shall not be required to deliver any additional
information with respect to such initial Borrower, Indemnitor or their respective members or
partners which are not then currently required to be delivered by the initial Borrower and
initial Indemnitor pursuant to the terms hereof or of any other Loan Document), including,
without limitation, information evidencing the Buyer’s compliance with the provisions of
Section 2.30 and Section 2.31 hereof and pays to Lender a non-refundable
application fee in the amount of $5,000. Lender shall have the right to approve or
disapprove the proposed Buyer. In determining whether to give or withhold its approval of
the proposed Buyer, Lender shall consider the Buyer’s experience and track record in owning
and operating facilities similar to the Property, the Buyer’s financial strength, the
Buyer’s general business standing and the Buyer’s relationships and experience with
contractors, vendors, tenants, lenders and other business entities; provided,
however, that, notwithstanding Lender’s agreement to consider the foregoing factors
in determining whether to give or withhold such approval, such approval shall be given or
withheld based on what Lender determines to be commercially reasonable in Lender’s sole
discretion and, if given, may be given subject to such conditions as Lender may deem
appropriate For Loans of less than $50,000,000: provided, further, however, notwithstanding
the foregoing, Lender shall evaluate the proposed Buyer and any replacement Indemnitor
pursuant to this clause (d) as if it were evaluating an initial extension of credit to a
borrower pursuant to permanent market underwriting standards and without regard to the
financial or other condition of the Borrower or any current Indemnitor and without regard to
the impact on the trust which owns the Loan in connection with any Secondary Market
Transaction or any class of Securities issued thereunder;

     (3) Borrower pays Lender, concurrently with the closing of such Sale, a non-refundable
assumption fee in an amount equal to one percent (1.0%) of the then outstanding principal
balance of the Note plus an amount equal to all out-of-pocket costs and expenses, including,
without limitation, reasonable attorneys’ fees and Rating Agency fees, incurred by Lender in
connection with the Sale;

     (4) In the event that such Sale is a Transfer of the Property in its entirety, the
Buyer assumes and agrees to pay the Debt subject to the provisions of Section 6.27
hereof and, in all cases (whether such Sale is a Transfer of the Property in its entirety or
a Transfer of direct or indirect interests in the Borrower for which consent is required
under this Section 2.9), prior to or concurrently with the closing of such Sale, the
Buyer executes, without any cost or expense to Lender, such documents and agreements as
Lender shall reasonably require to evidence and effectuate said assumption and delivers such
legal opinions (including, without limitation, a REMIC opinion) as Lender may require;

     (5) A party associated with the Buyer approved by Lender in its sole discretion assumes
the obligations of the current Indemnitor under its guaranty or indemnity agreement and environmental indemnity agreement and such party associated
with the Buyer executes, without any cost or expense to Lender, a substitution agreement

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or a new guaranty or indemnity agreement or environmental indemnity agreement in form and
substance satisfactory to Lender and delivers such legal opinions as Lender may require;
provided, however, in connection with an assumption of the Loan, (x) the
Buyer shall not be required to post any additional collateral with Lender or deposit any
additional reserves with Lender beyond that in effect immediately prior to the related
assumption and (y) the party associated with the Buyer which enters into such substitution
agreement or new guaranty or indemnity agreement or environmental indemnity shall not be
required to maintain evidence of credit worthiness greater than that required by permanent
market underwriting standards;

     (6) Borrower and the Buyer execute, without any cost or expense to Lender, new
financing statements or financing statement amendments (and new financing statements as may
be necessary) and any additional documents reasonably requested by Lender;

     (7) Borrower delivers to Lender, without any cost or expense to Lender, such
replacement policy or endorsements to Lender’s title insurance policy, hazard insurance
policy endorsements or certificates and other similar materials as Lender may deem necessary
at the time of the Sale, all in form and substance satisfactory to Lender, including,
without limitation, a replacement policy or an endorsement or endorsements to Lender’s title
insurance policy insuring the lien of this Mortgage, extending the effective date of such
policy to the date of execution and delivery (or, if later, of recording) of the assumption
agreement referenced above in subparagraph (4) of this Section, with no additional
exceptions added to such policy, and, in the event that such Sale is a Transfer of the
Property in its entirety, insuring that fee simple title to the Property is vested in the
Buyer;

     (8) Borrower and any current Indemnitor execute and deliver to Lender, without any cost
or expense to Lender, a release of Lender, its officers, directors, employees and agents,
from all claims and liability relating to the transactions evidenced by the Loan Documents,
through and including the date of the closing of the Sale, which agreement shall be in form
and substance satisfactory to Lender and shall be binding upon the Buyer and any new
Indemnitor;

     (9) Subject to the provisions of Section 6.27 hereof, such Sale is not
construed so as to relieve Borrower of any personal liability under the Note or any of the
other Loan Documents for any acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale, whether or not same is discovered prior or
subsequent to the closing of such Sale, and Borrower executes, without any cost or expense
to Lender, such documents and agreements as Lender shall reasonably require to evidence and
effectuate the ratification of said personal liability. In the event that such Transfer is
a Sale of the Property in its entirety, Borrower shall be released from and relieved of any
personal liability under the Note or any of the other Loan Documents for any acts or events
occurring or obligations arising after the closing of such Sale which are not caused by or
arising out of any acts or events occurring or obligations arising prior to or
simultaneously with the closing of such Sale;

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     (10) Such Sale is not construed so as to relieve any current Indemnitor of its
obligations under any guaranty or indemnity agreement for any acts or events occurring or
obligations arising prior to or simultaneously with the closing of such Sale, and each such
current Indemnitor executes, without any cost or expense to Lender, such documents and
agreements as Lender shall reasonably require to evidence and effectuate the ratification of
each such guaranty and indemnity agreement. In the event that such Sale is a Transfer of
the Property in its entirety, each such current Indemnitor shall be released from and
relieved of any of its obligations under any guaranty or indemnity agreement executed in
connection with the loan secured hereby for any acts or events occurring or obligations
arising after the closing of such Sale which are not caused by or arising out of any acts or
events occurring or obligations arising prior to or simultaneously with the closing of such
Sale;

     (11) The Buyer shall furnish, if the Buyer is a corporation, partnership or other
entity, all appropriate papers evidencing the Buyer’s capacity and good standing, and the
qualification of the signers to execute the assumption of the Debt, which papers shall
include certified copies of all documents relating to the organization and formation of the
Buyer and of the entities, if any, which are partners of the Buyer. In the event that such
Sale is a Transfer of the Property in its entirety, the Buyer shall be a Single Purpose
Entity whose formation documents shall be approved by counsel to Lender, and who shall
comply with the requirements set forth in Section 2.29 hereof;

     (12) Borrower delivers to Lender confirmation in writing (a “No-Downgrade
Confirmation”) from each Rating Agency that such Sale will not result in a
qualification, downgrade or withdrawal of any ratings issued in connection with any
Secondary Market Transaction (as hereinafter defined) or, in the event the Secondary Market
Transaction has not yet occurred, Lender shall, in its sole discretion, have approved the
Sale;

     (13) The applicable transfer will not result in an increase in the real property taxes
for the Premises and Improvements that would cause the debt service coverage ratio of the
Debt with respect to the immediately succeeding twelve (12) month period to be less than the
debt service coverage ratio of the Debt for the twelve (12) month period immediately
preceding such transfer, in each case as determined by Lender; and

     (14) Borrower delivers to Lender an opinion with respect to substantive
non-consolidation opinion after giving effect to such transfer in form and substance and
from a law firm acceptable to Lender and the Rating Agencies.

          Section 2.10 Payment of Utilities, Assessments, Charges, Etc. Borrower shall pay when
due all utility charges which are incurred by Borrower or which may become a charge or lien against
any portion of the Property for gas, electricity, water and sewer services furnished to the
Premises and/or the Improvements and all other assessments or charges of a similar nature, or
assessments payable pursuant to any restrictive covenants, whether public or private, affecting the
Premises and/or the Improvements or any portion thereof, whether or not such assessments or charges
are or may become liens thereon.

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          Section 2.11 Access Privileges and Inspections. Lender and the agents,
representatives and employees of Lender shall, subject to the rights of Tenants, have full and free
access to the Premises and the Improvements and any other location where books and records
concerning the Property are kept at all reasonable times and, except in the event of an emergency,
upon not less than 24 hours prior notice (which notice may be telephonic) for the purposes of
inspecting the Property and of examining, copying and making extracts from the books and records of
Borrower relating to the Property. Borrower shall lend assistance to all such agents,
representatives and employees of Lender.

          Section 2.12 Waste; Alteration of Improvements. Borrower shall not commit, suffer or
permit any waste on the Property nor take any actions that might invalidate any insurance carried
on the Property. Borrower shall maintain the Property in good condition and repair. No part of
the Improvements may be removed, demolished or materially altered, without the prior written
consent of Lender other than in connection with non-structural day to day maintenance and except
for tenant improvements under Leases. Without the prior written consent of Lender, Borrower shall
not commence construction of any improvements on the Premises other than improvements required for
the maintenance or repair of the Property. Lender reserves the right to condition its consent to
any material alteration, removal, demolition or new construction on the following: (i) such
conditions as would be required by a prudent interim construction lender, including, but not
limited to, the prior approval by Lender of plans and specifications, construction budgets,
contractors and form of construction contracts and the furnishing to Lender of evidence regarding
funds, permits, approvals bonds, insurance, lien waivers, title endorsements, appraisals, surveys,
certificates of occupancy, certificates regarding completion, invoices, receipts and affidavits
from contractors and subcontractors, in form and substance satisfactory to Lender in its
discretion, (ii) the delivery of an opinion from counsel satisfactory to Lender in its discretion
and in form and substance satisfactory to Lender in its discretion opining as to such matters as
Lender may reasonably require, including, without limitation, an opinion that such alteration,
removal, demolition or new construction will not have an adverse effect on the status of any trust
formed in connection with a Secondary Market Transaction a “real estate mortgage investment
conduit” within the meaning of Section 860D of the Code (“REMIC”), and (iii) Borrower’s agreement
to pay all fees, costs and expenses incurred by Lender in granting such consent, including, without
limitation, reasonable attorneys’ fees and expenses.

          Section 2.13 Zoning. Without the prior written consent of Lender, Borrower shall not
seek, make, suffer, consent to or acquiesce in any change in the zoning or conditions of use of the
Premises or the Improvements. Borrower shall comply with and make all payments required under the
provisions of any covenants, conditions or restrictions affecting the Premises or the Improvements.
Borrower shall comply with all existing and future requirements of all governmental authorities
having jurisdiction over the Property. Borrower shall keep all licenses, permits, franchises and
other approvals necessary for the operation of the Property in full force and effect. Borrower
shall operate the Property as a mixed retail/residential project for so long as the Debt is
outstanding. If, under applicable zoning provisions, the use of all or any part of the Premises or
the Improvements is or becomes a nonconforming use, Borrower shall not cause or permit such use to
be discontinued or abandoned without the prior written consent of Lender. Further, without
Lender’s prior written consent, Borrower shall not file or subject any part of the Premises or the
Improvements to any declaration of condominium or co-operative or convert any

31

 

part of the Premises or the Improvements to a condominium, co-operative or other form of
multiple ownership and governance.

          Section 2.14 Financial Statements and Books and Records. Borrower shall keep accurate
books and records of account of the Property and its own financial affairs sufficient to permit the
preparation of financial statements therefrom in accordance with generally accepted accounting
principles. Lender and its duly authorized representatives shall have the right to examine, copy
and audit Borrower’s records and books of account at all reasonable times. So long as this
Mortgage continues in effect, Borrower shall provide to Lender, in addition to any other financial
statements required hereunder or under any of the other Loan Documents, the following financial
statements and information, all of which must be certified to Lender as being true and correct by
Borrower or the person or entity to which they pertain, as applicable, and, with respect to the
financial statements and information set forth in subsection (d) hereof, compiled by an independent
certified public accountant, be prepared in accordance with the income tax basis of accounting
consistently applied and be in form and substance acceptable to Lender:

          (a) copies of all tax returns filed by Borrower, within thirty (30) days after the date of
filing, including extensions;

          (b) monthly operating statements (net operating income on an accrual basis) for the Property,
within thirty (30) days after the end of each of the first (1st) twelve (12) calendar months
following the date hereof; and

          (c) quarterly operating statements for the Property on the same basis as the monthly operating
statements described above, and a Rent Roll, within forty-five (45) days after the end of each
March, June, September and December commencing with the first (1st) of such months to occur
following the first (1st) anniversary of the date hereof;

          (d) annual balance sheet and statement of operations for the Property and annual financial
statements for Borrower, and each Indemnitor, within ninety (90) days after the end of each
calendar year; and

          (e) such other information with respect to the Property, Borrower, the principals or general
partners in Borrower and each Indemnitor, which may be reasonably requested from time to time by
Lender, within a reasonable time after the applicable request.

If, at the time one or more Disclosure Documents are being prepared for a securitization, Lender
expects that Borrower alone or Borrower and one or more affiliates of Borrower collectively, or the
Property alone or the Property and any other parcel(s) of real property, together with improvements
thereon and personal property related thereto, that is “related”, within the meaning of the
definition of Significant Obligor, to the Property (a “Related Property”) collectively,
will be a Significant Obligor, Borrower shall furnish to Lender upon request (i) the selected
financial data or, if applicable, net operating income, required under Item 1112(b)(1) of
Regulation AB and meeting the requirements thereof, if Lender expects that the principal amount of
the Loan, together with any loans made to an affiliate of Borrower or secured by a Related Property
that is included in a securitization with the Loan (a “Related Loan”), as of the cut-off date for
such

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securitization may, or if the principal amount of the Loan together with any Related Loans as of
the cut-off date for such securitization and at any time during which the Loan and any Related
Loans are included in a securitization does, equal or exceed ten percent (10%) (but less than
twenty percent (20%)) of the aggregate principal amount of all mortgage loans included or expected
to be included, as applicable, in the securitization or (ii) the financial statements required
under Item 1112(b)(2) of Regulation AB and meeting the requirements thereof, if Lender expects that
the principal amount of the Loan together with any Related Loans as of the cut-off date for such
securitization may, or if the principal amount of the Loan together with any Related Loans as of
the cut-off date for such securitization and at any time during which the Loan and any Related
Loans are included in a securitization does, equal or exceed twenty percent (20%) of the aggregate
principal amount of all mortgage loans included or expected to be included, as applicable, in the
securitization. Such financial data or financial statements shall be furnished to Lender (A)
within ten (10) Business Days after notice from Lender in connection with the preparation of
Disclosure Documents for the securitization, (B) not later than thirty (30) days after the end of
each fiscal quarter of Borrower and (C) not later than seventy-five (75) days after the end of each
fiscal year of Borrower; provided, however, that Borrower shall not be obligated to furnish
financial data or financial statements pursuant to clauses (B) or (C) of this sentence with respect
to any period for which a filing pursuant to the Securities Exchange Act of 1934 in connection with
or relating to the securitization (an “Exchange Act Filing”) is not required. As used herein,
“Regulation AB” shall mean Regulation AB under the Securities Act of 1933 and the Securities
Exchange Act of 1934 (as amended). As used herein, “Disclosure Document” shall mean a prospectus,
prospectus supplement, private placement memorandum, or similar offering memorandum or offering
circular, in each case in preliminary or final form, used to offer securities in connection with a
securitization. As used herein, “Significant Obligor” shall have the meaning set forth in Item
1101(k) of Regulation AB.

If any of the aforementioned materials are not furnished to Lender within the applicable time
periods, are not prepared in accordance with generally accepted accounting principles or Lender is
dissatisfied with the form of any of the foregoing and has notified Borrower of its
dissatisfaction, in addition to any other rights and remedies of Lender contained herein and
provided Lender has given Borrower at least ten (10) days notice of such failure and opportunity to
cure, (i) Borrower shall pay to Lender upon demand, at Lender’s option and in its sole discretion,
an amount equal to $2,500 per reporting period, and (ii) Lender shall have the right, but not the
obligation, to obtain the same by means of an audit by an independent certified public accountant
selected by Lender, in which event Borrower agrees to pay, or to reimburse Lender for, any expense
of such audit and further agrees to provide all necessary information to said accountant and to
otherwise cooperate in the making of such audit.

          Section 2.15 Further Assurances. Borrower shall, on the request of Lender and at the
expense of Borrower: (a) promptly correct any defect, error or omission which may be discovered in
the contents of this Mortgage or in the contents of any of the other Loan Documents; (b) promptly
execute, acknowledge, deliver and record or file such further instruments (including, without
limitation, further mortgages, deeds of trust, security deeds, security agreements, financing
statements, continuation statements and assignments of rents or leases) and promptly do such
further acts as may be necessary, desirable or proper to carry out more effectively the purposes of
this Mortgage and the other Loan Documents and to subject to the liens and security interests
hereof and thereof any property intended by the terms hereof and

33

 

thereof to be covered hereby and thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements or appurtenances to the Property; (c) promptly
execute, acknowledge, deliver, procure and record or file any document or instrument (including
specifically, without limitation, any financing statement) deemed advisable by Lender to protect,
continue or perfect the liens or the security interests hereunder against the rights or interests
of third persons; and (d) promptly furnish to Lender, upon Lender’s request, a duly acknowledged
written statement and estoppel certificate addressed to such party or parties as directed by Lender
and in form and substance supplied by Lender, setting forth all amounts due under the Note, stating
whether any Default or Event of Default has occurred hereunder, stating whether any offsets or
defenses exist against the Debt and containing such other matters as Lender may reasonably require.

          Section 2.16 Payment of Costs; Reimbursement to Lender. Borrower shall pay all costs
and expenses of every character reasonably incurred in connection with the closing of the loan
evidenced by the Note and secured hereby, attributable or chargeable to Borrower as the owner of
the Property or otherwise attributable to any consent requested of Lender or any Rating Agency
under the terms hereof or any other Loan Document, including, without limitation, customary
servicing and consent fees, appraisal fees, recording fees, documentary, stamp, mortgage or
intangible taxes, brokerage fees and commissions, title policy premiums and title search fees,
uniform commercial code/tax lien/litigation search fees, escrow fees, consultants’ fees,
No-Downgrade Confirmations and reasonable attorneys’ fees. If Borrower defaults in any such
payment, which default is not cured within any applicable grace or cure period, Lender may pay the
same and Borrower shall reimburse Lender on demand for all such costs and expenses incurred or paid
by Lender, together with such interest thereon at the Default Interest Rate from and after the date
of Lender’s making such payment until reimbursement thereof by Borrower. Any such sums disbursed
by Lender, together with such interest thereon, shall be additional indebtedness of Borrower
secured by this Mortgage and by all of the other Loan Documents securing all or any part of the
Debt. Further, Borrower shall promptly notify Lender in writing of any litigation or threatened
litigation affecting the Property, or any other demand or claim which, if enforced, could impair or
threaten to impair Lender’s security hereunder. Without limiting or waiving any other rights and
remedies of Lender hereunder, if Borrower fails to perform any of its covenants or agreements
contained in this Mortgage or in any of the other Loan Documents and such failure is not cured
within any applicable grace or cure period, or if any action or proceeding of any kind (including,
but not limited to, any bankruptcy, insolvency, arrangement, reorganization or other debtor relief
proceeding) is commenced which might affect Lender’s interest in the Property or Lender’s right to
enforce its security, then Lender may, at its option, with or without notice to Borrower, make any
appearances, disburse any sums and take any actions as may be necessary or desirable to protect or
enforce the security of this Mortgage or to remedy the failure of Borrower to perform its covenants
and agreements (without, however, waiving any default of Borrower). Borrower agrees to pay on
demand all expenses of Lender incurred with respect to the foregoing (including, but not limited
to, reasonable fees and disbursements of counsel), together with interest thereon at the Default
Interest Rate from and after the date on which Lender incurs such expenses until reimbursement
thereof by Borrower. Any such expenses so incurred by Lender, together with interest thereon as
provided above, shall be additional indebtedness of Borrower secured by this Mortgage and by all of
the other Loan Documents securing all or any part of the Debt. The necessity for any such actions
and of the amounts to be paid shall be determined by Lender in its discretion. Lender is hereby
empowered

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to enter and to authorize others to enter upon the Property or any part thereof for the
purpose of performing or observing any such defaulted term, covenant or condition without thereby
becoming liable to Borrower or any person in possession holding under Borrower. Borrower hereby
acknowledges and agrees that the remedies set forth in this Section 2.16 shall be exercisable by
Lender, and any and all payments made or costs or expenses incurred by Lender in connection
therewith shall be secured hereby and shall be, without demand, immediately repaid by Borrower with
interest thereon at the Default Interest Rate, notwithstanding the fact that such remedies were
exercised and such payments made and costs incurred by Lender after the filing by Borrower of a
voluntary case or the filing against Borrower of an involuntary case pursuant to or within the
meaning of the Bankruptcy Reform Act of 1978, as amended, Title 11 U.S.C., or after any similar
action pursuant to any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable to Borrower, Lender, any Indemnitor, the Debt or any of the Loan Documents. Borrower
hereby indemnifies and holds Lender harmless from and against all loss, cost and expenses with
respect to any Event of Default hereof, any liens (i.e., judgments, mechanics’ and materialmen’s
liens, or otherwise), charges and encumbrances filed against the Property, and from any claims and
demands for damages or injury, including claims for property damage, personal injury or wrongful
death, arising out of or in connection with any accident or fire or other casualty on the Premises
or the Improvements or any nuisance made or suffered thereon, except those that are due to Lender’s
gross negligence or willful misconduct as finally determined by a court of competent jurisdiction,
including, without limitation, in any case, reasonable attorneys’ fees, costs and expenses as
aforesaid, whether at pretrial, trial or appellate level, and such indemnity shall survive payment
in full of the Debt. This Section shall not be construed to require Lender to incur any expenses,
make any appearances or take any actions.

          Section 2.17 Security Interest. This Mortgage is also intended to encumber and create
a security interest in, and Borrower hereby grants to Lender a security interest in, all sums on
deposit with Lender pursuant to the provisions of Article III hereof or any other Section hereof or
of any other Loan Document and all fixtures, chattels, accounts, equipment, inventory, contract
rights, general intangibles and other personal property included within the Property, all renewals,
replacements of any of the aforementioned items, or articles in substitution therefor or in
addition thereto or the proceeds thereof (said property is hereinafter referred to collectively as
the “Collateral”), whether or not the same shall be attached to the Premises or the Improvements in
any manner. It is hereby agreed that to the extent permitted by law, all of the foregoing property
is to be deemed and held to be a part of and affixed to the Premises and the Improvements. The
foregoing security interest shall also cover Borrower’s leasehold interest in any of the foregoing
property which is leased by Borrower. Notwithstanding the foregoing, all of the foregoing property
shall be owned by Borrower and no leasing or installment sales or other financing or title
retention agreement in connection therewith shall be permitted without the prior written approval
of Lender. Borrower shall, from time to time upon the request of Lender, supply Lender with a
current inventory of all of the property in which Lender is granted a security interest hereunder,
in such detail as Lender may reasonably require. Borrower shall promptly replace all of the
Collateral subject to the lien or security interest of this Mortgage when worn or obsolete with
Collateral comparable to the worn out or obsolete Collateral when new and will not, without the
prior written consent of Lender, remove from the Premises or the Improvements any of the Collateral
subject to the lien or security interest of this Mortgage except such as is replaced by an article
of equal suitability and value as above provided, owned

35

 

by Borrower free and clear of any lien or security interest except that created by this
Mortgage and the other Loan Documents. All of the Collateral shall be kept at the location of the
Premises except as otherwise required by the terms of the Loan Documents. Borrower shall not use
any of the Collateral in violation of any applicable statute, ordinance or insurance policy.

          Section 2.18 Security Agreement. This Mortgage constitutes a security agreement
between Borrower and Lender with respect to the Collateral in which Lender is granted a security
interest hereunder, and, cumulative of all other rights and remedies of Lender hereunder, Lender
shall have all of the rights and remedies of a secured party under any applicable Uniform
Commercial Code. Borrower hereby agrees to execute and deliver on demand and hereby irrevocably
constitutes and appoints Lender the attorney-in-fact of Borrower to execute and deliver and, if
appropriate, to file with the appropriate filing officer or office, such security agreements,
financing statements, continuation statements or other instruments as Lender may request or require
in order to impose, perfect or continue the perfection of the lien or security interest created
hereby. To the extent specifically provided herein, Lender shall have the right of possession of
all cash, securities, instruments, negotiable instruments, documents, certificates and any other
evidences of cash or other property or evidences of rights to cash rather than property, which are
now or hereafter a part of the Property, and Borrower shall promptly deliver the same to Lender,
endorsed to Lender, without further notice from Lender. Borrower agrees to furnish Lender with
notice of any change in the name, identity, organizational structure, residence, or principal place
of business or mailing address of Borrower within ten (10) days of the effective date of any such
change. Upon the occurrence of any Event of Default, Lender shall have the rights and remedies as
prescribed in this Mortgage, or as prescribed by general law, or as prescribed by any applicable
Uniform Commercial Code, all at Lender’s election. Any disposition of the Collateral may be
conducted by an employee or agent of Lender. Any person, including both Borrower and Lender, shall
be eligible to purchase any part or all of the Collateral at any such disposition. Expenses of
retaking, holding, preparing for sale, selling or the like (including, without limitation, Lender’s
reasonable attorneys’ fees and legal expenses), together with interest thereon at the Default
Interest Rate from the date incurred by Lender until actually paid by Borrower, shall be paid by
Borrower on demand and shall be secured by this Mortgage and by all of the other Loan Documents
securing all or any part of the Debt. Lender shall have the right to enter upon the Premises and
the Improvements or any real property where any of the property which is the subject of the
security interest granted herein is located to take possession of, assemble and collect the same or
to render it unusable, or Borrower, upon demand of Lender, shall assemble such property and make it
available to Lender at the Premises, or at a place which is mutually agreed upon or, if no such
place is agreed upon, at a place reasonably designated by Lender to be reasonably convenient to
Lender and Borrower. If notice is required by law, Lender shall give Borrower at least ten (10)
days’ prior written notice of the time and place of any public sale of such property, or
adjournments thereof, or of the time of or after which any private sale or any other intended
disposition thereof is to be made, and if such notice is sent to Borrower, as the same is provided
for the mailing of notices herein, it is hereby deemed that such notice shall be and is reasonable
notice to Borrower. No such notice is necessary for any such property which is perishable,
threatens to decline speedily in value or is of a type customarily sold on a recognized market.
Any sale made pursuant to the provisions of this Section shall be deemed to have been a
public sale conducted in a commercially reasonable manner if held contemporaneously with a
foreclosure sale as provided in Section 5.1(e) hereof upon giving the same notice w
ith
respect to the sale of the Property

36

 

hereunder as is required under said Section 5.1(e).
Furthermore, to the extent permitted by law, in conjunction with, in addition to or in substitution
for the rights and remedies available to Lender pursuant to any applicable Uniform Commercial Code:

          (a) In the event of a foreclosure sale, the Property may, at the option of Lender, be sold as
a whole; and

          (b) It shall not be necessary that Lender take possession of the aforementioned Collateral, or
any part thereof, prior to the time that any sale pursuant to the provisions of this Section is
conducted and it shall not be necessary that said Collateral, or any part thereof, be present at
the location of such sale; and

          (c) Lender may appoint or delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by Lender, including the sending of notices and the conduct
of the sale, but in the name and on behalf of Lender. The name and address of Borrower (as Debtor
under any applicable Uniform Commercial Code) are as set forth on the first page hereof. The name
and address of Lender (as Secured Party under any applicable Uniform Commercial Code) are as set
forth on the first page hereof.

          Section 2.19 Easements and Rights-of-Way. Borrower shall not grant any easement or
right-of-way with respect to all or any portion of the Premises or the Improvements without the
prior written consent of Lender. Borrower shall comply with all easements affecting the Property.
The purchaser at any foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the provisions of this Mortgage and may take immediate
possession of the Property free from, and despite the terms of, such grant of easement or
right-of-way. If Lender consents to the grant of an easement or right-of-way, Lender agrees to
grant such consent without charge to Borrower other than expenses, including, without limitation,
reasonable attorneys’ fees, incurred by Lender in the review of Borrower’s request and in the
preparation of documents effecting the subordination.

          Section 2.20 Compliance with Laws. Borrower shall at all times comply with all
statutes, ordinances, regulations and other governmental or quasi-governmental requirements and
private covenants now or hereafter relating to the ownership, construction, use or operation of the
Property, including, but not limited to, those concerning employment and compensation of persons
engaged in operation and maintenance of the Property and any environmental or ecological
requirements, even if such compliance shall require structural changes to the Property;
provided, however, that, Borrower may, upon providing Lender with security
satisfactory to Lender, proceed diligently and in good faith to contest the validity or
applicability of any such statute, ordinance, regulation or requirement so long as during such
contest the Property shall not be subject to any lien, charge, fine or other liability and shall
not be in danger of being forfeited, lost or closed. Borrower shall not use or occupy, or allow
the use or occupancy of, the Property in any manner which violates
any Lease of or any other agreement applicable to the Property or any applicable law, rule,
regulation or order or which constitutes a public or private nuisance or which makes void, voidable
or cancelable, or increases the premium of, any insurance then in force with respect thereto.

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          Section 2.21 Additional Taxes. In the event of the enactment after the date hereof of
any law of the state in which the Property is located or of any other governmental entity deducting
from the value of the Property for the purpose of taxing any lien or security interest thereon, or
imposing upon Lender the payment of the whole or any part of the taxes or assessments or charges or
liens herein required to be paid by Borrower, or changing in any way the laws relating to the
taxation of deeds of trust, mortgages or security agreements or debts secured by deeds of trust,
mortgages or security agreements or the interest of the Lender, mortgagee or secured party in the
property covered thereby, or the manner of collection of such taxes, so as to adversely affect this
Mortgage or the Debt or Lender, then, and in any such event, Borrower, upon demand by Lender, shall
pay such taxes, assessments, charges or liens, or reimburse Lender therefor; provided,
however, that if in the opinion of counsel for Lender (a) it might be unlawful to require
Borrower to make such payment, or (b) the making of such payment might result in the imposition of
interest beyond the maximum amount permitted by law, then and in either such event, Lender may
elect, by notice in writing given to Borrower, to declare all of the Debt to be and become due and
payable in full thirty (30) days from the giving of such notice, and, in connection with the
payment of such Debt, no prepayment premium or fee shall be due unless, at the time of such
payment, an Event of Default or a Default shall have occurred, which Default or Event of Default is
unrelated to the provisions of this Section 2.21, in which event any applicable prepayment
premium or fee in accordance with the terms of the Note shall be due and payable.

          Section 2.22 Secured Indebtedness. It is understood and agreed that this Mortgage
shall secure payment of not only the indebtedness evidenced by the Note but also any and all
substitutions, replacements, renewals and extensions of the Note, any and all indebtedness and
obligations arising pursuant to the terms hereof and any and all indebtedness and obligations
arising pursuant to the terms of any of the other Loan Documents, all of which indebtedness is
equally secured with and has the same priority as any amounts advanced as of the date hereof. It
is agreed that any future advances made by Lender to or for the benefit of Borrower from time to
time under this Mortgage or the other Loan Documents and whether or not such advances are
obligatory or are made at the option of Lender, or otherwise, made for any purpose, and all
interest accruing thereon, shall be equally secured by this Mortgage and shall have the same
priority as all amounts, if any, advanced as of the date hereof and shall be subject to all of the
terms and provisions of this Mortgage.

          Section 2.23 Borrower’s Waivers. To the full extent permitted by law, Borrower agrees
that Borrower shall not at any time insist upon, plead, claim or take the benefit or advantage of
any law now or hereafter in force providing for any appraisement, valuation, stay, moratorium or
extension, or any law now
or hereafter in force providing for the reinstatement of the Debt prior to any sale of the
Property to be made pursuant to any provisions contained herein or prior to the entering of any
decree, judgment or order of any court of competent jurisdiction, or any right under any statute to
redeem all or any part of the Property so sold. Borrower, for Borrower and Borrower’s successors
and assigns, and for any and all persons ever claiming any interest in the Property, to the full
extent permitted by law, hereby knowingly, intentionally and voluntarily, with and upon the advice
of competent counsel: (a) waives, releases, relinquishes and forever forgoes all rights of
valuation, appraisement, stay of execution, reinstatement and notice of election or intention to
mature or declare due the Debt (except such notices as are specifically provided for herein); (b)
waives, releases, relinquishes

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and forever forgoes all right to a marshaling of the assets of
Borrower, including the Property, to a sale in the inverse order of alienation, or to direct the
order in which any of the Property shall be sold in the event of foreclosure of the liens and
security interests hereby created and agrees that any court having jurisdiction to foreclose such
liens and security interests may order the Property sold as an entirety; and (c) waives, releases,
relinquishes and forever forgoes all rights and periods of redemption provided under applicable
law. To the full extent permitted by law, Borrower shall not have or assert any right under any
statute or rule of law pertaining to the exemption of homestead or other exemption under any
federal, state or local law now or hereafter in effect, the administration of estates of decedents
or other matters whatever to defeat, reduce or affect the right of Lender under the terms of this
Mortgage to a sale of the Property, for the collection of the Debt without any prior or different
resort for collection, or the right of Lender under the terms of this Mortgage to the payment of
the Debt out of the proceeds of sale of the Property in preference to every other claimant
whatever. Furthermore, Borrower hereby knowingly, intentionally and voluntarily, with and upon the
advice of competent counsel, waives, releases, relinquishes and forever forgoes all present and
future statutes of limitations as a defense to any action to enforce the provisions of this
Mortgage or to collect any of the Debt to the fullest extent permitted by law. Borrower covenants
and agrees that upon the commencement of a voluntary or involuntary bankruptcy proceeding by or
against Borrower, Borrower shall not seek a supplemental stay or otherwise shall not seek pursuant
to 11 U.S.C. §105 or any other provision of the Bankruptcy Reform Act of 1978, as amended, or any
other debtor relief law (whether statutory, common law, case law, or otherwise) of any jurisdiction
whatsoever, now or hereafter in effect, which may be or become applicable, to stay, interdict,
condition, reduce or inhibit the ability of Lender to enforce any rights of Lender against any
guarantor or indemnitor of the secured obligations or any other party liable with respect thereto
by virtue of any indemnity, guaranty or otherwise.

          Section 2.24 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

          (a) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (i) SUBMITS TO PERSONAL JURISDICTION IN
THE STATE IN WHICH THE PREMISES IS LOCATED OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON
ARISING FROM OR RELATING TO THE NOTE, THIS MORTGAGE OR ANY OTHER OF THE LOAN DOCUMENTS, (ii) AGREES
THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION SITTING IN THE COUNTY IN WHICH THE PREMISES IS LOCATED, (iii) SUBMITS TO THE
JURISDICTION OF SUCH COURTS, AND (iv) TO THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).

          (b) BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVES, RELINQUISHES AND FOREVER
FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR 

39

 

PROCEEDING BASED UPON, ARISING OUT OF, OR IN
ANY WAY RELATING TO THE DEBT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR BORROWER, OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR ANY OTHER
PERSONS AFFILIATED WITH LENDER OR BORROWER, IN EACH OF THE FOREGOING CASES, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE.

          Section 2.25 Attorney-in-Fact Provisions. With respect to any provision of this
Mortgage or any other Loan Document whereby Borrower grants to Lender a power-of-attorney, provided
no Default or Event of Default has occurred under this Mortgage, Lender shall first give Borrower
written notice at least three (3) days prior to acting under such power, which notice shall demand
that Borrower first take the proposed action within such period and advising Borrower that if it
fails to do so, Lender will so act under the power; provided, however, that, in the
event that a Default or an Event of Default has occurred, or if necessary to prevent imminent
death, serious injury, damage, loss, forfeiture or diminution in value to the Property or any
surrounding property or to prevent any adverse affect on Lender’s interest in the Property, Lender
may act immediately and without first giving such notice. In such event, Lender will give Borrower
notice of such action as soon thereafter as reasonably practical.

          Section 2.26 Management. The management of the Property shall be by either: (a)
Borrower or Acadia Realty Trust (“Acadia”) or any of Acadia’s subsidiaries for so long as
Borrower or Acadia or Acadia’s subsidiary is managing the Property in a first class manner; or (b)
a professional property management company approved by Lender. Aberdeen Properties, Inc., a
Delaware corporation, is approved by Lender as property manager under the property management
agreement submitted to Lender. Any property management other than by Borrower shall be pursuant to
a written agreement approved by Lender. In no event shall any manager be removed or replaced or
the terms of any management agreement modified or amended without the prior written consent of
Lender which approval may be conditioned upon, among other things, receipt by Lender of a
No-Downgrade Confirmation from each Rating Agency. After an Event of Default or a default under
any management contract then in effect, which default is not cured within any applicable grace or
cure period or if at any time during the term of the Loan the debt service coverage ratio of the
Property is ever less than 1.20:1.00, as determined by Lender, Lender shall have the right to
terminate, or to direct Borrower to terminate, such management contract upon thirty (30) days’
notice and to retain, or to direct Borrower to retain, a new
management agent approved by Lender which approval may be conditioned upon, among other
things, receipt by Lender of a No-Downgrade Confirmation from each Rating Agency. All Rents and
Profits generated by or derived from the Property shall first be utilized solely for current
expenses directly attributable to the ownership and operation of the Property, including, without
limitation, current expenses relating to Borrower’s liabilities and obligations with respect to
this Mortgage and the other Loan Documents, and none of the Rents and Profits generated by or
derived from the Property shall be diverted by Borrower and utilized for any other purposes unless
all such current expenses attributable to the ownership and operation of the Property have been
fully paid and satisfied.

40

 

          Section 2.27 Hazardous Waste and Other Substances.

          (a) Borrower hereby represents and warrants to Lender that, as of the date hereof to the best
of Borrower’s knowledge, information and belief and other than as set forth in that certain Phase I
Environmental Site Assessment dated January 4, 2007 prepared by IVI Due Diligence Services, Inc.:
(i) none of Borrower nor the Property nor any Tenant at the Premises nor the operations conducted
thereon is in direct or indirect violation of or otherwise exposed to any liability under any
local, state or federal law, rule or regulation or common law duty pertaining to human health,
natural resources or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. §9601 et
seq.) (“CERCLA”), the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
§6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §1251 et
seq.), the Clean Air Act (42 U.S.C. §7401 et seq.), the Emergency Planning
and Community-Right-to-Know Act (42 U.S.C. §11001 et seq.), the Endangered Species
Act (16 U.S.C. §1531 et seq.), the Toxic Substances Control Act (15 U.S.C. §2601
et seq.), the Occupational Safety and Health Act (29 U.S.C. §651 et
seq.) and the Hazardous Materials Transportation Act (49 U.S.C. §1801 et
seq.), regulations promulgated pursuant to said laws, all as amended from time to time
(collectively, “Environmental Laws”) or otherwise exposed to any liability under any
Environmental Law relating to or affecting the Property, whether or not used by or within the
control of Borrower; (ii) no hazardous, toxic or harmful substances, wastes, materials, pollutants
or contaminants (including, without limitation, asbestos or asbestos-containing materials, lead
based paint, Toxic Mold (as hereinafter defined) polychlorinated biphenyls, petroleum or petroleum
products or byproducts, flammable explosives, radioactive materials, infectious substances or raw
materials which include hazardous constituents) or any other substances or materials which are
included under or regulated by Environmental Laws (collectively, “Hazardous Substances”)
are located on, in or under or have been handled, generated, stored, processed or disposed of on or
released or discharged from the Property (including underground contamination), except for those
substances used by Borrower or any Tenant in the ordinary course of their respective businesses and
in compliance with all Environmental Laws and where such Hazardous Substances could not reasonably
be expected to give rise to liability under Environmental Laws; (iii) radon is not present at the
Property in excess or in violation of any applicable thresholds or standards or in amounts that
require disclosure under applicable law to any tenant or occupant of or invitee to the Property or
to any governmental agency or the general public; (iv) the Property is not subject to any private
or governmental lien or judicial or administrative notice or action arising under Environmental
Laws; (v) there is no pending, nor, to Borrower’s knowledge, information or belief, threatened
litigation arising under Environmental Laws affecting Borrower or the Property; (vi) there are no
and have been no existing or closed
underground storage tanks or other underground storage receptacles for Hazardous Substances or
landfills or dumps on the Property; (vii) Borrower has received no notice of, and to the best of
Borrower’s knowledge and belief, there exists no investigation, action, proceeding or claim by any
agency, authority or unit of government or by any third party which could result in any liability,
penalty, sanction or judgment under any Environmental Laws with respect to any condition, use or
operation of t
he Property, nor does Borrower know of any basis for such an investigation, action,
proceeding or claim; and (viii) Borrower has received no notice of and, to the best of Borrower’s
knowledge and belief, there has been no claim by any party that any use, operation or condition of
the Property has caused any nuisance or any other liability or adverse condition on any other
property, nor does Borrower know of any basis for such an investigation,

41

 

action, proceeding or
claim. For the purposes hereof, “Toxic Mold” shall mean any mold or fungus at the Property
which is of a type (i) that might pose a significant risk to human health or the environment or
(ii) that would negatively impact the value of the Property.

          (b) Borrower has not received nor to the best of Borrower’s knowledge, information and belief
has there been issued, any notice, notification, demand, request for information, citation,
summons, or order in any way relating to any actual, alleged or potential violation or liability
arising under Environmental Laws.

          (c) Neither the Property, nor to the best of Borrower’s knowledge, information and belief, any
property to which Borrower has, in connection with the maintenance or operation of the Property,
directly or indirectly transported or arranged for the transportation of any Hazardous Substances
is listed or, to the best of Borrower’s knowledge, information and belief, proposed for listing on
the National Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or
on any similar federal or state list of sites requiring environmental investigation or clean-up.

          (d) Borrower shall comply with all applicable Environmental Laws. Borrower shall keep the
Property or cause the Property to be kept free from Hazardous Substances (except those substances
used by Borrower or any Tenant in the ordinary course of their respective businesses and except in
compliance with all Environmental Laws and where such Hazardous Substances could not reasonably be
expected to give rise to liability under Environmental Laws) and in compliance with all
Environmental Laws, Borrower shall not install or use any underground storage tanks, shall
expressly prohibit the use, generation, handling, storage, production, processing and disposal of
Hazardous Substances by all Tenants in quantities or conditions that would violate or give rise to
any obligation to take remedial or other action under any applicable Environmental Laws. Without
limiting the generality of the foregoing, during the term of this Mortgage, Borrower shall not
install in the Improvements or permit to be installed in the Improvements any asbestos or
asbestos-containing materials.

          (e) Borrower shall promptly notify Lender if Borrower shall become aware of (i) the actual or
potential existence of any Hazardous Substances on the Property other than those occurring in the
ordinary course of Borrower’s business and which do not violate, or would not otherwise give rise
to liability under Environmental Laws, (ii) any direct or indirect violation of, or other exposure
to liability under, any Environmental Laws, (iii) any lien, action or notice affecting the Property
or Borrower resulting from any violation or alleged violation of or liability or alleged liability
under any Environmental Laws, (iv) the institution of any investigation,
inquiry or proceeding concerning Borrower or the Property pursuant to any Environmental Laws
or otherwise relating to Hazardous Substances, or (v) the discovery of any occurrence, condition or
state of facts which would render any representation or warranty contained in this Mortgage
incorrect in any respect if made at the time of such discovery. Immediately upon receipt of same,
Borrower, shall deliver to Lender copies of any and all requests for information, complaints,
citations, summonses, orders, notices, reports or other communications, documents or instruments in
any way relating to any actual, alleged or potential violation or liability of any nature
whatsoever arising under Environmental Laws and relating to the Property or to Borrower. Borrower
shall remedy or cause to be remedied in a timely manner (and in any event within the time period
permitted by applicable Environmental Laws) any violation of

42

 

Environmental Laws or any condition
that could give rise to liability under Environmental Laws. Without limiting the foregoing,
Borrower shall, promptly and regardless of the source of the contamination or threat to the
environment or human health, at its own expense, take all actions as shall be necessary or prudent,
for the clean-up of any and all portions of the Property or other affected property, including,
without limitation, all investigative, monitoring, removal, containment and remedial actions in
accordance with all applicable Environmental Laws (and in all events in a manner satisfactory to
Lender) and shall further pay or cause to be paid, at no expense to Lender, all clean-up,
administrative and enforcement costs of applicable governmental agencies which may be asserted
against the Property. In the event Borrower fails to do so, Lender may, but shall not be obligated
to, cause the Property or other affected property to be freed from any Hazardous Substances or
otherwise brought into conformance with Environmental Laws and any and all costs and expenses
incurred by Lender in connection therewith, together with interest thereon at the Default Interest
Rate from the date incurred by Lender until actually paid by Borrower, shall be immediately paid by
Borrower on demand and shall be secured by this Mortgage and by all of the other Loan Documents
securing all or any part of the Debt. Borrower hereby grants to Lender and its agents and
employees access to the Property and a license to remove any items deemed by Lender to be Hazardous
Substances and to do all things Lender shall deem necessary to bring the Property into conformance
with Environmental Laws.

          (f) Borrower covenants and agrees, at Borrower’s sole cost and expense, to indemnify, defend
(at trial and appellate levels, and with attorneys, consultants and experts acceptable to Lender),
and hold Lender harmless from and against any and all liens, damages (including without limitation,
punitive or exemplary damages), losses, liabilities (including, without limitation, strict
liability), obligations, settlement payments, penalties, fines, assessments, citations, directives,
claims, litigation, demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses of any kind or of any nature whatsoever (including, without limitation, reasonable
attorneys’, consultants’ and experts’ fees and disbursements actually incurred in investigating,
defending, settling or prosecuting any claim, litigation or proceeding) which may at any time be
imposed upon, incurred by or asserted or awarded against Lender or the Property, and arising
directly or indirectly from or out of: (i) any violation or alleged violation of, or liability or
alleged liability under, any Environmental Law; (ii) the presence, release or threat of release of
or exposure to any Hazardous Substances or radon on, in, under or affecting all or any portion of
the Property or any surrounding areas, regardless of whether or not caused by or within the control
of Borrower; (iii) any transport, treatment, recycling, storage, disposal or arrangement therefor
of Hazardous Substances whether on the Property, originating from the Property, or otherwise
associated with Borrower or any operations conducted on the Property at any time; (iv) the failure by Borrower to comply fully
with the terms and conditions of this Section 2.27; (v) the breach of any representation or
warranty contained in this Section 2.27; or (vi) the enforcement of this Section
2.27, including, without limitation, the cost of assessment, investigation, containment,
removal and/or remediation of any and all Hazardous Substances from all or any portion of the
Property or any surrounding areas, the cost of any actions taken in response to the presence,
release or threat of release of any Hazardous Substances on, in, under or affecting any portion of
the Property or any surrounding areas to prevent or minimize such release or threat of release so
that it does not migrate or otherwise cause or threaten danger to present or future public health,
safety, welfare or the environment, and costs incurred to comply with Environmental Laws in
connection with

43

 

all or any portion of the Property or any surrounding areas. The indemnity set
forth in this Section 2.27 shall also include any diminution in the value of the security
afforded by the Property or any future reduction in the sales price of the Property by reason of
any matter set forth in this Section 2.27. The foregoing indemnity shall specifically not
include any such costs relating to Hazardous Substances which are initially placed on, in or under
the Property after foreclosure or other taking of title to the Property by Lender or its successor
or assigns. Lender’s rights under this Section shall survive payment in full of the Debt and shall
be in addition to all other rights of Lender under this Mortgage, the Note and the other Loan
Documents.

          (g) Upon Lender’s request, at any time after the occurrence of an Event of Default or at such
other time as Lender has reasonable grounds to believe that Hazardous Substances are or have been
released, stored or disposed of on the Property, or on property contiguous with the Property, or
that the Property may be in violation of the Environmental Laws, Borrower shall perform or cause to
be performed, at Borrower’s sole cost and expense and in scope, form and substance satisfactory to
Lender, an inspection or audit of the Property prepared by a hydrogeologist or environmental
engineer or other appropriate consultant approved by Lender indicating the presence or absence of
Hazardous Substances on the Property, the compliance or non-compliance status of the Property and
the operations conducted thereon with applicable Environmental Laws, or an inspection or audit of
the Property prepared by an engineering or consulting firm approved by Lender indicating the
presence or absence of friable asbestos or substances containing asbestos or lead or substances
containing lead or lead based paint (“Lead Based Paint”) on the Property. If Borrower
fails to provide reports of such inspection or audit within thirty (30) days after such request,
Lender may order the same, and Borrower hereby grants to Lender and its employees and agents access
to the Property and an irrevocable license to undertake such inspection or audit. The cost of such
inspection or audit, together with interest thereon at the Default Interest Rate from the date
incurred by Lender until actually paid by Borrower, shall be immediately paid by Borrower on demand
and shall be secured by this Mortgage and by all of the other Loan Documents securing all or any
part of the Debt.

          (h) Reference is made to that certain Environmental Indemnity Agreement of even date herewith
by and among Borrower and any other principal signatory named therein in favor of Lender (the
“Environmental Indemnity Agreement”). The provisions of this Mortgage and the
Environmental Indemnity Agreement shall be read together to maximize the coverage with respect to
the subject matter thereof, as determined by Lender.

          (i) If prior to the date hereof, it was determined that the Property contains
asbestos-containing materials (“ACM’s”), Borrower covenants and agrees to institute, within
thirty (30) days after the date hereof, an operations and maintenance program (the “Maintenance
Program”) designed by an environmental consultant, satisfactory to Lender, with respect to
ACM’s, consistent with “Guidelines for Controlling Asbestos-Containing Materials in Buildings”
(USEPA, 1985) and other relevant guidelines, and such Maintenance Program will hereafter
continuously remain in effect until the Debt secured hereby is repaid in full. In furtherance of
the foregoing, Borrower shall inspect and maintain all ACM’s on a regular basis and ensure that all
ACM’s shall be maintained in a condition that prevents exposure of residents to ACM’s at all times.
Without limiting the generality of the preceding sentence, Lender may require (i) periodic notices
or reports to Lender in form, substance and at such intervals as

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Lender may specify, (ii) an amendment to such operations and maintenance program to address changing circumstances, laws or
other matters, (iii) at Borrower’s sole expense, supplemental examination of the Property by
consultants specified by Lender, and (iv) variation of the operations and maintenance program in
response to the reports provided by any such consultants.

          (j) If, prior to the date hereof, it was determined that the Property contains Lead Based
Paint, Borrower had prepared an assessment report describing the location and condition of the Lead
Based Paint (a “Lead Based Paint Report”). If, at any time hereafter, Lead Based Paint is
suspected of being present on the Property, Borrower agrees, at its sole cost and expense and
within twenty (20) days thereafter, to cause to be prepared a Lead Based Paint Report prepared by
an expert, and in form, scope and substance, acceptable to Lender. Borrower agrees that if it has
been, or if at any time hereafter it is, determined that the Property contains Lead Based Paint, on
or before thirty (30) days following (i) the date hereof, if such determination was made prior to
the date hereof or (ii) such determination, if such determination is hereafter made, as applicable,
Borrower shall, at its sole cost and expenses, develop and implement, and thereafter diligently and
continuously carry out (or cause to be developed and implemented and thereafter diligently and
continually to be carried out), an operations, abatement and maintenance plan for the Lead Based
Paint on the Property, which plan shall be prepared by an expert, and be in form, scope and
substance, acceptable to Lender (together with any Lead Based Paint Report, the “O&M
Plan”). If an O&M Plan has been prepared prior to the date hereof, Borrower agrees to
diligently and continually carry out (or cause to be carried out) the provisions thereof.
Compliance with the O&M Plan shall require or be deemed to require, without limitation, the proper
preparation and maintenance of all records, papers and forms required under the Environmental Laws.

          Section 2.28 Indemnification; Subrogation.

          (a) Borrower shall indemnify, defend and hold Lender harmless against: (i) any and all claims
for brokerage, leasing, finders or similar fees which may be made relating to the Property or the
Debt, and (ii) any and all liability, obligations, losses, damages, penalties, claims, actions,
suits, costs and expenses (including Lender’s reasonable attorneys’ fees) of whatever kind or
nature which may be asserted against, imposed on or incurred by Lender in connection with the Debt,
this Mortgage, the Property, or any part thereof, or the exercise by Lender of any rights or
remedies granted to it under this Mortgage or arise from the information provided in accordance
with the terms hereof; provided, however, that nothing herein shall be construed to
obligate Borrower to indemnify, defend and hold harmless Lender from and against
any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs and expenses enacted against, imposed on or incurred by Lender by reason of Lender’s willful
misconduct or gross negligence.

          (b) If Lender is made a party defendant to any litigation or any claim is threatened or
brought against Lender concerning the Debt, this Mortgage, the Property, or any part thereof, or
any interest therein, or the construction, maintenance, operation or occupancy or use thereof, then
Borrower shall indemnify, defend and hold Lender harmless from and against all liability by reason
of said litigation or claims, including reasonable attorneys’ fees and expenses incurred by Lender
in any such litigation or claim, whether or not any such litigation or claim is prosecuted to
judgment. If Lender commences an action against Borrower to enforce

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any of the terms hereof or to
prosecute any breach by Borrower of any of the terms hereof or to recover any sum secured hereby,
Borrower shall pay to Lender its reasonable attorneys’ fees and expenses. The right to such
attorneys’ fees and expenses shall be deemed to have accrued on the commencement of such action,
and shall be enforceable whether or not such action is prosecuted to judgment. If Borrower
breaches any term of this Mortgage, Lender may engage the services of an attorney or attorneys to
protect its rights hereunder, and in the event of such engagement following any breach by Borrower,
Borrower shall pay Lender reasonable attorneys’ fees and expenses incurred by Lender, whether or
not an action is actually commenced against Borrower by reason of such breach. All references to
“attorneys” in this Subsection and elsewhere in this Mortgage shall include, without limitation,
any attorney or law firm engaged by Lender and Lender’s in-house counsel, and all references to
“fees and expenses” in this Subsection and elsewhere in this Mortgage shall include, without
limitation, any fees of such attorney or law firm, any appellate counsel fees, if applicable, and
any allocation charges and allocation costs of Lender’s in-house counsel.

          (c) A waiver of subrogation shall be obtained by Borrower from its insurance carrier and,
consequently, Borrower waives any and all right to claim or recover against Lender, its officers,
employees, agents and representatives, for loss of or damage to Borrower, the Property, Borrower’s
property or the property of others under Borrower’s control from any cause insured against or
required to be insured against by the provisions of this Mortgage.

          Section 2.29 Covenants with Respect to Existence, Indebtedness, Operations, Fundamental
Changes of Borrower.

          (a) Borrower, and any general partner or managing member of Borrower, as applicable, have each
done since the date of their formation and shall do or cause to be done all things necessary to (i)
preserve, renew and keep in full force and effect its existence, rights, and franchises, (ii)
continue to engage in the business presently conducted by it, (iii) obtain and maintain all
licenses, and (iv) qualify to do business and remain in good standing under the laws of each
jurisdiction, in each case as and to the extent required for the ownership, maintenance, management
and operation of the Property. Borrower hereby represents, warrants and covenants as of the date
hereof and until such time as the Debt is paid in full, that Borrower has been, since the date of
its formation, is and shall remain a Single-Purpose Entity (as hereinafter defined). Each general
partner or the SPE Member (as hereinafter defined) of Borrower (each, an “SPE Equity
Owner”), has since the date of its formation complied and will at all times comply, with
each of the representations, warranties and covenants contained in this Section 2.29
as if such representation, warranty or covenant was made directly by such SPE Equity Owner. A
“Single-Purpose Entity” or “SPE” means a corporation, limited partnership or
limited liability company that:

     (1) if a corporation, must have at least one Independent Director (as hereinafter
defined), or if requested by Lender (which request Borrower shall comply with within five
(5) business days) in connection with a Secondary Market Transaction, two Independent
Directors, and must not take any action that, under the terms of any certificate or articles
of incorporation, by-laws, or any voting trust agreement with respect to such entity’s
common stock, requires the unanimous affirmative vote of 100% of the members of the board of
directors unless all of the directors, including, without

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limitation, all Independent
Directors, shall have participated in such vote (“SPE Corporation”);

     (2) if a limited partnership, must have each general partner be an SPE Corporation;

     (3) if a limited liability company, must have one managing member (the “SPE
Member”) and such managing member must be an SPE Corporation. Only the SPE Member may
be designated as a manager under Borrower’s operating agreement and pursuant to the law
where Borrower is organized. Borrower may be a single member Delaware limited liability
company without an SPE Corporation managing member so long as Borrower complies with the
provisions set forth in Sections 2.29(b) and (c) below;

     (4) was and will be organized solely for the purpose of (i) owning an interest in the
Property, (ii) acting as a general partner of a limited partnership that owns an interest in
the Property, or (iii) acting as the managing member of a limited liability company that
owns an interest in the Property;

     (5) will not, nor will any partner, limited or general, member or shareholder thereof,
as applicable, amend, modify or otherwise change its partnership certificate, partnership
agreement, articles of incorporation, by-laws, operating agreement, articles of
organization, or other formation agreement or document, as applicable, in any material term
or manner, or in a manner which adversely affects Borrower’s existence as a Single Purpose
Entity;

     (6) will not liquidate or dissolve (or suffer any liquidation or dissolution), or enter
into any transaction of merger or consolidation, or acquire by purchase or otherwise all or
substantially all the business or assets of, or any stock or other evidence of beneficial
ownership of any entity;

     (7) will not, nor will any partner, limited or general, member or shareholder thereof,
as applicable, violate the terms of its partnership certificate, partnership agreement,
articles of incorporation, by-laws, operating agreement, articles of organization, or other
formation agreement or document, as applicable;

     (8) has not and will not guarantee, pledge its assets for the benefit of, or otherwise
become liable on or in connection with, any obligation of any other person or entity;

     (9) does not own and will not own any asset other than (i) the Property, and (ii)
incidental personal property necessary for the operation of the Property;

     (10) is not engaged and will not engage, either directly or indirectly, in any business
other than the ownership, management and operation of the Property;

     (11) will not enter into any contract or agreement with any general partner, principal,
affiliate or member of Borrower, as applicable, or any affiliate of any general

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partner, principal or member of Borrower, except upon terms and conditions that are intrinsically
fair and substantially similar to those that would be available on an arms-length basis with
third parties other than an affiliate;

     (12) has not incurred and will not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than (i) the Debt, and (ii) trade
payables or accrued expenses incurred in the ordinary course of business of operating the
Property customarily satisfied within thirty (30) days not evidenced by a note and in an
aggregate amount not to exceed two percent (2.0%) of the existing principal balance of the
Note, and no other debt will be secured (senior, subordinate or pari passu) by the Property;

     (13) has not made and will not make any loans or advances to any third party (including
any affiliate);

     (14) is and will be solvent and pay its debts from its assets as the same shall become
due;

     (15) has done or caused to be done and will do all things necessary to preserve its
existence, and will observe all formalities applicable to it;

     (16) will conduct and operate its business in its own name and as presently conducted
and operated;

     (17) will maintain financial statements, books and records and bank accounts separate
from those of its affiliates, including, without limitation, its general partners or
members, as applicable;

     (18) will be, and at all times will hold itself out to the public as, a legal entity
separate and distinct from any other entity (including, without limitation, any affiliate,
general partner, or member, as applicable, or any affiliate of any general partner or member
of Borrower, as applicable) and will correct any known misunderstanding concerning its
separate identity;

     (19) will file its own tax returns;

     (20) will 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;

     (21) will establish and maintain an office through which its business will be conducted
separate and apart from those of its affiliates or shall allocate fairly and reasonably any
overhead and expense for shared office space;

     (22) will not commingle the funds and other assets of Borrower with those of any
general partner, member, affiliate, principal or any other person;

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     (23) has and will maintain its assets in such a manner that it is not costly or
difficult to segregate, ascertain or identify its individual assets from those of any
affiliate or any other person;

     (24) does not and will not hold itself out to be responsible for the debts or
obligations of any other person;

     (25) will pay the salaries of its own employees (if any) from its own funds and
maintain a sufficient number of employees (if any) in light of its contemplated business
operations;

     (26) will pay any liabilities out of its own funds, including salaries of its
employees, not funds of any affiliate; and

     (27) will use stationery, invoices, and checks separate from its affiliates.

          (b) In the event Borrower is a single-member Delaware limited liability company, the limited
liability company agreement of Borrower (the “LLC Agreement”) shall provide that (i) upon
the occurrence of any event that causes the sole member of Borrower (“Member”) to cease to
be the member of Borrower (other than (A) upon an assignment by Member of all of its limited
liability company interest in Borrower and the admission of the transferee, or (B) the resignation
of Member and the admission of an additional member in either case in accordance with the terms of
the Loan Documents and the LLC Agreement), any person acting as a special or springing member of
Borrower shall without any action of any other Person and simultaneously with the Member ceasing to
be the member of Borrower, automatically be admitted to Borrower (“Special Member”) and
shall continue Borrower without dissolution and (ii) Special Member may not resign from Borrower or
transfer its rights as Special Member unless (A) a successor Special Member has been admitted to
Borrower as Special Member in accordance with requirements of Delaware law and (B) such successor
Special Member has also accepted its appointment as a Special Member. The LLC Agreement shall
further provide that (i) Special Member shall automatically cease to be a member of Borrower upon
the admission to Borrower of a substitute Member, (ii) Special Member shall be a member of Borrower
that has no interest in the profits, losses and capital of Borrower and has no right to receive any
distributions of Borrower assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the “Act”), Special Member shall not be required to make any capital
contributions to Borrower and shall not receive a limited liability company interest in Borrower,
(iv) Special Member, in its capacity as Special Member, may not bind Borrower, and (v) except
as required by any mandatory provision of the Act, Special Member, in its capacity as Special
Member, shall have no right to vote on, approve or otherwise consent to any action by, or matter
relating to, Borrower, including, without limitation, the merger, consolidation or conversion of
Borrower. In order to implement the admission to Borrower of Special Member, Special Member shall
execute a counterpart to the LLC Agreement. Prior to its admission to Borrower as Special Member,
Special Member shall not be a member of Borrower.

          (c) Upon the occurrence of any event that causes the Member to cease to be a member of
Borrower, to the fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the

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continued membership
of Member in Borrower, agree in writing (i) to continue Borrower and (ii) to the admission of the
personal representative or its nominee or designee, as the case may be, as a substitute member of
Borrower, effective as of the occurrence of the event that terminated the continued membership of
Member of Borrower in Borrower. Any action initiated by or brought against Member or Special
Member under any creditors rights laws shall not cause Member or Special Member to cease to be a
member of Borrower and upon the occurrence of such an event, the business of Borrower shall
continue without dissolution. The LLC Agreement shall provide that each of Member and Special
Member waives any right it might have to agree in writing to dissolve Borrower upon the occurrence
of any action initiated by or brought against Member or Special Member under any creditors rights
laws, or the occurrence of an event that causes Member or Special Member to cease to be a member of
Borrower.

          As used in this Section 2.29, “Independent Director” shall mean a duly
appointed member of the board of directors of any SPE Corporation or board of managers or of a
single member Delaware limited liability company which is an SPE who is provided by a
nationally-recognized company that provides professional independent directors who shall not have
been at the time of initial appointment or at any time while serving as an Independent Director,
and may not have been at any time during the preceding five years (i) a stockholder, director,
officer, employee, partner, attorney or counsel of such SPE Corporation, single member Delaware
limited liability company which is an SPE, Borrower or any affiliate of any of them, (ii) a
customer, supplier or other Person who derives any of its purchases or revenues from its activities
with such SPE Corporation, single member Delaware limited liability company which is an SPE,
Borrower or any affiliate of any of them, (iii) a Person or other entity controlling or under
common control with any such stockholder, partner, customer, supplier or other Person, or (iv) a
member of the immediate family of any such stockholder, director, officer, employee, partner,
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 the
management, policies or activities of a Person, whether through ownership of voting securities, by
contract or otherwise. As used herein, the term “affiliate” shall mean: (1) any person
or entity directly or indirectly owning, controlling or holding with power to vote ten percent
(10%) or more of the outstanding voting securities or interests of such other person or entity; (2)
any person or entity ten percent (10%) or more of whose outstanding voting securities are directly
or indirectly owned, controlled or held with power to vote by such other person or entity; (3) any
person or entity directly or indirectly controlling, controlled by or under common control with
such other person or entity; (4) any officer, director or partner of such other person or entity;
(5) if such other person or entity is an officer, director or partner, any company for which such
person or entity acts in any such capacity; and (6) any close relative or spouse of the specified
person.

          Section 2.30 Embargoed Person. At all times throughout the term of the Loan,
including after giving effect to any Sale hereunder, (a) none of the funds or assets of Indemnitor
that are used to repay the Loan or of Borrower shall constitute property of, or shall be
beneficially owned directly or, to Borrower’s best knowledge, indirectly, by any person subject to
sanctions or trade restrictions under United States law (“Embargoed Person” or
“Embargoed Persons”) that are identified on (1) the “List of Specially Designated Nationals
and Blocked Persons” maintained by the Office of Foreign Assets Control (OFAC), U.S. Department of
the Treasury, and/or to Borrower’s best knowledge, as of the date thereof, based upon reasonable

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inquiry by Borrower, on any other similar list maintained by OFAC pursuant to any authorizing
statute including, but not limited to, 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 Order or regulation promulgated thereunder, with the result that
the investment in Borrower or any Indemnitor, as applicable (whether directly or indirectly), is
prohibited by law, or the Loan made by Lender would be in violation of law, or (2) Executive Order
13224 (September 23, 2001) issued by the President of the United States (“Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support
Terrorism”), any related enabling legislation or any other similar Executive Orders, and (b) no
Embargoed Person shall have any direct interest, and to Borrower’s best knowledge, as of the date
hereof, based upon reasonable inquiry by Borrower, indirect interest, of any nature whatsoever in
Borrower or any Indemnitor, as applicable, with the result that the investment in Borrower or any
Indemnitor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in
violation of law.

          Section 2.31 Anti-Money Laundering. At all times throughout the term of the Loan,
including after giving effect to any Transfers permitted pursuant to the Loan Documents, none of
the funds of Borrower or any Indemnitor, as applicable, that are used to repay the Loan shall be
derived from any unlawful activity, with the result that the investment in Borrower or any
Indemnitor, as applicable (whether directly or indirectly), is prohibited by law or the Loan is in
violation of law.

          Section 2.32 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 Mortgage or any of 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 this Mortgage, as requested by Lender in its sole
discretion, that (i) Borrower is not 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; (ii) Borrower is not subject to Federal or state
statutes regulating investments and fiduciary obligations with respect to governmental plans;
and (iii) one or more of the following circumstances is true:

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

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

     (3) Borrower qualifies as an “operating company” within the meaning of 29 C.F.R.
Section 2510.3-101 or an investment company registered under the Investment Company Act of
1940.

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          (c) Borrower shall indemnify Lender and defend and hold Lender harmless from and against all
civil penalties, excise taxes, or other loss, cost damage and expense (including, without
limitation, reasonable attorneys’ fees and disbursements and costs incurred in the investigation,
defense and settlement of claims and losses incurred in correcting any prohibited transaction or in
the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption
under ERISA that may be required, in Lender’s sole discretion) that Lender may incur, directly or
indirectly, as a result of a default under this Section. This indemnity shall survive any
termination, satisfaction or foreclosure of this Mortgage.

          Section 2.33 Opinion Assumptions. Borrower shall at all times conduct its business so
that the assumptions made with respect to Borrower in the Non-Consolidation Opinion shall be true
and correct in all respects.

ARTICLE
III

RESERVES AND CASH MANAGEMENT

          Section 3.1 Reserves Generally.

          (a) As additional security for the payment and performance by Borrower of all duties,
responsibilities and obligations under the Note and the other Loan Documents, Borrower hereby
unconditionally and irrevocably assigns, conveys, pledges, mortgages, transfers, delivers,
deposits, sets over and confirms unto Lender, and hereby grants to Lender a security interest in,
(i) the Payment Reserve, the Impound Account, the Immediate Repair Reserve, the Replacement
Reserve, as applicable (each as hereinafter defined) and any other reserve or escrow account
established pursuant to the terms hereof or of any other Loan Document (collectively, the
“Reserves”), (ii) the accounts into which the Reserves have been deposited, (iii) all
insurance on said accounts, (iv) all accounts, contract rights and general intangibles or other
rights and interests pertaining thereto, (v) all sums now or hereafter therein or represented
thereby, (vi) all replacements, substitutions or proceeds thereof, (vii) all instruments and
documents now or hereafter evidencing the Reserves or such accounts, (viii) all
powers, options, rights, privileges and immunities pertaining to the Reserves (including the
right to make withdrawals therefrom), and (ix) all proceeds of the foregoing. Borrower hereby
authorizes and consents to the account into which the Reserves have been deposited being held in
Lender’s name or the name of any entity servicing the Note for Lender and hereby acknowledges and
agrees that Lender, or at Lender’s election, such servicing agent, shall have exclusive control
over said account. Notice of the assignment and security interest granted to Lender herein may be
delivered by Lender at any time to the financial institution wherein the Reserves have been
established, and Lender, or such servicing entity, shall have possession of all passbooks or other
evidences of such accounts. Borrower hereby assumes all risk of loss with respect to amounts on
deposit in the Reserves. Funds on deposit in the Replacement Reserve shall bear interest at a rate
equal to the then prevailing commercial money market rate. All amounts deemed earned on funds
contributed to the Replacement Reserve at the rate referenced in the immediately preceding sentence
shall be retained by Lender and accumulated for the benefit of Borrower and added to the balance in
the Replacement Reserve and shall be disbursed for payment of the items for which other funds in
the Replacement Reserve are to be disbursed. Borrower shall not be entitled to earn any interest
with respect to funds on deposit in the

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Payment Reserve, the Impound Account and the Immediate
Repairs Reserve. Borrower hereby knowingly, voluntarily and intentionally stipulates, acknowledges
and agrees that the advancement of the funds from the Reserves as set forth herein is at Borrower’s
direction and is not the exercise by Lender of any right of set-off or other remedy upon a Default
or an Event of Default. Borrower hereby waives all right to withdraw funds from the Reserves
except as provided for in this Mortgage. If an Event of Default shall occur hereunder or under any
other of the Loan Documents Lender may, without notice or demand on Borrower, at its option: (A)
withdraw any or all of the funds (including, without limitation, interest) then remaining in the
Reserves and apply the same, after deducting all costs and expenses of safekeeping, collection and
delivery (including, but not limited to, reasonable attorneys’ fees, costs and expenses) to the
Debt or any other obligations of Borrower under the other Loan Documents in such manner as Lender
shall deem appropriate in its sole discretion, and the excess, if any, shall be paid to Borrower,
(B) exercise any and all rights and remedies of a secured party under any applicable Uniform
Commercial Code, or (C) exercise any other remedies available at law or in equity. No such use or
application of the funds contained in the Reserves shall be deemed to cure any Default or Event of
Default.

          (b) The Reserves shall not, unless otherwise explicitly required by applicable law, be or be
deemed to be escrow or trust funds, but, at Lender’s option and in Lender’s discretion, may either
be held in a separate account or be commingled by Lender with the general funds of Lender. The
Reserves are solely for the protection of Lender and entail no responsibility on Lender’s part
beyond the payment of the respective items for which they are held following receipt of bills,
invoices or statements therefor in accordance with the terms hereof and beyond the allowing of due
credit for the sums actually received. Upon assignment of this Mortgage by Lender, any funds in
the Reserves shall be turned over to the assignee and any responsibility of Lender, as assignor,
with respect thereto shall terminate. If the funds in the applicable Reserve shall exceed the
amount of payments actually applied by Lender for the purposes and items for which the applicable
Reserve is held, such excess may be credited by Lender on subsequent payments to be made hereunder
or, at the option of Lender, refunded to Borrower. If, however, the applicable Reserve shall not
contain sufficient funds to pay the sums required by the dates on which such sums are required to
be on deposit in such account, Borrower shall, within ten (10) days after receipt of written notice thereof, deposit with
Lender the full amount of any such deficiency. If Borrower shall fail to deposit with Lender the
full amount of such deficiency as provided above, Lender shall have the option, but not the
obligation, to make such deposit, and all amounts so deposited by Lender, together with interest
thereon at the Default Interest Rate from the date so deposited by Lender until actually paid by
Borrower, shall be immediately paid by Borrower on demand and shall be secured by this Mortgage and
by all of the other Loan Documents securing all or any part of the Debt. If there is an Event of
Default under this Mortgage, Lender may, but shall not be obligated to, apply at any time the
balance then remaining in any or all of the Reserves against the Debt in whatever order Lender
shall subjectively determine. No such application of any or all of the Reserves shall be deemed to
cure any Event of Default. Upon full payment of the Debt in accordance with its terms or at such
earlier time as Lender may elect, the balance of any or all of the Reserves then in Lender’s
possession shall be paid over to Borrower and no other party shall have any right or claim thereto.

          Section 3.2 Payment Reserve.

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          (a) Contemporaneously with the execution hereof, Borrower has established with Lender a
reserve in the amount of the first (1st) payment of principal, interest and deposits for any
applicable reserves or escrow accounts required under the terms of this Mortgage or the other Loan
Documents as calculated by Lender (the “Payment Reserve”). Borrower understands and agrees
that, notwithstanding the establishment of the Payment Reserve as herein required, all of the
proceeds of the Note have been, and shall be considered, fully disbursed and shall bear interest
and be payable on the terms provided therein.

          (b) For so long as no Event of Default has occurred hereunder or under any of the other Loan
Documents, Lender shall, on the First Payment Date (as defined in the Note) under the Note, advance
from the Payment Reserve to itself the amount of the monthly installment due and payable by
Borrower under the Note on the First Payment Date and shall also advance from the Payment Reserve
into the Impound Account the amount of any deposit for taxes and insurance premiums and into the
Replacement Reserve (as hereinafter defined) the amount of any deposit for Repairs (as hereinafter
defined) and into any other reserve account the amount of any deposit in accordance with the terms
of any other Loan Document required to be paid by Borrower concurrently with such monthly
installment pursuant to the terms hereof and thereof. Provided no Default or Event of Default has
occurred, after the scheduled disbursement from the Payment Reserve, any amounts then remaining in
the Payment Reserve shall be paid to Borrower. Nothing contained herein, including, without
limitation, the existence of the Payment Reserve, shall release Borrower of any obligation to make
payments under the Note, this Mortgage or the other Loan Documents strictly in accordance with the
terms hereof or thereof and, in this regard, without limiting the generality of the foregoing,
should the amounts contained in the Payment Reserve not be sufficient to pay in full the monthly
installments and the Impound Account, Replacement Reserve and any other applicable reserve account
deposits referenced above in this subparagraph, Borrower shall be responsible for paying such
deficiency on the First Payment Date.

          Section 3.3 Impound Account. Borrower shall establish and maintain at all times while this Mortgage continues in
effect an
impound account (the “Impound Account”) with Lender for payment of real estate taxes and
assessments and insurance on the Property and as additional security for the Debt. Simultaneously
with the execution hereof, Borrower shall deposit in the Impound Account an amount determined by
Lender to be necessary to ensure that there will be on deposit with Lender an amount which, when
added to the monthly payments subsequently required to be deposited with Lender hereunder on
account of real estate taxes, assessments and insurance premiums, will result in there being on
deposit with Lender in the Impound Account an amount sufficient to pay the next due installment of
real estate taxes and assessments on the Property at least one (1) month prior to the earlier of
(a) the due date thereof or (b) any such date by which Borrower or Lender is required by law to pay
same and the next due annual insurance premiums with respect to the Property at least one (1) month
prior to the due date thereof. Commencing on the first monthly payment date under the Note and
continuing thereafter on each monthly payment date under the Note, Borrower shall pay to Lender,
concurrently with and in addition to the monthly payment due under the Note and until the Debt is
fully paid and performed, deposits in an amount equal to one-twelfth (1/12) of the amount of the
annual real estate taxes and assessments that will next become due and payable on the Property,
plus one-twelfth (1/12) of the amount of the annual premiums that will next become due and payable
on insurance policies which Borrower is required to maintain hereunder, each as

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estimated and determined by Lender. So long as no Default or Event of Default has occurred, and no event has
occurred or failed to occur which with the passage of time, the giving of notice, or both would
constitute an Event of Default (a “Default”), all sums in the Impound Account shall be held
by Lender in the Impound Account to pay said taxes, assessments and insurance premiums before the
same become delinquent. Borrower shall be responsible for ensuring the receipt by Lender, at least
thirty (30) days prior to the respective due date for payment thereof, of all bills, invoices and
statements for all taxes, assessments and insurance premiums to be paid from the Impound Account,
and so long as no Event of Default has occurred, Lender shall pay the governmental authority or
other party entitled thereto directly to the extent funds are available for such purpose in the
Impound Account. In making any payment from the Impound Account, Lender shall be entitled to rely
on any bill, statement or estimate procured from the appropriate public office or insurance company
or agent without any inquiry into the accuracy of such bill, statement or estimate and without any
inquiry into the accuracy, validity, enforceability or contestability of any tax, assessment,
valuation, sale, forfeiture, tax lien or title or claim thereof.

          Section 3.4 Immediate Repair Reserve. Prior to the execution of this Mortgage, Lender
has caused the Property to be inspected and such inspection has revealed that the Property is in
need of certain maintenance, repairs and/or remedial or corrective work. Contemporaneously with
the execution hereof, Borrower has established with Lender a reserve in the amount of $5,250.00
(the “Immediate Repair Reserve”) by depositing such amount with Lender. Borrower shall
cause each of the items described in that certain Property Condition Report (the “Deferred
Maintenance”) to be completed, performed, remediated and corrected to the satisfaction of
Lender and as necessary to bring the Property into compliance with all applicable laws, ordinances,
rules and regulations on or before the expiration of six (6) months after the effective date
hereof, as such time period may be extended by Lender in its sole discretion. So long as no Event
of Default has occurred, all sums in the Immediate Repair Reserve shall be held by Lender in the
Immediate Repair Reserve to pay the costs and expenses of completing the Deferred Maintenance. So long as no Default
or Event of Default has occurred, Lender shall, to the extent funds are available for such purpose
in the Immediate Repair Reserve, disburse to Borrower the amount paid or incurred by Borrower in
completing, performing, remediating or correcting the Deferred Maintenance upon (a) the receipt by
Lender of a written request from Borrower for disbursement from the Immediate Repair Reserve and a
certification by Borrower in a form as may be required by Lender that the applicable item of
Deferred Maintenance has been completed in accordance with the terms of this Mortgage, (b) delivery
to Lender of invoices, receipts or other evidence satisfactory to Lender verifying the costs of the
Deferred Maintenance to be reimbursed, (c) delivery to Lender of a certification from an inspecting
architect, engineer or other consultant reasonably acceptable to Lender describing the completed
work, verifying the completion of the work and the value of the completed work and, if applicable,
certifying that the Property is, as a result of such work, in compliance with all applicable laws,
ordinances, rules and regulations relating to the Deferred Maintenance so performed, and (d)
delivery to Lender of affidavits, lien waivers or other evidence reasonably satisfactory to Lender
showing that all materialmen, laborers, subcontractors and any other parties who might or could
claim statutory or common law liens and are furnishing or have furnished materials or labor to the
Property have been paid all amounts due for such labor and materials furnished to the Property.
Lender shall not be required to make advances from the Immediate Repair Reserve more frequently
than once in any thirty

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(30) day period. In making any payment from the Immediate Repair Reserve,
Lender shall be entitled to rely on such request from Borrower without any inquiry into the
accuracy, validity or contestability of any such amount. Borrower hereby grants to Lender a
power-of-attorney, coupled with an interest, to cause the Deferred Maintenance to be completed,
performed, remediated and corrected to the satisfaction of Lender upon Borrower’s failure to do so
in accordance with the terms and conditions of this Section 3.4, and to apply the amounts
on deposit in the Immediate Repair Reserve to the costs associated therewith, all as Lender may
determine in its sole and absolute discretion but without obligation to do so.

          Section 3.5 Replacement Reserve. As additional security for the Debt, Borrower shall
establish and maintain at all times while this Mortgage continues in effect a repair reserve (the
“Replacement Reserve”) with Lender for payment of costs and expenses incurred by Borrower
in connection with the performance of work to the roofs, chimneys, gutters, downspouts, paving,
curbs, ramps, driveways, balconies, porches, patios, exterior walls, exterior doors and doorways,
windows, elevators and mechanical and HVAC equipment (collectively, the “Repairs”).
Commencing on the first monthly Payment Date under the Note and continuing thereafter on each
monthly Payment Date under the Note, Borrower shall pay to Lender, concurrently with and in
addition to the monthly payment due under the Note and until the Debt is fully paid and performed,
a deposit to the Replacement Reserve in an amount equal to $647.93 per month. So long as no Event
of Default has occurred, all sums in the Replacement Reserve shall be held by Lender in the
Replacement Reserve to pay the costs and expenses of Repairs. So long as no Default or Event of
Default has occurred, Lender shall, to the extent funds are available for such purpose in the
Replacement Reserve, disburse to Borrower the amount paid or incurred by Borrower in performing
such Repairs within ten (10) days following: (a) the receipt by Lender of a written request from
Borrower for disbursement from the Replacement Reserve and a certification by Borrower in a form
approved in writing by Lender that the applicable item of Repair has been
completed; (b) the delivery to Lender of invoices, receipts or other evidence satisfactory to
Lender, verifying the cost of performing the Repairs; (c) for disbursement requests in excess of
$25,000.00, the delivery to Lender of affidavits, lien waivers or other evidence reasonably
satisfactory to Lender showing that all materialmen, laborers, subcontractors and any other parties
who might or could claim statutory or common law liens and are furnishing or have furnished
material or labor to the Property have been paid all amounts due for labor and materials furnished
to the Property; (d) for disbursement requests in excess of $25,000.00, delivery to Lender of a
certification from an inspecting architect or other third party acceptable to Lender describing the
completed Repairs and verifying the completion of the Repairs and the value of the completed
Repairs; and (e) for disbursement requests in excess of $25,000.00, delivery to Lender of a new
certificate of occupancy for the portion of the Improvements covered by such Repairs, if said new
certificate of occupancy is required by law, or a certification by Borrower that no new certificate
of occupancy is required. Lender shall not be required to make advances from the Replacement
Reserve more frequently than once in any thirty (30) day period. In making any payment from the
Replacement Reserve, Lender shall be entitled to rely on such request from Borrower without any
inquiry into the accuracy, validity or contestability of any such amount. Lender may, at
Borrower’s expense, make or cause to be made during the term of this Mortgage an annual inspection
of the Property to determine the need, as determined by Lender in its reasonable judgment, for
further Repairs of the Property. In the event that such inspection reveals that further Repairs of
the Property are required, Lender shall provide Borrower with a written description of the required
Repairs and Borrower shall

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complete such Repairs to the reasonable satisfaction of Lender within
ninety (90) days after the receipt of such description from Lender, or such later date as may be
approved by Lender in its sole discretion.

ARTICLE
IV

EVENTS OF DEFAULT

          Section 4.1 Events of Default. The occurrence of any of the following events shall be
an Event of Default hereunder:

          (a) Borrower (x) fails to pay any payments due under the Note or to the Reserves on the date
when the same is due and payable, or (y) fails to pay any money to Lender required hereunder at the
time or within any applicable grace period set forth herein, or if no grace period is set forth
herein, then within seven (7) days of the date such payment is due (except those regarding payments
to be made under the Note or to the Reserves, which failure is not subject to any grace or cure
period).

          (b) Borrower fails to provide insurance as required by Section 2.3 hereof or fails to
perform any covenant, agreement, obligation, term or condition set forth in Section 2.27 or
Section 2.29 hereof.

          (c) Borrower fails to perform any other covenant, agreement, obligation, term or condition set
forth herein, other than those otherwise described in this Section 4.1, and, to the extent
such failure or default is susceptible of being cured, the continuance of such failure or
default for thirty (30) days after written notice thereof from Lender to Borrower;
provided, however, that if such default is susceptible of cure but such cure cannot
be accomplished with reasonable diligence within said period of time, and if Borrower commences to
cure such default promptly after receipt of notice thereof from Lender, and thereafter prosecutes
the curing of such default with reasonable diligence, such period of time shall be extended for
such period of time as may be necessary to cure such default with reasonable diligence, but not to
exceed an additional sixty (60) days.

          (d) Any representation or warranty made herein, in or in connection with any application or
commitment relating to the loan evidenced by the Note, or in any of the other Loan Documents to
Lender by Borrower, by any principal, general partner, manager or member in Borrower, or by any
Indemnitor is determined by Lender to have been false or misleading in any material respect at the
time made.

          (e) There shall be a sale, conveyance, disposition, alienation, hypothecation, leasing,
assignment, pledge, mortgage, granting of a security interest in or other transfer or further
encumbrancing of the Property, Borrower or its general partners or managing members, or any portion
thereof or any interest therein, in violation of Section 2.9 hereof.

          (f) A default occurs under any of the other Loan Documents which has not been cured within any
applicable grace or cure period therein provided.

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          (g) Borrower, general partner or managing member in Borrower or any Indemnitor becomes
insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of
creditors, or files a petition in bankruptcy, or is voluntarily adjudicated insolvent or bankrupt
or admits in writing the inability to pay its debts as they mature, or petitions or applies to any
tribunal for or consents to or fails to contest the appointment of a receiver, trustee, custodian
or similar officer for Borrower, for any such general partner or managing member of Borrower or for
any Indemnitor or for a substantial part of the assets of Borrower, of any such general partner or
managing member of Borrower or of any Indemnitor, or commences any case, proceeding or other action
under any bankruptcy, reorganization, arrangement, readjustment or debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect.

          (h) A petition is filed or any case, proceeding or other action is commenced against Borrower,
against any general partner or managing member of Borrower or against any Indemnitor seeking to
have an order for relief entered against it as debtor or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts or other relief under any
law relating to bankruptcy, insolvency, arrangement, reorganization, receivership or other debtor
relief under any law or statute of any jurisdiction, whether now or hereafter in effect, or a court
of competent jurisdiction enters an order for relief against Borrower, against any general partner
or managing member of Borrower or against any Indemnitor, as debtor, or an order, judgment or
decree is entered appointing, with or without the consent of Borrower, of any such general partner
or managing member of Borrower or of any Indemnitor, a receiver, trustee, custodian or similar
officer for Borrower, for any such general partner or managing member of Borrower or for any
Indemnitor, or for any substantial part of any of the properties of Borrower, of any such general
partner or managing member of Borrower or of any Indemnitor, and if any such event shall occur, such petition, case, proceeding,
action, order, judgment or decree is not dismissed within sixty (60) days after being commenced.

          (i) The Property or any part thereof is taken on execution or other process of law in any
action against Borrower.

          (j) Borrower abandons all or a portion of the Property.

          (k) The holder of any lien or security interest on the Property (without implying the consent
of Lender to the existence or creation of any such lien or security interest), whether superior or
subordinate to this Mortgage or any of the other Loan Documents, declares a default and such
default is not cured within any applicable grace or cure period set forth in the applicable
document or such holder institutes foreclosure or other proceedings for the enforcement of its
remedies thereunder.

          (l) The Property, or any part thereof, is subjected to waste or to removal, demolition or
material alteration so that the value of the Property is materially diminished thereby and Lender
determines that it is not adequately protected from any loss, damage or risk associated therewith.

          (m) Any dissolution, termination, partial or complete liquidation, merger or consolidation of
Borrower, any general partner or any managing member, or any Indemnitor.

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ARTICLE V

REMEDIES

          Section 5.1 Remedies Available. If there shall occur an Event of Default under this
Mortgage, then this Mortgage is subject to foreclosure as provided by law and Lender may, at its
option and by or through a trustee, nominee, assignee or otherwise, to the fullest extent permitted
by law, exercise any or all of the following rights, remedies and recourses, either successively or
concurrently:

          (a) Acceleration. Accelerate the maturity date of the Note and declare any or all of
the Debt to be immediately due and payable without any presentment, demand, protest, notice or
action of any kind whatever (each of which is hereby expressly waived by Borrower), whereupon the
same shall become immediately due and payable. Upon any such acceleration, payment of such
accelerated amount shall constitute a prepayment of the principal balance of the Note and any
applicable prepayment fee provided for in the Note shall then be immediately due and payable.

          (b) Entry on the Property. Either in person or by agent, with or without bringing any
action or proceeding, or by a receiver appointed by a court and without regard to the adequacy of
its security, enter upon and take possession of the Property, or any part thereof, without force or
with such force as is permitted by law and without notice or process or with such notice or process
as is required by law, unless such notice and process is waivable, in which
case Borrower hereby waives such notice and process, and do any and all acts and perform any
and all work which may be desirable or necessary in Lender’s judgment to complete any unfinished
construction on the Premises, to preserve the value, marketability or rentability of the Property,
to increase the income therefrom, to manage and operate the Property or to protect the security
hereof, and all sums expended by Lender therefor, together with interest thereon at the Default
Interest Rate, shall be immediately due and payable to Lender by Borrower on demand and shall be
secured hereby and by all of the other Loan Documents securing all or any part of the Debt.

          (c) Collect Rents and Profits. With or without taking possession of the Property, sue
or otherwise collect the Rents and Profits, including those past due and unpaid.

          (d) Appointment of Receiver. Upon, or at any time prior or after, initiating the
exercise of any power of sale, instituting any judicial foreclosure or instituting any other
foreclosure of the liens and security interests provided for herein or any other legal proceedings
hereunder, make application to a court of competent jurisdiction for appointment of a receiver for
all or any part of the Property, as a matter of strict right and without notice to Borrower and
without regard to the adequacy of the Property for the repayment of the Debt or the solvency of
Borrower or any person or persons liable for the payment of the Debt, and Borrower does hereby
irrevocably consent to such appointment, waive any and all notices of and defenses to such
appointment and agree not to oppose any application therefor by Lender, but nothing herein is to be
construed to deprive Lender of any other right, remedy or privilege Lender may now have under the
law to have a receiver appointed, provided, however, that the appointment of such
receiver, trustee or other appointee by virtue of any court order, statute or regulation shall not

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impair or in any manner prejudice the rights of Lender to receive payment of the Rents and Profits
pursuant to other terms and provisions hereof. Any such receiver shall have all of the usual
powers and duties of receivers in similar cases, including, without limitation, the full power to
hold, develop, rent, lease, manage, maintain, operate and otherwise use or permit the use of the
Property upon such terms and conditions as said receiver may deem to be prudent and reasonable
under the circumstances as more fully set forth in Section 5.3 below. Such receivership
shall, at the option of Lender, continue until full payment of all of the Debt or until title to
the Property shall have passed by foreclosure sale under this Mortgage or deed in lieu of
foreclosure.

          (e) Foreclosure. Immediately commence an action to foreclose this Mortgage or to
specifically enforce its provisions with respect to any of the Debt, pursuant to the statutes in
such case made and provided, and sell the Property or cause the Property to be sold in accordance
with the requirements and procedures provided by said statutes in a single parcel or in several
parcels at the option of Lender. In the event foreclosure proceedings are instituted by Lender,
all expenses incident to such proceedings, including, but not limited to, reasonable attorneys’
fees and costs, shall be paid by Borrower and secured by this Mortgage and by all of the other Loan
Documents securing all or any part of the Debt. The Debt and all other obligations secured by this
Mortgage, including, without limitation, interest at the Default Interest Rate any prepayment
charge, fee or premium required to be paid under the Note in order to prepay principal (to the
extent permitted by applicable law), reasonable attorneys’ fees and any other amounts due and
unpaid to Lender under the Loan Documents, may be bid by Lender in the event of a foreclosure sale
hereunder. In the event of a judicial sale pursuant to a foreclosure decree, it is understood and agreed that Lender or its assigns may become the
purchaser of the Property or any part thereof.

          (f) Judicial Remedies. Proceed by suit or suits, at law or in equity, instituted by
or on behalf of Lender, to enforce the payment of the Debt or the other obligations of Borrower
hereunder or pursuant to the Loan Documents, to foreclose the liens and security interests of this
Mortgage as against all or any part of the Property, and to have all or any part of the Property
sold under the judgment or decree of a court of competent jurisdiction. This remedy shall be
cumulative of any other non-judicial remedies available to Lender with respect to the Loan
Documents. Proceeding with the request or receiving a judgment for legal relief shall not be or be
deemed to be an election of remedies or bar any available non-judicial remedy of Lender.

          (g) Other. Exercise any other right or remedy available hereunder, under any of the
other Loan Documents or at law or in equity.

          Section 5.2 Application of Proceeds. To the fullest extent permitted by law, the
proceeds of any sale under this Mortgage shall be applied, to the extent funds are so available, to
the following items in such order as Lender in its discretion may determine:

          (a) To payment of the reasonable costs, expenses and fees of taking possession of the
Property, and of holding, operating, maintaining, using, leasing, repairing, improving, marketing
and selling the same and of otherwise enforcing Lender’s rights and remedies hereunder and under
the other Loan Documents, including, but not limited to,

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receivers’ fees, court costs, attorneys’,
accountants’, appraisers’, managers’ and other professional fees, title charges and transfer taxes.

          (b) To payment of all sums expended by Lender under the terms of any of the Loan Documents and
not yet repaid, together with interest on such sums at the Default Interest Rate.

          (c) To payment of the Debt and all other obligations secured by this Mortgage, including,
without limitation, interest at the Default Interest Rate and, to the extent permitted by
applicable law, any prepayment fee, charge or premium required to be paid under the Note in order
to prepay principal, in any order that Lender chooses in its sole discretion.

          (d) The remainder, if any, of such funds shall be disbursed to Borrower or to the person or
persons legally entitled thereto.

          Section 5.3 Right and Authority of Receiver or Lender in the Event of Default; Power of
Attorney. Upon the occurrence of an Event of Default, and entry upon the Property pursuant to
Section 5.1(b) hereof or appointment of a receiver pursuant to Section 5.1(d)
hereof, and under such terms and conditions as may be prudent and reasonable under the
circumstances in Lender’s or the receiver’s sole discretion, all at Borrower’s expense, Lender or
said receiver, or such other persons or entities as they shall hire, direct or engage, as the case
may be, may do or permit one or more of the following, successively or concurrently: (a) enter upon and take
possession and control of any and all of the Property; (b) take and maintain possession of all
documents, books, records, papers and accounts relating to the Property; (c) exclude Borrower and
its agents, servants and employees wholly from the Property; (d) manage and operate the Property;
(e) preserve and maintain the Property; (f) make repairs and alterations to the Property; (g)
complete any construction or repair of the Improvements, with such changes, additions or
modifications of the plans and specifications or intended disposition and use of the Improvements
as Lender may in its sole discretion deem appropriate or desirable to place the Property in such
condition as will, in Lender’s sole discretion, make it or any part thereof readily marketable or
rentable; (h) conduct a marketing or leasing program with respect to the Property, or employ a
marketing or leasing agent or agents to do so, directed to the leasing or sale of the Property
under such terms and conditions as Lender may in its sole discretion deem appropriate or desirable;
(i) employ such contractors, subcontractors, materialmen, architects, engineers, consultants,
managers, brokers, marketing agents, or other employees, agents, independent contractors or
professionals, as Lender may in its sole discretion deem appropriate or desirable to implement and
effectuate the rights and powers herein granted; (j) execute and deliver, in the name of Lender as
attorney-in-fact and agent of Borrower or in its own name as Lender, such documents and instruments
as are necessary or appropriate to consummate authorized transactions; (k) enter such leases,
whether of real or personal property, or tenancy agreements, under such terms and conditions as
Lender may in its sole discretion deem appropriate or desirable; (1) collect and receive the Rents
and Profits from the Property; (m) eject tenants or repossess personal property, as provided by
law, for breaches of the conditions of their leases or other agreements; (n) initiate a cause of
action for unpaid Rents and Profits, payments, income or proceeds in the name of Borrower or
Lender; (o) maintain actions in forcible entry and detainer, ejectment for possession and actions
in distress for rent; (p) compromise or give acquittance for Rents and Profits, payments, income or
proceeds that may become due; (q) delegate or assign

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any and all rights and powers given to Lender
by this Mortgage; and (r) do any acts which Lender in its sole discretion deems appropriate or
desirable to protect the security hereof and use such measures, legal or equitable, as Lender may
in its sole discretion deem appropriate or desirable to implement and effectuate the provisions of
this Mortgage. This Mortgage shall constitute a direction to and full authority to any lessee, or
other third party who has heretofore dealt or contracted or may hereafter deal or contract with
Borrower or Lender, at the request of Lender, to pay all amounts owing under any Lease, contract,
concession, license or other agreement to Lender without proof of the Event of Default relied upon.
Any such lessee or third party is hereby irrevocably authorized to rely upon and comply with (and
shall be fully protected by Borrower in so doing) any request, notice or demand by Lender for the
payment to Lender of any Rents and Profits or other sums which may be or thereafter become due
under its Lease, contract, concession, license or other agreement, or for the performance of any
undertakings under any such Lease, contract, concession, license or other agreement, and shall have
no right or duty to inquire whether any Event of Default under this Mortgage or under any of the
other Loan Documents has actually occurred or is then existing. Borrower hereby constitutes and
appoints Lender, its assignees, successors, transferees and nominees, as Borrower’s true and lawful
attorney-in-fact and agent, with full power of substitution in the Property, in Borrower’s name,
place and stead, to do or permit any one or more of the foregoing described rights, remedies,
powers and authorities, successively or concurrently, and said power of attorney shall be deemed a
power coupled with an interest and irrevocable so long as any portion of the Debt is
outstanding. Any money advanced by Lender in connection with any action taken under this
Section 5.3, together with interest thereon at the Default Interest Rate from the date of
making such advancement by Lender until actually paid by Borrower, shall be a demand obligation
owing by Borrower to Lender and shall be secured by this Mortgage and by every other instrument
securing all or any portion of the Debt.

          Section 5.4 Occupancy After Foreclosure. In the event there is a foreclosure sale
hereunder and at the time of such sale, Borrower or Borrower’s representatives, successors or
assigns, or any other persons claiming any interest in the Property by, through or under Borrower
(except tenants of space in the Improvements subject to leases entered into prior to the date
hereof), are occupying or using the Property, or any part thereof, then, to the extent not
prohibited by applicable law, each and all shall, at the option of Lender or the purchaser at such
sale, as the case may be, immediately become the tenant of the purchaser at such sale, which
tenancy shall be a tenancy from day-to-day, terminable at the will of either landlord or tenant, at
a reasonable rental per day based upon the value of the Property occupied or used, such rental to
be due daily to the purchaser. Further, to the extent permitted by applicable law, in the event
the tenant fails to surrender possession of the Property upon the termination of such tenancy, the
purchaser shall be entitled to institute and maintain an action for unlawful detainer of the
Property in the appropriate court of the county in which the Premises is located.

          Section 5.5 Notice to Account Debtors. Lender may, at any time after an Event of
Default, notify the account debtors and obligors of any accounts, chattel paper, negotiable
instruments or other evidences of indebtedness to Borrower included in the Property to pay Lender
directly. Borrower shall at any time or from time to time upon the request of Lender provide to
Lender a current list of all such account debtors and obligors and their addresses.

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          Section 5.6 Cumulative Remedies. All remedies contained in this Mortgage are
cumulative and Lender shall also have all other remedies provided at law and in equity or in any
other Loan Documents. Such remedies may be pursued separately, successively or concurrently at the
sole subjective direction of Lender and may be exercised in any order and as often as occasion
therefor shall arise. No act of Lender shall be construed as an election to proceed under any
particular provisions of this Mortgage to the exclusion of any other provision of this Mortgage or
as an election of remedies to the exclusion of any other remedy which may then or thereafter be
available to Lender. No delay or failure by Lender to exercise any right or remedy under this
Mortgage shall be construed to be a waiver of that right or remedy or of any Event of Default.
Lender may exercise any one or more of its rights and remedies at its option without regard to the
adequacy of its security.

          Section 5.7 Payment of Expenses. Borrower shall pay on demand all of Lender’s
expenses incurred in any efforts to enforce any terms of this Mortgage, whether or not any lawsuit
is filed and whether or not foreclosure is commenced but not completed, including, but not limited
to, reasonable legal fees and disbursements, fees of any Rating Agency, fees related to any No-Downgrade Confirmation,
foreclosure costs and title charges, together with interest thereon from and after the date
incurred by Lender until actually paid by Borrower at the Default Interest Rate, and the same shall
be secured by this Mortgage and by all of the other Loan Documents securing all or any part of the
Debt.

ARTICLE
VI

MISCELLANEOUS TERMS AND CONDITIONS

          Section 6.1 Time of Essence. Time is of the essence with respect to all provisions of
this Mortgage.

          Section 6.2 Release of Mortgage. If all of the Debt be paid, then and in that event
only, all rights under this Mortgage, except for those provisions hereof which by their terms
survive, shall terminate and the Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced hereby, which shall be promptly released of record
by Lender in due form at Borrower’s cost. No release of this Mortgage or the lien hereof shall be
valid unless executed by Lender.

          Section 6.3 Certain Rights of Lender. Without affecting Borrower’s liability for the
payment of any of the Debt, Lender may from time to time and without notice to Borrower: (a)
release any person liable for the payment of the Debt; (b) extend or modify the terms of payment of
the Debt; (c) accept additional real or personal property of any kind as security or alter,
substitute or release any property securing the Debt; (d) recover any part of the Property; (e)
consent in writing to the making of any subdivision map or plat thereof; (f) join in granting any
easement therein; or (g) join in any extension agreement of this Mortgage or any agreement
subordinating the lien hereof.

          Section 6.4 Waiver of Certain Defenses. No action for the enforcement of the lien
hereof or of any provision hereof shall be subject to any defense which would not be good

63

 

and
available to the party interposing the same in an action at law upon the Note or any of the other
Loan Documents.

          Section 6.5 Notices. All notices, demands, requests or other communications to be
sent by one party to the other hereunder or required by law shall be in writing and shall be deemed
to have been validly given or served by delivery of the same in person to the intended addressee,
or by depositing the same with Federal Express or another reputable private courier service for
next business day delivery, or by depositing the same in the United States mail, postage prepaid,
registered or certified mail, return receipt requested, in any event addressed to the intended
addressee at its address set forth on the first page of this Mortgage or at such other address
as may be designated by such party as herein provided. All notices, demands and requests shall be
effective upon such personal delivery, or one (1) business day after being deposited with the
private courier service, or two (2) business days after being deposited in the United States mail
as required above. Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given as herein required shall be deemed to be receipt of
the notice, demand or request sent. By giving to the other party hereto at least fifteen (15)
days’ prior written notice thereof in accordance with the provisions hereof, the parties hereto
shall have the right from time to time to change their respective addresses and each shall have the
right to specify as its address any other address within the United States of America.

          Section 6.6 Successors and Assigns; Joint and Several Liability. The terms,
provisions, indemnities, covenants and conditions hereof shall be binding upon Borrower and the
successors and assigns of Borrower, including all successors in interest of Borrower in and to all
or any part of the Property, and shall inure to the benefit of Lender, its directors, officers,
shareholders, employees and agents and their respective successors and assigns and shall constitute
covenants running with the land. All references in this Mortgage to Borrower or Lender shall be
deemed to include all such parties’ successors and assigns, and the term “Lender” as used
herein shall also mean and refer to any lawful holder or owner, including pledgees and
participants, of any of the Debt. If Borrower consists of more than one person or entity, each is
jointly and severally liable to perform the obligations of Borrower hereunder and all
representations, warranties, covenants and agreements made by Borrower hereunder are joint and
several.

          Section 6.7 Severability. A determination that any provision of this Mortgage is
unenforceable or invalid shall not affect the enforceability or validity of any other provision,
and any determination that the application of any provision of this Mortgage to any person or
circumstance is illegal or unenforceable shall not affect the enforceability or validity of such
provision as it may apply to any other persons or circumstances.

          Section 6.8 Gender. Within this Mortgage, words of any gender shall be held and
construed to include any other gender, and words in the singular shall be held and construed to
include the plural, and vice versa, unless the context otherwise requires.

          Section 6.9 Waiver; Discontinuance of Proceedings. Lender may waive any single Event
of Default by Borrower hereunder without waiving any other prior or subsequent Event of Default.
Lender may remedy any Event of Default by Borrower hereunder without

64

 

waiving the Event of Default
remedied. Neither the failure by Lender to exercise, nor the delay by Lender in exercising, any
right, power or remedy upon any Event of Default by Borrower hereunder shall be construed as a
waiver of such Event of Default or as a waiver of the right to exercise any such right, power or
remedy at a later date. No single or partial exercise by Lender of any right, power or remedy
hereunder shall exhaust the same or shall preclude any other or further exercise thereof, and every such right, power
or remedy hereunder may be exercised at any time and from time to time. No modification or waiver
of any provision hereof nor consent to any departure by Borrower therefrom shall in any event be
effective unless the same shall be in writing and signed by Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose given. No notice to
nor demand on Borrower in any case shall of itself entitle Borrower to any other or further notice
or demand in similar or other circumstances. Acceptance by Lender of any payment in an amount less
than the amount then due on any of the Debt shall be deemed an acceptance on account only and shall
not in any way affect the existence of an Event of Default. In case Lender shall have proceeded to
invoke any right, remedy or recourse permitted hereunder or under the other Loan Documents and
shall thereafter elect to discontinue or abandon the same for any reason, Lender shall have the
unqualified right to do so and, in such an event, Borrower and Lender shall be restored to their
former positions with respect to the Debt, the Loan Documents, the Property and otherwise, and the
rights, remedies, recourses and powers of Lender shall continue as if the same had never been
invoked.

          Section 6.10 Section Headings. The headings of the sections and paragraphs of this
Mortgage are for convenience of reference only, are not to be considered a part hereof and shall
not limit or otherwise affect any of the terms hereof.

          Section 6.11 GOVERNING LAW. THIS MORTGAGE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PREMISES IS LOCATED, PROVIDED THAT TO
THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, SUCH FEDERAL LAW
SHALL SO GOVERN AND BE CONTROLLING, AND PROVIDED FURTHER THAT THE LAWS OF THE STATE
IN WHICH THE PREMISES IS LOCATED SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS
AND SECURITY INTERESTS IN THE PROPERTY LOCATED IN SUCH STATE.

          Section 6.12 Counting of Days. The term “days” when used herein shall mean
calendar days. If any time period ends on a Saturday, Sunday or holiday officially recognized by
the state within which the Premises is located, the period shall be deemed to end on the next
succeeding business day. The term “business day” when used herein shall mean a weekday,
Monday through Friday, except a legal holiday or a day on which banking institutions in New York,
New York are authorized by law to be closed.

          Section 6.13 Relationship of the Parties. The relationship between Borrower and
Lender is that of a borrower and a lender only and neither of those parties is, nor shall it hold
itself out to be, the agent, employee, joint venturer or partner of the other party.

65

 

          Section 6.14 Application of the Proceeds of the Note. To the extent that proceeds of
the Note are used to pay indebtedness secured by any outstanding lien, security interest, charge or
prior encumbrance against the Property, such proceeds have been advanced by Lender at Borrower’s
request and Lender shall be subrogated to any and all rights, security interests and liens owned by
any owner or holder of such outstanding liens, security interests, charges or encumbrances,
irrespective of whether said liens, security interests, charges or encumbrances are released.

          Section 6.15 Unsecured Portion of Indebtedness. If any part of the Debt cannot be
lawfully secured by this Mortgage or if any part of the Property cannot be lawfully subject to the
lien and security interest hereof to the full extent of such indebtedness, then all payments made
shall be applied on said indebtedness first in discharge of that portion thereof which is unsecured
by this Mortgage.

          Section 6.16 Cross Default. An Event of Default hereunder which has not been cured
within any applicable grace or cure period shall be a default under each of the other Loan
Documents.

          Section 6.17 Interest After Sale. In the event the Property or any part thereof shall
be sold upon foreclosure as provided hereunder, to the extent permitted by law, the sum for which
the same shall have been sold shall, for purposes of redemption (pursuant to the laws of the state
in which the Premises is located), bear interest at the Default Interest Rate.

          Section 6.18 Inconsistency with Other Loan Documents. In the event of any
inconsistency between the provisions hereof and the provisions in any of the other Loan Documents,
it is intended that the provisions of the Note shall control over the provisions of this Mortgage,
and that the provisions of this Mortgage shall control over the provisions of the Lease Assignment,
the Indemnity and Guaranty Agreement, the Environmental Indemnity Agreement, and the other Loan
Documents.

          Section 6.19 Construction of this Document. This document may be construed as a
mortgage, security deed, deed of trust, chattel mortgage, conveyance, assignment, security
agreement, pledge, financing statement, hypothecation or contract, or any one or more of the
foregoing, in order to fully effectuate the liens and security interests created hereby and the
purposes and agreements herein set forth.

          Section 6.20 No Merger. It is the desire and intention of the parties hereto that
this Mortgage and the lien hereof do not merge in fee simple title to the Property. It is hereby
understood and agreed that should Lender acquire any additional or other interests in or to the
Property or the ownership
thereof, then, unless a contrary intent is manifested by Lender as evidenced by an appropriate
document duly recorded, this Mortgage and the lien hereof shall not merge in such other or
additional interests in or to the Property, toward the end that this Mortgage may be foreclosed as
if owned by a stranger to said other or additional interests.

          Section 6.21 Rights With Respect to Junior Encumbrances. Any person or entity
purporting to have or to take a junior mortgage or other lien upon the Property or any interest
therein shall be subject to the rights of Lender to amend, modify, increase, vary, alter or

66

 

supplement this Mortgage, the Note or any of the other Loan Documents, and to extend the maturity
date of the Debt, and to increase the amount of the Debt, and to waive or forebear the exercise of
any of its rights and remedies hereunder or under any of the other Loan Documents and to release
any collateral or security for the Debt, in each and every case without obtaining the consent of
the holder of such junior lien and without the lien or security interest of this Mortgage losing
its priority over the rights of any such junior lien.

          Section 6.22 Lender May File Proofs of Claim. In the case of any receivership,
insolvency, bankruptcy, reorganization, arrangement, adjustment, composition or other proceedings
affecting Borrower or the principals, general partners or managing members in Borrower, or their
respective creditors or property, Lender, to the extent permitted by law, shall be entitled to file
such proofs of claim and other documents as may be necessary or advisable in order to have the
claims of Lender allowed in such proceedings for the entire Debt at the date of the institution of
such proceedings and for any additional amount which may become due and payable by Borrower
hereunder after such date.

          Section 6.23 Fixture Filing. This Mortgage shall be effective from the date of its
recording as a financing statement filed as a fixture filing with respect to all goods constituting
part of the Property which are or are to become fixtures. This Mortgage shall also be effective as
a financing statement covering minerals or the like (including oil and gas) and is to be filed for
record in the real estate records of the county where the Premises is situated. The mailing
address of Borrower and the address of Lender from which information concerning the security
interests may be obtained are set forth in Section 2.18 above.

          Section 6.24 After-Acquired Property. All property acquired by Borrower after the
date of this Mortgage which by the terms of this Mortgage shall be subject to the lien and the
security interest created hereby, shall immediately upon the acquisition thereof by Borrower and
without further mortgage, conveyance or assignment become subject to the lien and security interest
created by this Mortgage. Nevertheless, Borrower shall execute, acknowledge, deliver and record or
file, as appropriate, all and every such further mortgages, security agreements, financing
statements, assignments and assurances as Lender shall require for accomplishing the purposes of
this Mortgage.

          Section 6.25 No Representation. By accepting delivery of any item required to be observed, performed or fulfilled or
to be
given to Lender pursuant to the Loan Documents, including, but not limited to, any officer’s
certificate, balance sheet, statement of profit and loss or other financial statement, survey,
appraisal or insurance policy, Lender shall not be deemed to have warranted, consented to, or
affirmed the sufficiency, legality, effectiveness or legal effect of the same, or of any term,
provision or condition thereof, and such acceptance of delivery thereof shall not be or constitute
any warranty, consent or affirmation with respect thereto by Lender.

          Section 6.26 Counterparts. This Mortgage may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed an
original, and all of which shall be taken to be one and the same instrument, for the same effect as
if all parties hereto had signed the same signature page. Any signature page of this Mortgage may
be detached from any counterpart of this Mortgage without impairing the legal effect of any

67

 

signatures thereon and may be attached to another counterpart of this Mortgage identical in form
hereto but having attached to it one or more additional signature pages.

          Section 6.27 Personal Liability. Notwithstanding anything to the contrary contained
in this Mortgage, the liability of Borrower and its officers, directors, general partners,
managers, members and principals for the Debt and for the performance of the other agreements,
covenants and obligations contained herein and in the Loan Documents shall be limited as set forth
in the Note.

          Section 6.28 Recording and Filing. Borrower will cause the Loan Documents and all
amendments and supplements thereto and substitutions therefor to be recorded, filed, re-recorded
and re-filed in such manner and in such places as Lender shall reasonably request, and will pay on
demand all such recording, filing, re-recording and re-filing taxes, fees and other charges.
Borrower shall reimburse Lender, or its servicing agent, for the costs incurred in obtaining a tax
service company to verify the status of payment of taxes and assessments on the Property.

          Section 6.29 Entire Agreement and Modifications. This Mortgage and the other Loan
Documents contain the entire agreements between the parties relating to the subject matter hereof
and thereof and all prior agreements relative hereto and thereto which are not contained herein or
therein are terminated. This Mortgage and the other Loan Documents may not be amended, revised,
waived, discharged, released or terminated orally but only by a written instrument or instruments
executed by the party against which enforcement of the amendment, revision, waiver, discharge,
release or termination is asserted. Any alleged amendment, revision, waiver, discharge, release or
termination which is not so documented shall not be effective as to any party.

          Section 6.30 Intentionally Reserved.

          Section 6.31 Secondary Market. Lender may sell, transfer and deliver the Note and the Loan Documents to one or more
investors
in the secondary mortgage market (a “Secondary Market Transaction”). In connection with
such sale, Lender may retain or assign responsibility for servicing the loan evidenced by the Note
or may delegate some or all of such responsibility and/or obligations to a servicer, including, but
not limited to, any subservicer or master servicer, on behalf of the Investors (as hereinafter
defined). All references to Lender herein shall refer to and include, without limitation, any such
servicer, to the extent applicable.

          Section 6.32 Dissemination of Information. If Lender determines at any time to sell,
transfer or assign the Note, this Mortgage and the other Loan Documents, and any or all servicing
rights with respect thereto, or to grant participations therein (the “Participations”) or
issue mortgage pass-through certificates or other securities evidencing a beneficial interest in a
rated or unrated public offering or private placement (the “Securities”), Lender may
forward to each purchaser, transferee, Lender, servicer, participant, investor, or their respective
successors in such Participations and/or Securities (collectively, the “Investors”) or any
rating agency rating such Securities (each a “Rating Agency”), each prospective Investor
and each of the foregoing’s respective counsel, all documents and information which Lender now has
or may hereafter acquire relating to the Debt, to Borrower, any guarantor, any indemnitor, and the
Property, which

68

 

shall have been furnished by Borrower and any Indemnitor, as Lender determines
necessary or desirable.

          Section 6.33 Certain Matters Relating to Property Located in the State of
Connecticut. With respect to the Property which is located in the State of Connecticut,
notwithstanding anything contained herein to the contrary.

(a) This Mortgage secures and Debt includes: (i) all advances made by Lender with respect
to any of the Property for the payment of taxes, maintenance charges, insurance premiums or
costs incurred for the protection of any of the Property or the lien of this Mortgage and
(ii) all expenses incurred by Lender by reason of an Event of Default hereunder. This
Mortgage shall constitute a lien on Borrower’s fee interest in the Property from the time
this Mortgage is left of record (or, if this is a purchase money mortgage, from the time of
delivery hereof to Lender) for, among other things, all such advances and expenses, plus
interest thereon, regardless of the time when such advances are made or such expenses are
incurred.

(c) Borrower represents and warrants to Lender that Borrower is organized for a profit and
is engaged primarily in commercial, manufacturing, industrial or other non-consumer pursuits
(within the meaning of Section 37-9 of the Connecticut General Statutes).

(d) Borrower represents and warrants to Lender that no part of the Premises has, at any time
during the period of three (3) years immediately preceding the date of this Mortgage, been
included in the “property description” of any real estate contiguous with the Property
(within the meaning of Section 22a-452a(c) of the Connecticut General Statutes).

(e) BORROWER ACKNOWLEDGES THAT IT HAS THE RIGHT UNDER SECTION 52-278a ET SEQ. OF THE
CONNECTICUT GENERAL STATUTES, SUBJECT TO CERTAIN LIMITATIONS, TO NOTICE OF AND HEARING ON
THE RIGHT OF LENDER TO OBTAIN A PREJUDGMENT REMEDY, SUCH AS ATTACHMENT, GARNISHMENT OR
REPLEVIN, UPON COMMENCING ANY LITIGATION AGAINST BORROWER. NOTWITHSTANDING SUCH RIGHT,
BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE, JUDICIAL HEARING OR PRIOR COURT ORDER TO WHICH
IT MIGHT OTHERWISE HAVE THE RIGHT UNDER SAID STATUTE OR UNDER ANY OTHER STATE OR FEDERAL
STATUTE OR CONSTITUTION IN CONNECTION WITH THE OBTAINING BY LENDER OF ANY PREJUDGMENT REMEDY
IN CONNECTION WITH THIS MORTGAGE. BORROWER FURTHER CONSENTS TO THE ISSUANCE OF ANY
PREJUDGMENT REMEDIES WITHOUT A BOND AND AGREES NOT TO REQUEST OR FILE MOTIONS SEEKING TO
REQUIRE THE POSTING OF A BOND UNDER PUBLIC ACT 93-431 IN CONNECTION WITH LENDER’S EXERCISE
OF ANY PREJUDGMENT REMEDY. BORROWER ALSO WAIVES ANY AND ALL OBJECTION THAT IT MIGHT
OTHERWISE ASSERT, NOW OR IN THE FUTURE, TO THE EXERCISE OR USE BY LENDER OF ANY RIGHT OF
SETOFF, REPOSSESSION OR SELF HELP AS MAY PRESENTLY

69

 

EXIST UNDER STATUTE OR COMMON LAW, AND TO THE EXTENT PERMITTED BY LAW, THE BENEFITS OF ALL PRESENT AND FUTURE VALUATION, APPRAISEMENT,
HOMESTEAD, EXEMPTION, STAY, REDEMPTION AND MORATORIUM LAWS.

      (f) Borrower hereby waives, for itself or any of its assigns who assume this Mortgage,
any right it may have under Section 49-2(c)(7) of the Connecticut General Statutes, as
amended, or otherwise, to terminate the right to make “optional future advances” as defined
under said statute, including, without limitation, advances by Lender pursuant to this
Mortgage.

          Section 6.34 REMIC Opinions. In the event Borrower requests Lender’s consent with
respect to any proposed action or Borrower proposes to take any action not otherwise requiring
Lender’s specific consent under the Loan Documents, which Lender determines, in its discretion, may
affect (i) the “REMIC” status of Lender, its successors or assigns, or (ii) the status of this
Mortgage as a “qualified mortgage” as defined in Section 860G of the Internal Revenue Code of 1986
(or any succeeding provision of such law), Lender reserves the right to require Borrower, at
Borrower’s sole expense, to obtain, from counsel satisfactory to Lender in its discretion, an
opinion, in form and substance satisfactory to Lender in its discretion, that no adverse tax
consequences will arise as a result of the proposed course of action.

          Section 6.35 Splitting the Loan. 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, deeds of
trust and other security documents (the “Severed Loan Documents”) in such denominations and
priorities as Lender
shall determine in its sole discretion, provided, however, that the terms, provisions and
clauses of the Severed Loan Documents shall be no more adverse to Borrower than those contained in
the Note, this Mortgage and the other Loan Documents. 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 reasonably 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, that Lender shall not make or execute any such documents under such power until
not less than three (3) days has passed after notice has been given to Borrower by Lender of
Lender’s intent to exercise its rights under such power.

[THE BALANCE OF THIS PAGE WAS LEFT BLANK INTENTIONALLY]

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          IN WITNESS WHEREOF, Borrower has executed this Mortgage on the day and year first written
above.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	BORROWER:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	239 GREENWICH ASSOCIATES LIMITED
	 	 	PARTNERSHIP, a Connecticut limited partnership
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Acadia 239 Greenwich Avenue, LLC,

a Delaware limited liability company,

its general partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Acadia Realty Limited Partnership,

a Delaware limited partnership,

its sole member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Acadia Realty Trust,

its general partner
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Robert Masters
	 

	 	 	 	 	 	 	 	 	 	Senior Vice President

 

 

	 	 	 	 	 	 	 	 	 
	STATE OF

	 	 	 	 	)	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 )ss.:	 	 	 
	COUNTY OF

	 	 	 	 	)	 	 	 
	 

	 	 

	 	 	 	 	 	 

The
foregoing instrument was acknowledged before me this ___ day of January, 2007, by Robert
Masters, Senior Vice-President of Acadia Realty Trust, the general partner of Acadia Realty Limited
Partnership, a Delaware limited partnership, the sole member of Acadia 239 Greenwich Avenue, LLC, a
Delaware limited liability company, the general partner of 239 Greenwich Associates Limited
Partnership, a Connecticut limited partnership, and acknowledged the same to be his free act and
deed and the free act and deed of 239 Greenwich Associates Limited Partnership.

 

 

 

EXHIBIT A

Legal Descriptionexv10w62

 

Exhibit 10.62

 

REVOLVING CREDIT AGREEMENT

Between

WASHINGTON MUTUAL BANK,

as Lender

and

ACADIA REALTY LIMITED PARTNERSHIP,

as Borrower

Dated as of March          , 2007

Loan No. 625029471

 

 

 

REVOLVING CREDIT AGREEMENT

          THIS REVOLVING CREDIT AGREEMENT (this “Agreement”), dated as of the date set forth on the
cover page of this Agreement, is made by and between ACADIA REALTY LIMITED PARTNERSHIP, a Delaware
limited partnership (“Borrower”), and WASHINGTON MUTUAL BANK, a federal association (“Lender”).

RECITALS

          Borrower has requested that Lender make loan advances to Borrower from time to time. Subject
to the terms and conditions of this Agreement and of the other Loan Documents (as defined below)
Lender is willing to make such advances as provided in this Agreement.

          Accordingly, the parties agree as follows:

AGREEMENT

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

          Section 1.1. Certain Defined Terms. As used in this Agreement, the following terms
will have the following meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

          “Advance” means an advance of proceeds of the Loan by Lender to Borrower pursuant to
Article II.

          “Affiliate” means any Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with, another identified Person. A Person will be deemed
to control a corporation or other entity if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such corporation or other
entity, whether through the ownership of voting securities, by contract or otherwise.

          “Applicable Margin” means the interest rate per annum specified as the Applicable
Margin in Schedule 1, which is to be added to the Current Index in determining the Interest
Rate.

          “Authorized Officer” means any one of the individuals identified as Authorized
Officers in Schedule 1, or such other officer or other individual as Borrower may designate
as an Authorized Officer by means satisfactory to Lender.

          “Borrower” has the meaning specified in the preamble to this Agreement.

          “Borrowing” means a borrowing consisting of the making of an Advance.

 

 

          “Borrowing Request” means a request in substantially the form of Exhibit B, or
in such other form as Lender may specify from time to time, made by Borrower to Lender for a
Borrowing pursuant to the terms of this Agreement.

          “Business Day” means a day that is not a Saturday, Sunday or other day on which banks
are required or authorized to close in the location of Lender’s Applicable Office.

          “Commitment” has the meaning specified in Section 2.1.

          “Current Index” has the meaning specified in Section 2.5.

          “Date Down Endorsement” has the meaning specified in Section 3.1.

          “Debt Service Coverage Ratio” has the meaning specified in Schedule 1.

          “Default” has the meaning specified in the definition of “Event of Default”.

          “Default Rate” has the meaning specified in Section 2.8.

          “Dollars”, “dollars” or the symbol “$” means lawful money of the
United States of America denominated in United States dollars.

          “Equity Interest” means: (a) if Borrower is a corporation, its capital stock; (b) if
Borrower is a limited liability company, its membership interests; or (c) if Borrower is a
partnership, its partnership interests.

          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          “Event of Default” means any of the events specified in Section 7.1, provided that
there has been satisfied any requirement in connection with such event for the giving of notice, or
the lapse of time, or the happening of any further condition, event or act, and “Default”
will mean any of such events, whether or not any such requirement has been satisfied.

          “Extension Debt Service Coverage Ratio” means the Debt Service Coverage Ratio
recalculated to exclude from NOI any income from any Qualifying Lease which has a remaining term of
less than twenty-four (24) months from the Initial Maturity Date.

          “Extension Request” has the meaning specified in Section 2.13.

          “Extension Term” has the meaning specified in Section 2.13.

          “Facility Fee” has the meaning specified in Section 2.2.

          “Financial Covenant Parties” has the meaning specified in Schedule 1.

          “GAAP” means generally accepted accounting principles applicable in the United States,
consistently applied.

2

 

          “Indebtedness” means, with respect to any Person: (a) all items of Indebtedness or
liability that would be included in determining total liabilities as shown on the liability side of
a balance sheet as of the date of determination; (b) Indebtedness secured by any Lien on property
carried on the asset side of the balance sheet of such Person whether or not such Indebtedness has
been assumed; (c) any other Indebtedness or liability for borrowed money or for the deferred
purchase price of property or services for which such Person is directly or contingently liable as
obligor, guarantor, or otherwise, or in respect of which such Person otherwise assures a creditor
against loss; and (d) any other obligations of such Person under leases that have been or, pursuant
to GAAP, should be recorded as capital leases.

          “Indemnity” means that certain Certificate of Indemnity Regarding Hazardous Materials
dated as of the date hereof from Borrower and Lender, as the same may be modified, amended,
restated or replaced from time to time.

          “Initial Maturity Date” has the meaning specified in Section 2.13.

          “Insolvency Proceeding” means any proceeding commenced by or against any Person under
any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency law, any assignment for the benefit of creditors, or any other proceeding seeking
reorganization, arrangement or other relief from Indebtedness.

          “Interest Adjustment Date” has the meaning specified in Section 2.5.

          “Interest Rate” has the meaning specified in Section 2.5.

          “Legal Proceeding” has the meaning specified in Section 8.8.

          “Lender’s Applicable Office” means the office of Lender principally responsible for
servicing the Loan, which initially will be the office at the address for notices to Lender shown
on Schedule 1.

          “LIBOR Rate” has the meaning specified in Section 2.5.

          “Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of
any kind (including any agreement to give any of the foregoing, any conditional sale or other title
retention agreement, or any lease in the nature thereof).

          “Loan” means the loan to be made pursuant to this Agreement.

          “Loan Documents” means this Agreement, the Note, the Note Modification Agreement, the
Mortgage, the Indemnity, the Guaranty, if any, and all other documents, instruments and agreements
related thereto.

          “Loan Parties” means Borrower, and, if Borrower is a partnership, Borrower’s general
partners.

          “London Banking Day” has the meaning specified in Section 2.5.

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          “Material Adverse Effect” means, as to any Person, any material adverse effect on:
(a) the business, assets, operations, capitalization, property, condition (financial or otherwise)
or prospects of such Person; or (b) the ability of such Person to pay and perform its obligations
as they become due, including, as to Borrower, all obligations of Borrower under the Loan
Documents.

          “Maturity Date” means February ___, 2010, unless Lender’s obligation to make Advances
is earlier terminated pursuant to Section 7.2, in which case the Maturity Date will be such date of
earlier termination.

          “Mortgage” means that certain mortgage described in, and amended and restated by, that
certain Mortgage Modification Agreement between Borrower and Lender dated as of the date hereof, as
the same may be modified, amended, restated or replaced from time to time.

          “NOI” has the meaning specified in Schedule 2.

          “Note” means the replacement promissory note payable to the order of Lender, delivered
pursuant to the Note Modification Agreement, evidencing the aggregate Indebtedness of Borrower to
Lender under this Agreement.

          “Note Modification Agreement” means that certain Note Modification Agreement dated as
of the date hereof between Borrower and Lender.

          “Person” means an individual, partnership, corporation (including a business trust),
joint stock company, limited liability company, trust, unincorporated association, joint venture or
other entity, or any governmental authority or entity.

          “Property” has the meaning specified in the Mortgage.

          “Qualifying Lease” means a bona fide arm’s-length lease of space in the Property to a
tenant unaffiliated with Borrower that is: (i) fully-executed; (ii) unmodified, in full force and
effect and not in default or subject to notice of termination; (iii) entered into in compliance
with all requirements contained in the Mortgage; (iv) with all tenant improvements completed and
paid for by Borrower, to the extent required by the lease; and (v) with the tenant in possession
pursuant to all requisite permits and government approvals and paying rent under the lease.

          “Rent Roll” means a rent roll for the Property that: (i) shows the tenant name, leased
space (by unit number and floor and/or square footage, as applicable), expiration date, gross
monthly rent and other tenant charges for each lease of space in the Property; (ii) identifies each
listed lease as to whether it is an Qualifying Lease; (iii) is certified as true, complete and
correct by a representative of Borrower satisfactory to Lender; and (iv) is otherwise in form and
content satisfactory to Lender.

          “Subsidiary” means any corporation, limited liability company, partnership or other
entity a majority of (a) the total combined voting power of all classes of Equity Interests of
which or (b) the outstanding Equity Interests of which are, as of the date of determination, owned
by Borrower either directly or through Subsidiaries.

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          “Title Insurer” has the meaning specified in Section 3.1.

          “Unused Commitment” means, as of any date of determination, an amount equal to the
Commitment minus the sum of: (a) the outstanding principal balance of the Loan, and (b) the
aggregate principal amount of Advances for which a Borrowing Request has been made pursuant to
Section 2.4 but which have not been disbursed as of the date of determination.

          “Unused Fee” has the meaning specified in Section 2.2.

          Section 1.2. Computation of Time Periods. In this Agreement, in the computation of
periods of time from a specified date to a later specified date: (a) the word “from” means “from
and including,” (b) the words “to” and “until” each means “to but excluding”; and (c) the word
“through” means “through and including”.

          Section 1.3. Accounting Terms. All accounting terms not specifically defined in this
Agreement will be construed, and all accounting procedures will be performed, in accordance with
GAAP applicable as of the date of this Agreement.

ARTICLE II

AMOUNTS AND TERMS OF THE BORROWINGS

          Section 2.1. The Commitment. Subject to the terms and conditions of this Agreement,
Lender will make available to Borrower a revolving credit facility in the maximum amount set forth
as the Commitment Amount in Schedule 1 (the “Commitment”), subject to reduction in
accordance with the terms and provisions of Schedule 2.

          Section 2.2. Fees.

            (a) On or before the earlier of the date of the first Advance or the 30th day after the date
of this Agreement, Borrower will pay to Lender a nonrefundable facility fee (the “Facility Fee”) in
the amount set forth in Schedule 1.

            (b) Borrower shall, during the term of the Loan, pay to Lender a fee (the “Unused Fee”),
computed on the daily Unused Commitment for each day at a rate per annum equal to 0.0125% per
annum, calculated on the basis of a year of three hundred sixty (360) days for the actual number of
days elapsed. The accrued Unused Fee shall be due and payable quarterly in arrears on the first
day of January, April, July and October of each year commencing on July 1,
2007, and upon the Maturity Date (as stated, by acceleration or otherwise).

          Section 2.3. The Borrowings.

            (a) Lender agrees, on the terms and subject to the conditions set forth in this Agreement,
during the period from the date of this Agreement to the Maturity Date, to make Advances to
Borrower from time to time on any Business Day in an aggregate amount not to exceed the Unused
Commitment. Lender will have no obligation to make any Advances on or

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after the Maturity Date. Lender will have no obligation to make more than three Advances in
any calendar month.

            (b) Each request for an Advance must be in an amount not less than $50,000 or an integral
multiple of $10,000 in excess thereof; provided, that Borrower may, subject to the other terms and
conditions of this Agreement, request an Advance in the amount of the entire Unused Commitment.

            (c) Borrower may prepay all or any part of any the outstanding principal balance of the Loan
pursuant to Section 2.11 and reborrow pursuant to this Section 2.3.

          Section 2.4. Procedure for Borrowings.

            (a) Borrowing Requests. Each Borrowing Request will be made by Borrower to Lender not
later than 10:00 a.m. (prevailing local time at Lender’s Applicable Office) on the second Business
Day prior to the date of the proposed Borrowing. Each Borrowing Request will be made by an
Authorized Officer of Borrower by telecopy, e-mail or overnight courier delivery, in writing, on
the form of Borrowing Request attached as Exhibit A.

            (b) Availability of Borrowings. Lender will make Borrowings available to Borrower in
immediately available funds to an account of Borrower with Lender, or such other account of
Borrower as may be approved by Lender.

          Section 2.5. Interest Rate. The Note, the Loan and all amounts owing under this
Agreement and the other Loan Documents will bear interest at the rate provided in this Section 2.5
(the “Interest Rate”).

            (a) Interest Rate Adjustments. The Interest Rate will be adjusted daily to the
Current Index (as defined below) plus the Applicable Margin.

            (b) Definitions. As used in this Section 2.5, the following terms have the meanings
set forth below:

     “Current Index” means, as of any date of determination, the LIBOR Rate figure
available on such day (or if such day is not a London Banking Day, on the most recent London
Banking Day) as of 11:00 a.m., London time.

     “LIBOR Rate” means the rate, rounded to the nearest one-thousandth of one
percentage point (0.001%) for deposits in United States dollars for maturities of one month
as determined by Lender based upon the British Bankers Association fixing of the London
Interbank Offered Rate.

     “London Banking Day” means any day (i) that is not a Saturday or Sunday and
(ii) on which commercial banks are generally open for business (including dealings in
foreign exchange and foreign currency deposits) in London, England and dealings are carried
on in the London interbank market.

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          Section 2.6. Payment of Interest. Borrower will pay all accrued interest on the
outstanding principal amount of the Loan on the first day of each calendar month.

          Section 2.7. Unavailability of LIBOR Rate. If in the sole judgment of Lender (a) it
becomes unlawful for Lender to obtain funds in the London interbank market or to continue to fund
or maintain principal amounts bearing interest at rates determined by reference to the LIBOR Rate;
or (b) because of conditions in the relevant money markets, the LIBOR Rate will not adequately
reflect the cost to Lender of making, funding or maintaining the principal amount of the Loan; or
(c) the LIBOR Rate is no longer available or is no longer calculated or reported on a basis
reasonably comparable to the basis on which it is calculated and reported on the date of this
Agreement, then, in any such event, Lender will choose a new index that reasonably reflects the
cost to Lender of making, funding or maintaining the principal amount of the Loan, and such new
index will then be the Index. Lender will give Borrower notice of such choice.

          Section 2.8. Default Rate. Upon the occurrence of an Event of Default, and without
notice or demand, all amounts outstanding hereunder and under the Note and the other Loan
Documents, including all accrued but unpaid interest, will thereafter bear interest at a variable
rate, adjusted at the times at which the Interest Rate would otherwise have been adjusted pursuant
to Section 2.5, of five percent per annum above the Interest Rate that would have been applicable
from time to time had there been no Event of Default (the “Default Rate”) until all Events of
Default are cured. Failure to exercise any option granted to Lender hereunder will not waive the
right to exercise the same in the event of any subsequent Event of Default. Interest at the
Default Rate will commence to accrue upon the occurrence of any Event of Default, including the
failure to pay all sums outstanding hereunder and under the other Loan Documents at maturity.

          Section 2.9. Maximum Interest. In no event will charges constituting interest payable
by Borrower to Lender exceed the maximum amount permitted under any applicable law or regulation,
and if any payments by Borrower exceed such maximum amount, the excess will be applied first to
reduce the amounts owing to Lender under this Agreement and the other Loan Documents in such order
as Lender may elect, next to reduce any other amounts owing by Borrower to Lender in such order as
Lender may elect, and any excess will be refunded to Borrower.

          Section 2.10. Late Charge. If any amount payable under this Agreement, the Note or
the other Loan Documents is not paid within fifteen (15) days after the due date thereof, Borrower
will pay a late charge of five percent of the delinquent amount as liquidated damages for the extra
expense in handling past due payments. Any late charge payable under this Section is in addition
to any interest payable at the Default Rate.

          Section 2.11. Prepayments. Borrower may prepay the outstanding principal balance of
the Loan in full or in part without premium or penalty at any time and from time to time.

          Section 2.12. Reduction of Balance to Zero. Borrower will reduce the balance of
principal and all other amounts outstanding under this Agreement to zero for not less than thirty
(30) consecutive days at least once during each successive 364-day period during which this

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Agreement remains in effect starting with the 364-day period beginning on the date of this
Agreement.

          Section 2.13. Maturity; Extension of Maturity Date.

            (a) Maturity. Borrower will repay all remaining unpaid principal of and interest on
the Loan on or before the Maturity Date.

            (b) Extension. Borrower may request that Lender extend the Maturity Date of this
Note (the “Initial Maturity Date”) for one (1) (but only one) twenty-four (24) month period (the
“Extension Term”) by giving Lender notice of such request (an “Extension Request”) to so extend at
least thirty (30) days but not more than sixty (60) days prior to the Initial Maturity Date. The
date of such request is referred to as the “Request Date”. Borrower may extend the Initial
Maturity Date as provided above only upon satisfaction of the following conditions:

      (i) There shall be an Extension Debt Service Coverage Ratio of at least 1.2 to 1.0;

      (ii) Not less than eighty-nine percent (89%) net rentable square feet of the Property
must be leased under Qualifying Leases as of the Request Date; and

      (iii) A current estoppel certificate in the form executed and delivered by Borrower
showing no adverse information (which, if required by Lender, must be dated within ten (10)
days prior to the Initial Maturity Date).

            (c) Rent Roll. Borrower must deliver to Lender with the Extension Request (i) a Rent
Roll current as of the Request Date; (ii) copies of all Qualifying Leases listed on that Rent Roll;
and (iii) such further supporting information as Lender may reasonably require.

            (d) Payment of Costs. Borrower must have paid to Lender all of Lender’s costs and
expenses incurred in connection with the extension of the Initial Maturity Date, including but not
limited to attorneys’ fees, if any, or must have arranged for such payment to Lender’s
satisfaction.

            (e) Absence of Default or Adverse Change. As of the Request Date: (a) no Default or
Event of Default shall exist; (b) no material adverse change in the financial condition or the
management of the Property, Borrower or any guarantor of the Loan shall have occurred since the
date hereof; and (c) no material adverse change shall have occurred with respect to the Property.
Borrower must so certify in writing if requested by Lender.

          Section 2.14. Evidence of Indebtedness. The Advances made by Lender to Borrower will
be evidenced by the Note, payable to the order of Lender. Lender may maintain in accordance with
its usual practice an account or accounts evidencing the Indebtedness of Borrower resulting from
Advances and payments made from time to time under this Agreement. In any legal action or
proceeding in respect of this Agreement or the Note, the entries made in such account or accounts
will be presumptive evidence of the existence and amounts of the obligations of Borrower therein
recorded absent manifest error.

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          Section 2.15. Illegality. Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or regulation will make it
unlawful, or any central bank or other governmental authority will assert that it is unlawful, for
Lender to perform its obligations under this Agreement to make or maintain Advances, Lender may, by
notice to Borrower, suspend the right of Borrower to elect such Advances and, if necessary in the
reasonable opinion of Lender to comply with such law or regulation, Borrower will prepay the
outstanding balance of principal and other sums owed to Lender under this Agreement and under the
other Loan Documents at the latest time permitted by the applicable law or regulation or, if
earlier, on the date such amounts are due and payable under the terms of this Agreement and the
other Loan Documents.

ARTICLE III

CONDITIONS OF BORROWING

          Section 3.1. Conditions Precedent to Initial Advance. The obligation of Lender to
make the initial Advance is subject to satisfaction by Borrower of the following conditions
precedent:

            (a) Lender must have received the following documents in form and substance satisfactory to
Lender and, as appropriate, duly executed by the parties thereto:

     (i) This Agreement, the Mortgage, the Indemnity, the Note and all other applicable Loan
Documents;

     (ii) Copies of such authorizing resolutions of Borrower and its constituent entities,
if any, as Lender may require with respect to the Loan and the Loan Documents;

     (iii) One or more certificates of such Person or Persons on behalf of Borrower and its
constituent entities, if any, as Lender may require certifying: (A) the names and true
signatures of the officers or other representatives of the applicable entity authorized to
sign the Loan Documents; (B) that true and correct copies of the organizational documents of
the applicable entities are attached to such certificate or certificates; and (C) such other
matters as Lender may require;

     (iv) Current financial statements of Borrower and with respect to the Property and such
other financial data as Lender shall require;

     (v) An independent M.A.I. appraisal of the Property and Improvements complying in all
respects with the standards for real estate appraisals established pursuant to the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989;

     (vi) The policies of insurance required by the Mortgage, together with evidence of the
payment of the premiums therefor;

     (vii) A detailed report by a properly qualified engineer, which shall include,
inter alia, a certification that such engineer has obtained and examined a
list of prior

9

 

owners, tenants and other users of all or any portion of the Property or any
improvements thereon, and has made an on-site physical examination of the Property, and a
visual observation of the surrounding areas, and has found no evidence of past or present
hazardous materials activities or the presence of hazardous materials;

     (viii) A paid title insurance policy, in the amount of the Loan Allocation for each
property in ALTA 10-17-92 or other form approved by Lender, issued by a title insurance
company reasonably acceptable to Lender (the “Title Insurer”) which shall insure the
Mortgage to be a valid lien on Borrower’s interest in the Property free and clear of all
defects and encumbrances except those previously received and approved by Lender, and shall
contain (i) full coverage against mechanics’ liens (filed and inchoate), (ii) a reference to
the survey but no survey exceptions except those theretofore approved by Lender, (iii) such
affirmative insurance and endorsements as Lender may require, and (iv) if any such policy is
dated earlier than the date of the disbursement of the Loan, an endorsement to such policy,
in form approved by Lender, redating the policy and setting forth no additional exceptions
except those approved by Lender’s Counsel (a “Date Down Endorsement”); and shall be
accompanied by such reinsurance agreements between the Title Insurer and title companies
approved by Lender, in ALTA 1994 facultative form, as Lender may require;

     (ix) An as-built survey of the Property, certified to Lender and the Title Insurer;

     (x) Certified copies of all leases in respect of the Property and an estoppel regarding
lease matters from each tenant or from Borrower;

     (xi) Opinions of Borrower’s counsel and local counsel to the effects reasonably
required by Lender; Borrower hereby acknowledges that each of its counsel delivering opinion
letters to Lender on or about the date hereof has been requested and directed by Borrower to
do so;

     (xii) Copies of the certificate(s) of occupancy for the Property and of any and all
other authorizations (including plot plan and subdivision approvals, zoning variances,
water, sewer, building and other permits) required by governmental authorities or otherwise
necessary for the use, occupancy and operation of the Property for their intended purposes
in accordance with all applicable laws;

     (xiii) UCC, judgment and litigation searches against Borrower and advice from the Title
Insurer to the effect that searches of proper public records disclose no materially adverse
matters, leases of personalty or financing statements filed or recorded against the
Mortgaged Property or Borrower; and

     (xiv) Such other documents as Lender may require;

            (b) Payment of all fees due and payable pursuant to Section 2.2.

            (c) The representations and warranties made to Lender herein, in the other Loan Documents and
in any other document, certificate or statement executed or delivered to

10

 

Lender in connection with the Loan shall be true and correct on and as of the date of the
advance of the Loan with the same effect as if made on such date.

            (d) The Property shall not have been materially injured or damaged by fire or other casualty.

            (e) Such other conditions precedent as Lender may reasonably require.

          Section 3.2. Conditions Precedent to Each Advance. The obligation of Lender to make
each Advance (including but not limited to the initial Advance) will be subject to the further
conditions precedent that, on the date of such Advance, before and immediately after giving effect
thereto, the following statements must be true and correct, and the making by Borrower of the
applicable Borrowing Request will constitute Borrower’s representation and warranty that on and as
of the date of such Borrowing Request and as of the date of the requested Borrowing, before and
immediately after giving effect thereto, the following statements are and will be true and
correct:

     (i) Lender shall have received a Date Down Endorsement from the Title Insurer effective
as of the date of the Advance;

     (ii) The representations and warranties contained in Article IV of this Agreement are
and will be true and correct in all material respects as though made on and as of such date,
unless such representations and warranties are expressly stated to be made as of an earlier
date;

     (iii) There shall have occurred no material adverse change in the condition or value of
the Property, as defined in the Mortgage;

     (iv) After giving effect to the requested Advance, the Unused Commitment will not be
less than zero;

     (v) No event has occurred and is continuing or would result from the requested Advance
that constitutes or would constitute a Default or an Event of Default;

     (vi) The most recent financial statements delivered to Lender pursuant to Section 5.3
present fairly the financial position and results of operations of Borrower and the other
Persons reported therein as of the date of, and for the periods presented in, such financial
statements, and since the date of such financial statements there has not been any material
adverse change in the financial condition or operations of Borrower or the other Persons
reported therein; and

     (vii) Borrower is and will be in compliance with all covenants contained in Articles V
and VI of this Agreement.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

          Borrower represents and warrants to Lender as follows:

          Section 4.1. Organization. Borrower is duly organized and validly existing under the
laws of the jurisdiction of its organization. Borrower has full power and authority to own its
properties and to transact the businesses in which it is presently engaged or presently proposes to
engage. Borrower is duly qualified to do business and is in good standing in all jurisdictions in
which the failure so to qualify could reasonably be expected to have a Material Adverse Effect.

          Section 4.2. Authorization; No Breach. The execution, delivery, and performance of
this Agreement and the other Loan Documents by Borrower, to the extent to be executed, delivered or
performed by Borrower, have been duly authorized by all necessary corporate, limited liability
company, partnership or similar action, as applicable; do not require the consent or approval of
any other Person, regulatory authority or governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of Borrower’s organizational
documents, or any agreement or other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.

          Section 4.3. Financial Information. Each financial statement of Borrower or any other
Person supplied to Lender in connection with the Loan truly and completely disclosed Borrower’s or
such other Person’s financial condition as of the date of the statement, and there has been no
material adverse change in such financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Neither Borrower nor any such other Person has any
material contingent obligation except as disclosed in such financial statements or in footnotes
thereto or otherwise disclosed to Lender in writing.

          Section 4.4. Legal Effect. This Agreement and the other Loan Documents constitute
legal, valid and binding obligations of Borrower and the other parties thereto (other than Lender)
enforceable against Borrower and such other parties in accordance with their respective terms,
subject to applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally
and to general principles of equity (whether considered in a proceeding at law or in equity).

          Section 4.5. Compliance with Law. Borrower, the other Loan Parties, and the
properties and activities of each thereof, are in compliance with all applicable laws, rules,
regulations and court and administrative orders, except to the extent that failure so to comply
could not reasonably be expected to have a Material Adverse Effect.

          Section 4.6. Hazardous Substances. Borrower, each other Loan Party and the properties
of each thereof comply in all material respects with all applicable laws and regulations relating
to the environment, including without limitation, all laws and regulations relating to pollution
and environmental control.

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          Section 4.7. Litigation and Claims. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid taxes) against Borrower or
any other Loan Party is pending or threatened, and no other event has occurred that could
reasonably be expected to have a Material Adverse Effect.

          Section 4.8. Taxes. All tax returns and reports of Borrower and each other Loan Party
that are required to have been filed, have been filed, and all taxes, assessments and other
governmental charges that have become due and payable by Borrower or any other Loan Party have been
paid in full, except those presently being, or promptly to be, contested in good faith, by
appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP.

          Section 4.9. Employee Benefit Plans. Each employee benefit plan as to which Borrower
or any other Loan Party may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (a) no reportable event or prohibited
transaction (each as defined in ERISA) has occurred with respect to any such plan, (b) neither
Borrower nor any other Loan Party has withdrawn from any such plan or initiated steps to do so, (c)
no steps have been taken to terminate any such plan, and (d) there are no unfunded liabilities in
connection with any such plan.

          Section 4.10. Regulated Entities. None of Borrower, any Person controlling Borrower,
or any Subsidiary is an “Investment Company” within the meaning of the Investment Company Act of
1940, or subject to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, any state public utilities code, or any other federal or state statute or regulation
limiting its ability to incur or guarantee Indebtedness.

          Section 4.11. Information. All information furnished by Borrower or any other Loan
Party to Lender in connection with this Agreement or any transaction contemplated hereby is, and
all information hereafter furnished by or on behalf of Borrower or any other Loan Party to Lender
will be, true and accurate in every material respect on the date as of which such information is
dated or certified; and none of such information is or will be incomplete by omitting to state any
material fact necessary to make such information not misleading.

          Section 4.12. Survival of Representations and Warranties. Borrower understands and
agrees that Lender, without independent investigation, is relying upon the above representations
and warranties in entering into this Agreement and the other Loan Documents. Such representations
and warranties will be continuing in nature and will remain true and correct until all of
Borrower’s Indebtedness under this Agreement has been paid in full, and Lender’s Commitment to make
Advances under this Agreement has been permanently terminated in writing.

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ARTICLE V

AFFIRMATIVE COVENANTS

          So long as the Note or any other amount payable by Borrower under the Loan Documents remains
unpaid or Lender has any Commitment to make Advances under this Agreement, Borrower covenants and
agrees that it will:

          Section 5.1. Changes in Financial Condition; Litigation. Promptly inform Lender in
writing of (a) all material adverse changes in the financial condition of any Financial Covenant
Party, and (b) all existing and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting any Financial Covenant Party that could reasonably be
expected to have a Material Adverse Effect.

          Section 5.2. Financial Records. Cause the books and records of each Financial
Covenant Party to be maintained in accordance with GAAP.

          Section 5.3. Reporting Requirements. Deliver to Lender the financial statements, tax
returns and other items required under the Mortgage.

          Section 5.4. Other Agreements. Comply in all material respects with all terms and
conditions of all other agreements, whether now or hereafter existing, between Borrower and any
other Person and notify Lender immediately in writing of any default in connection with any such
agreement that could reasonably be expected to have a Material Adverse Effect.

          Section 5.5. Executive Personnel. Maintain, and cause each Financial Covenant Party
to maintain, executive and management personnel with substantially the same qualifications and
experience as its present executive and management personnel.

          Section 5.6. Compliance With Law. Conduct, and cause each Financial Covenant Party to
conduct, its business affairs in a reasonable and prudent manner and in compliance with all
applicable laws, ordinances, rules, regulations and court and administrative orders, except to the
extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

          Section 5.7. Inspection. Permit, and cause each Financial Covenants Party to permit,
employees or agents of Lender at any reasonable time to inspect any and all of its properties and
to examine or audit its books, accounts, and records (including any thereof held by third parties)
and to make copies and memoranda of its books, accounts, and records.

          Section 5.8. Existence. Preserve and keep in full force and effect the corporate,
limited liability company or partnership existence, as the case may be, of Borrower and each other
Financial Covenant Party, and qualify to do business in each jurisdiction where the failure so to
qualify could reasonably be expected to have a Material Adverse Effect.

          Section 5.9. Maintenance of Insurance. Maintain, and cause each other Financial
Covenant Party to maintain, insurance with financially sound and reputable insurers in such amounts
and covering such risks as are customarily carried by Persons engaged in

14

 

businesses and activities similar to those of Borrower and the other Financial Covenant
Parties and otherwise similarly situated.

          Section 5.10. Use of Proceeds. Use the proceeds of the Borrowings only for general
business and commercial purposes and not use any thereof, directly or indirectly: (a) for any
personal, family or household purpose; (b) to purchase or carry any margin stock (within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System); (c) to extend
credit to others for the purpose of purchasing or carrying any margin stock; or (d) for any purpose
that violates, or is inconsistent with, the provisions of Regulations U, T or X of the Board of
Governors of the Federal Reserve System.

          Section 5.11. Information for Participants, Etc.; Publicity. Borrower agrees to
furnish such information and confirmation as may be required from time to time by Lender on request
of potential loan participants and assignees and agrees to make adjustments in the Loan Documents
to accommodate such participants’ or assignees’ requirements, provided that such adjustments do not
vary the economic terms of the credit extensions under this Agreement or increase in any material
way the obligations of Borrower or any other Loan Party. Borrower hereby authorizes Lender to
disclose to potential participants and assignees any information in Lender’s possession with
respect to Loan, Borrower and the other Loan Parties and Financial Covenant Parties.

          Section 5.12. Additional Assurances. Make, execute and deliver to Lender such
promissory notes, instruments, documents and other agreements as Lender may reasonably request to
evidence the Borrowings and otherwise to carry out the purpose and intent of this Agreement.

ARTICLE VI

NEGATIVE COVENANTS

          So long as the Note or any other amount payable by Borrower under the Loan Documents remains
unpaid or Lender has any Commitment to make Advances under this Agreement, Borrower covenants and
agrees that it will not, and will not permit any Financial Covenant Party to:

          Section 6.1. Business Activities. Engage in any business activities of a type
substantially different from those in which it is currently engaged.

          Section 6.2. Loans and Guaranties. (a) Lend or advance money to any other Person,
except (i) commercial bank demand deposits and time deposits maturing within one year, (ii)
marketable general obligations of the United States or a state thereof or marketable obligations
fully guaranteed by the United States, (iii) short-term commercial paper with the highest rating of
a generally recognized rating service, (iv) loans and advances to employees or other Loan Parties
or Financial Covenant Parties in the ordinary course of business related to expenses incurred in
the ordinary course of business, (v) other loans in the ordinary course of business not to
exceed $35,000,000 in any single transaction or series of related transactions and not to exceed
$100,000,000 in the aggregate at any one time and (vi) other investments

15

 

reasonably acceptable to Lender; or (b) incur any obligation as surety or guarantor other than
in the ordinary course of business.

          Section 6.3. Dividends and Distributions. Directly or indirectly declare or pay any
dividends or purchase, redeem, retire or otherwise acquire for value any of its Equity Interests,
or make any distribution of assets to holders of any of its Equity Interest as such whether in
cash, assets or obligations of Borrower if a Default exists or if the same would result in the
occurrence of a Default or would cause a violation of any financial covenant set forth in
Schedule 2 if such financial covenant were to be tested immediately after such action,
provided, however, that notwithstanding the foregoing, this Section 6.3 shall not prohibit Borrower
from making any dividends to the extent dividends are necessary for Borrower to maintain its status
as a Real Estate Investment Trust for federal income taxation purposes.

          Section 6.4. Liquidation, Merger, Sale of Assets. Liquidate, cease operations,
dissolve or enter into any merger, consolidation or other combination nor sell, lease, or dispose
of all or substantially all of its business or assets nor transfer or sell assets except transfers,
sales or dispositions of personal property assets that are obsolete or worn out property disposed
of in the ordinary course of business.

          Section 6.5. Transactions with Affiliates. Directly or indirectly engage in any
transaction (including, without limitation, the purchase, sale or exchange of assets or the
rendering of any service) with any Affiliate of Borrower or a Financial Covenant Party except in
the ordinary course, and pursuant to the reasonable requirements, of Borrower’s or such Financial
Covenant Party’s business and upon fair and reasonable terms that are no less favorable to Borrower
or such Financial Covenant Party than those that might be obtained in an arm’s-length transaction
at the time from parties that are not Affiliates.

          Section 6.6. Financial Covenants. Permit the Financial Covenant Parties to be out of
compliance with the financial covenants set forth in Schedule 2.

ARTICLE VII

DEFAULT AND REMEDIES

          Section 7.1. Events of Default. Each of the following events will constitute an event
of default (“Event of Default”) under this Agreement:

            (a) Default on Indebtedness to Lender. Any regular monthly payment under this
Agreement is not paid so that it is received by Lender within ten (10) days after the date when
due, or any other amount payable pursuant to this Agreement or the other Loan Documents (including
but not limited to any payment of principal or interest due on the Maturity Date) is not paid so
that it is received by Lender when due.

            (b) Covenant Default.

            (i) Violation of any of the covenants contained in Article VI of this Agreement, or

16

 

     (ii) Failure by Borrower or any Affiliate of Borrower to perform, keep, or observe any
other material term, provision, condition, covenant, or agreement contained in this
Agreement, in the Mortgage, any of the other Loan Documents, or in any other present or
future agreement between Borrower or such Affiliate on the one hand and Lender or any
Affiliate of Lender on the other hand, and as to any such failure that can be cured and does
not pose an imminent risk of loss to Lender, the failure of Borrower or such Affiliate to
cure such Default within thirty (30) days after Borrower receives written notice thereof
from Lender or after any officer, member, manager or partner of Borrower or such Affiliate
becomes aware thereof; provided, however, that if the Default cannot by its nature be cured
within the thirty (30) day period or cannot after diligent attempts by Borrower or such
Affiliate be cured within such thirty (30) day period, and such Default is likely to be
cured within a reasonable time, then Borrower or such Affiliate will have an additional
reasonable period (which will not in any case exceed an additional thirty (30) days) to
attempt to cure such failure, and within such reasonable time period the failure to have
cured such failure will not be deemed an Event of Default (provided that Lender will have no
obligation to make Advances during such cure period).

          (c) Material Adverse Change. If there occurs a material adverse change in the
business or financial condition of Borrower or any other Loan Party or Financial Covenant Party, or
if there is a material impairment of the prospect of repayment of any portion of the Indebtedness
owing by Borrower under this Agreement and the other Loan Documents.

          (d) Certain Legal Matters. If (i) any material portion of the assets of any Loan
Party or Financial Covenant Party is attached, seized, subjected to a writ or distress warrant, or
is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar
capacity for such Loan Party or Financial Covenant Party or the assets thereof, and such
attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded
within ten (10) days, or (ii) a Loan Party or Financial Covenant Party is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any material part of its
business affairs, or (iii) a judgment or other claim becomes a Lien upon any material portion of
the assets of a Loan Party or Financial Covenant Party, or if a notice of lien, levy, or assessment
is filed of record with respect to any of the assets of a Loan Party or Financial Covenant Party by
the United States Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower or the applicable Loan Party or Financial Covenant Party receives notice thereof;
provided, however, that none of the foregoing will constitute an Event of Default where such action
or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower or
the applicable Loan Party or Financial Covenant Party (provided further that no Advances will be
required to be made during such cure period).

          (e) Insolvency. If (i) any Loan Party or Financial Covenant Party becomes insolvent,
(ii) an Insolvency Proceeding is commenced by any Loan Party or Financial Covenant Party, or (iii)
an Insolvency Proceeding is commenced against any Loan Party or Financial Covenant Party and is not
dismissed or stayed within sixty (60) days (provided that no Advances will be made prior to the
dismissal of such Insolvency Proceeding).

17

 

            (f) Other Agreements. If (i) there is an Event of Default under the Mortgage, there
is a default under any agreement to which any Loan Party or Financial Covenant Party is a party
with Lender and such default is not cured within the applicable cure period, if any, under such
agreement, or (ii) there is a default under any agreement to which any Loan Party or Financial
Covenant Party is a party with a third party resulting in a right by such third party, whether or
not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $100,000.

            (g) Judgments. If a judgment or judgments for the payment of money in an amount,
individually or in the aggregate, of $1,000,000 or more will be rendered against any Loan
Party or Financial Covenant Party and will remain unsatisfied and unstayed for a period of
forty-five (45) days.

            (h) Misrepresentations. If any material misrepresentation or material misstatement
now or hereafter exists in any representation or warranty set forth in this Agreement, the Mortgage
or in any certificate or Borrowing Request submitted to Lender in connection with the Loan.

            (i) Full Force and Effect, Defective Documentation, Etc. If this Agreement or any of
the other Loan Documents ceases to be in full force and effect, at any time and for any reason, or
Borrower or any other Loan Party repudiates any Loan Document or asserts that any Loan Document is
not in full force and effect.

          Section 7.2. Remedies. At any time after the occurrence and during the continuance of
an Event of Default, Lender may, by notice to Borrower, (a) declare the obligation of Lender to
make Advances to be terminated, whereupon the same will forthwith terminate, (b) exercise any and
all rights and remedies provided in the Mortgage and (c) declare (i) the Note and all interest
thereon and (ii) all other amounts payable under this Agreement and the other Loan Documents to be
immediately due and payable, whereupon the Note, all such interest, and all such other amounts will
become and be immediately due and payable, without presentment, demand, protest or further notice
of any kind, all of which are hereby expressly waived by Borrower; provided, however, that if an
Insolvency Proceeding by or against Borrower is commenced, (A) the obligation of Lender to make
Advances will automatically be terminated and (B) the Note, all interest thereon, and all other
amounts payable under this Agreement and the other Loan Documents will automatically become and be
immediately due and payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by Borrower.

          Section 7.3. Right of Offset. After the occurrence and during the continuance of an
Event of Default, Lender and its Affiliates are hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other Indebtedness at any time
owing by Lender or its Affiliates to or for the credit or the account of Borrower or any other Loan
Party against any and all of the obligations of Borrower or any other Loan Party now or hereafter
existing under this Agreement and the other Loan Documents irrespective of whether Lender has made
any demand. The rights of Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of offset) that Lender may have.

18

 

          Section 7.4. Cumulative Remedies. After the occurrence and during the continuance of
an Event of Default, Lender may proceed to enforce the Loan Documents by exercising such remedies
as are available thereunder or in respect thereof under applicable law, whether for specific
performance of any covenant or other agreement contained in the Loan Documents or in aid of the
exercise of any power granted in the Loan Documents. No remedy conferred in this Agreement or the
other Loan Documents is intended to be exclusive of any other remedy, and each and every such
remedy will be cumulative and will be in addition to every other remedy conferred herein or therein
or now or hereafter existing at law, in equity, by statute or otherwise.

          Section 7.5. Application of Payments. After the occurrence and during the continuance
of an Event of Default, Lender will apply all funds received in respect of amounts owing under this
Agreement and the other Loan Documents in such order as Lender may determine in its sole discretion
notwithstanding any instruction from Borrower or any other Person.

ARTICLE VIII

MISCELLANEOUS

          Section 8.1. Amendments. An amendment or waiver of any provision of this Agreement or
the other Loan Documents, or a consent to any departure therefrom, will be effective against Lender
if, but only if, it is in writing and signed by Lender, and then such a waiver or consent will be
effective only in the specific instance and for the specific purpose for which given.

          Section 8.2. Notices. Except as otherwise specifically provided in this Agreement,
all notices and other communications provided for under this Agreement must be in writing and
mailed, telecopied or otherwise transmitted or delivered to the recipient at its address as set
forth in Schedule 1; or at such other address within the United States as may be designated
by such party in a written notice to the other party or parties. All such notices and
communications will, (a) if mailed, be effective three (3) Business Days following deposit in the
United States mail, postage prepaid; (b) if delivered by recognized overnight delivery service
(such as Federal Express) be effective upon delivery and (c) if telecopied, be effective when
telecopied and electronic confirmation of transmission is received, except that notices and
communications to Lender pursuant to Article II will not be effective until received by Lender.

          Section 8.3. No Waiver; Remedies. No failure on the part of Lender to exercise, and
no delay in exercising, any right under this Agreement or any other Loan Document will operate as a
waiver thereof; nor will any single or partial exercise of any right hereunder or under any other
Loan Document preclude any other or further exercise thereof or the exercise of any other right.
The remedies provided in this Agreement and the other Loan Documents are cumulative and not
exclusive of any remedies provided by law.

19

 

          Section 8.4. Costs and Expenses; Indemnification.

            (a) Costs of Preparation and Administration of Loan Documents. Whether or not the
transactions provided for in this Agreement are consummated, Borrower will pay on demand: (i) the
reasonable fees and out-of-pocket expenses of counsel for Lender in connection with the
preparation, execution and delivery of this Agreement and the other Loan Documents and any
amendments or modifications thereof or waivers or consents with respect thereto; (ii) any and all
out-of-pocket costs and expenses reasonably incurred by Lender in connection with the execution and
delivery of this Agreement and the other Loan Documents and the administration thereof.

            (b) Costs of Enforcement. In the event of any Default or Event of Default, or in the
event that any dispute arises (whether or not such dispute is with Borrower) relating to the
interpretation, enforcement or performance of this Agreement or any of the other Loan Documents, or
Lender’s rights thereunder, Lender will be entitled to collect from Borrower on demand all
reasonable fees and expenses incurred in connection therewith, including but not limited to fees of
attorneys, paralegals, accountants, expert witnesses, arbitrators, mediators and court reporters.
Without limiting the generality of the foregoing, Borrower will pay all such costs and expenses
incurred in connection with: (i) arbitration or other alternative dispute resolution proceedings,
trial court actions and appeals; (ii) bankruptcy or other Insolvency Proceedings of Borrower, any
other Loan Party, or any party having any interest in any security for the Loan (if any); (iii)
judicial or nonjudicial foreclosure on, or appointment of a receiver for, any property securing the
Loan (if any); (iv) post-judgment collection proceedings; (v) all claims, counterclaims,
cross-claims and defenses asserted in any of the foregoing whether or not they arise out of or are
related to this Agreement or any other Loan Document; (vi) all preparation for any of the
foregoing; and (vii) all settlement negotiations with respect to any of the foregoing.

            (c) Survival. The provisions of this Section 8.4 will survive the termination of the
commitment to lend under this Agreement and the repayment of the Loan and all other amounts payable
under the Loan Documents.

          Section 8.5. Binding Effect; Assignments and Participations. This Agreement will
become effective when it has been executed by Borrower and Lender and thereafter will be binding
upon and inure to the benefit of Borrower and Lender and their respective successors and assigns,
except that Borrower will not have the right to assign its rights under this Agreement or any
interest herein without the prior written consent of Lender. Lender may assign or grant
participations in or to all or any part of its rights and obligations under this Agreement and the
other Loan Documents.

          Section 8.6. Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of which when so executed
will be deemed to be an original and all of which taken together will constitute one and the same
agreement.

20

 

          Section 8.7. Governing Law. This Agreement will be governed by, and construed and
enforced in accordance with, the laws of the State of New Jersey, without reference to the
choice of law principles of the State of New Jersey.

          Section 8.8. Jurisdiction and Venue.

            (a) WAIVER OF JURY TRIAL. EACH OF BORROWER AND LENDER (FOR ITSELF AND ITS SUCCESSORS,
ASSIGNS AND PARTICIPANTS) WAIVES ITS RIGHT TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
PROVIDED FOR HEREIN OR THEREIN, IN ANY LEGAL ACTION OR PROCEEDING OF ANY TYPE BROUGHT BY ANY PARTY
TO ANY OF THE FOREGOING AGAINST ANY OTHER SUCH PARTY, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. ANY SUCH CLAIM OR CAUSE OF ACTION WILL BE TRIED BY A COURT SITTING WITHOUT A JURY.

            (b) Application to Certain Actions. Without limiting the foregoing, the provisions of
the above Subsection (a) will apply to any action, counterclaim or other proceeding that seeks, in
whole or in part, to challenge the validity or enforceability of this Agreement or the other Loan
Documents or any provision hereof or thereof. Such subsection will apply to all amendments,
renewals, supplements and modifications of this Agreement and the other Loan Documents.

          Section 8.9. Further Assurances. If Lender at any time discovers that this
Agreement, the Note or any other Loan Documents contains any error that was caused by a clerical
mistake, calculation error, computer error, printing error or similar error, Borrower shall, upon
demand by Lender re-execute any such documents as are necessary or appropriate to correct any such
error and Lender shall have no liability to Borrower or any other person or entity as a result of
such error. If the Note is lost, stolen, mutilated or destroyed and Lender delivers to Borrower an
indemnification agreement reasonably indemnifying Borrower against any loss or liability resulting
therefrom, Borrower will execute and deliver to Lender a replacement thereof in form and content
identical to the original document which will have the effect of the original for all purposes.

          Section 8.10. No Fiduciary Duty. Borrower acknowledges that Lender has no fiduciary
relationship with, or fiduciary duty to, Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents, and the relationship between Lender and Borrower in
connection herewith or therewith is solely that of creditor and debtor. None of this Agreement or
the other Loan Documents create a joint venture among the parties.

          Section 8.11. Severability. Any provision of the Loan Documents that is prohibited or
unenforceable in any jurisdiction will be ineffective to the extent of such prohibition or
unenforceability in such jurisdiction without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties waive any provision of law that renders any

21

 

provision of this Agreement or any other Loan Document prohibited or unenforceable in any
respect.

          Section 8.12. Entire Agreement. This Agreement and the other Loan Documents
constitute the final and complete expression of the parties with respect to the transactions
contemplated by this Agreement and replace and supersede all prior discussions, negotiations and
understandings with respect thereto. Neither this Agreement nor any term hereof nor of the other
Loan Documents may be changed, waived, discharged or terminated except as provided herein.

          Section 8.13. Descriptive Headings. The descriptive headings of the various
provisions of this Agreement are for convenience of reference only, do not constitute a part
hereof, and will not affect the meaning or construction of any provision hereof.

          Section 8.14. Gender and Number. Whenever appropriate to the meaning of this
Agreement or the other Loan Documents, use of the singular will be deemed to refer to the plural,
the use of the plural to the singular, and pronouns of certain gender to either or both the other
genders.

          Section 8.15. Prior Agreement Amended and Restated. This Agreement amends and
restates the following agreement in its entirety: Term Loan Agreement dated March 30, 2000 by and
between The Dime Savings Bank of New York, FSB and Borrower, as modified by that certain Term Loan
Modification Agreement dated as of March 26, 2004 by and between Washington Mutual Bank, FA,
successor by merger to The Dime Savings Bank of New York, FSB, and Borrower.

          Section 8.16. Non-Recourse/Limited Liability.

            (a) Any other provision of this Agreement, the Note or the Mortgage seemingly to
the contrary notwithstanding, it is understood and agreed that, except as provided in this Section
8.16, the Property shall be the sole recourse of Lender in the event of an Event of Default and
that the liability of Borrower (and, if Borrower is a partnership, its partners) for any amounts
due under this Agreement, the Note and/or under the Mortgage is limited to the interest of Borrower
or its partners in the Property.

            (b)
Lender may join Borrower (and, if Borrower is a partnership, its partners) as
defendants in any legal action it undertakes to enforce its rights and remedies under this
Agreement, the Note or under any of the Mortgage, provided that except as otherwise provided in the
immediately succeeding paragraph, any judgment in such action may be satisfied by recourse only to
the Property and not by recourse directly to Borrower or its partners or by execution on other
property or assets of Borrower or its partners.

            (c)
The foregoing notwithstanding, Lender shall have full recourse against
Borrower (and, if Borrower is a partnership, its general partners) and such general partners shall
be jointly and severally liable with Borrower and with one another for the full payment of: (i)
the amount of any income, proceeds or profits (including rents) of the Property and any funds
constituting a part of the Property that are, at the time of receipt, required for the payment of
operating expenses for the Property (including the establishment of a reasonable reserve for this

22

 

purpose) and/or the payment of amounts that are then due and payable under this Agreement
or the Note and that are not so used; (ii) any condemnation or insurance proceeds, or other similar
funds or payments attributable to the Property, that under the terms of the Mortgage should have
been paid to Lender but that have not been so paid to Lender; (iii) any tenant security deposits,
advances or prepaid rents, or other similar sums that have been paid to Borrower or held for the
account of Borrower by any other person or entity in connection with the operation of the Property
and that have not either been applied or refunded in accordance with the relevant lease or been
paid over to Lender; (iv) the amount of any loss suffered by Lender as a result of
misrepresentations or fraud by or on behalf of Borrower in connection with the loan evidenced by
the Note; (v) the amount of any loss suffered by Lender as a result of waste or gross mismanagement
by or permitted by Borrower; (vi) the amount of any loss suffered by Lender as a result of
violations of any governmental statute, rule or regulation applicable to the Property, but
specifically excluding any loss suffered by Lender arising directly or indirectly from the presence
or release of any hazardous or toxic substance, material or waste on the Property or Costs (as
defined in the separate certificate and indemnity agreement regarding hazardous substances of even
date herewith (the “Indemnity Agreement”) executed and delivered by Borrower to Lender); (vii) the
amount of any loss suffered by Lender as a result of any Unconsented Transfer (as defined in the
Security Instrument) or as a result of any attempt by or on behalf of Borrower to hinder, delay or
defeat Lender’s realization on its security for this Agreement or the Note after the occurrence and
during the continuance of an Event of Default (including without limitation the filing of any
bankruptcy or insolvency proceeding or action to enjoin foreclosure); (viii) interest on the
amounts described in clauses (i) through (ix) of this paragraph at the Default Rate; and (ix)
reasonable attorneys’ fees and other costs incurred by Lender in collecting any of the
foregoing.

            (d)In addition, nothing contained in this Section 8.16 shall: (i) be deemed to
be a release or impairment of the lien created by the Mortgage; or (ii) limit or otherwise
prejudice in any way the rights of Lender to enforce any of its rights and remedies under any of
the Mortgage, the Indemnity Agreement or any guaranty of the indebtedness evidenced by this
Agreement or the Note.

[Remainder of page intentionally left blank]

23

 

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

	 	 	 	 	 	 	 	 	 
	 	 	ACADIA REALTY LIMITED PARTNERSHIP, a 
Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Acadia Realty Trust, a Maryland real estate

investment trust, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Robert Masters	 	 
	 

	 	 	 	 	 	Senior Vice President	 	 

	 	 	 	 	 	 	 
	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 
	 	 	WASHINGTON MUTUAL BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Brian Scesney	 	 
	 

	 	 	 	Assistant Vice President	 	 

 

 

SCHEDULE 1

CERTAIN SPECIFIED PROVISIONS

	1.	 	Commitment Amount: $30,000,000, subject to reduction in accordance with the terms and
provisions of Schedule 2
	 
	2.	 	Facility Fee: $37,500
	 
	3.	 	Applicable Margin: 1.25% per annum
	 
	4.	 	Financial Covenant Parties means Borrower.
	 
	5.	 	Authorized Officer(s):

	 	 	 
	Name	 	Title
	Robert Masters

	 	Senior Vice President
	Michael Nelsen

	 	Senior Vice President

	6.	 	Notice address for Borrower:

c/o Acadia Realty Trust

1311 Mamaroneck Avenue, Suite 260

White Plains, New York 10605

Telephone:     914-288-8100

Telefax:           914-428-3646

	7.	 	Notice address for Lender:

Washington Mutual Bank

National Commercial Operations Center

P.O. Box 9178

Coppell, Texas 75019-9178

Attention:    Portfolio Administration

Telephone:  866-708-2841

Telefax     469-549-5607

with a copy to:

Mr. Paul M. Carroll

Washington Mutual Bank

589 Fifth Avenue

 

 

New York, New York 10017

Telephone:     212-326-6931

Telefax:           212-326-6020

2

 

SCHEDULE 2

FINANCIAL COVENANTS

          If at any time during the term of the Loan, Lender shall determine in its reasonable
discretion that as of the last day of a calendar year (the “Testing Date”) the Debt Service
Coverage Ratio (as hereinafter defined), calculated using the Assumed Debt Service (as hereinafter
defined), is less than 1.2 to 1.0, the Commitment shall be automatically and permanently reduced by
an aggregate amount which will have the effect of increasing the Debt Service Coverage Ratio such
that the ratio shall not be less than 1.2 to 1.0 and, in the event the outstanding principal amount
of the Loan would exceed the Commitment as a result of any such reduction, Borrower covenants and
agrees that within ten (10) days of notice from Lender of such determination Borrower shall prepay
the outstanding principal amount of the Loan by such amount as is necessary such that the
outstanding principal amount of the Loan is equal to or less than the Commitment as a result of
such reduction, together with any applicable prepayment premium or other amount provided for herein
or in the Note as a result of such prepayment. Borrower’s failure to effect such prepayment by the
expiration of such thirty (30) day period shall constitute an Event of Default. For purposes of
this paragraph, the following terms shall have the following meanings:

     “Assumed Debt Service” shall mean debt service for a twelve (12) month period
of equal monthly payments of principal and interest calculated using an amount equal to the
Commitment Amount Lender’s then applicable underwriting rate for commercial real estate
loans and an amortization period of three hundred (300) months.

     “Debt Service Coverage Ratio” shall mean the ratio of (i) the aggregate amount
of the NOI for the Property to (ii) the Assumed Debt Service.

     “NOI” shall mean, as of the Testing Date, the current monthly rental payments
with respect to all Qualifying Leases multiplied by twelve (12), minus (i) the actual
Operating Expenses (as defined below) for the twelve (12) month period immediately preceding
the Testing Date and (ii) an amount for reasonable management expenses equal to the greater
of four percent (4%) of rents with respect to Qualifying Leases or the actual management
expenses for the twelve (12) month period immediately preceding the Testing Date.

     “Operating Expenses” shall mean all reasonable operating expenses of the
Property, including, without limitation, those for maintenance, repairs, annual taxes,
insurance, utilities and other annual expenses (but not capital expenses) that are standard
and customary for properties similar to the Property. Operating Expenses for this purpose
shall not include any interest or principal payments on the Loan or any allowance for
depreciation.

          The determination of NOI and Operating Expenses shall be made by Lender in its reasonable
discretion.

 

 

          Borrower covenants and agrees to provide to Lender such information as Lender shall reasonably
request in connection with the calculation of NOI. Any failure or refusal by Borrower to provide
such information promptly following Lender’s request shall constitute an Event of Default hereunder
and under the Mortgage.

2

 

EXHIBIT A

BORROWING REQUEST

Washington Mutual Bank

National Operations Center

3929 W. John Carpenter Freeway

Irving, Texas 75063

Attention:     CREL/Asset Administration — 3545CCTX

Telefax:        469-549-5619

Email:           aacreclosing@wamu.net

Date:
                                        
,                     

          This refers to the Revolving Credit Agreement dated as of March ___, 2007
(the “Credit Agreement”) (capitalized terms used herein and not otherwise defined have the meanings
given to them in the Credit Agreement), between the undersigned (“Borrower”) and Washington Mutual
Bank (“Lender”), and hereby gives Lender notice, irrevocably, pursuant to Section 2.3 of the Credit
Agreement that Borrower hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the “Requested Borrowing”)
as required by the Credit Agreement:

          REQUESTED BORROWING

     (i) The Business Day on which the Requested Borrowing is to be made is
                    , 20___.

     (ii) The aggregate amount of the Requested Borrowing is
$                    .

     (iii) Borrower intends to use the funds requested pursuant to the Requested Borrowing for the
following purpose(s):
                                        
                    .

     (iv) Borrower anticipates repaying the Requested Borrowing from the following source:
                                        
                                     
    (NOTE — this information is requested for
information purposes only).

          CERTIFICATIONS

          The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the Requested Borrowing, before and immediately after giving effect
thereto and to the application of the proceeds therefrom:

     (A) The representations and warranties contained in Article IV of the Credit Agreement are
true and correct as though made on and as of such dates, unless such representations and warranties
are expressly stated to be made as of an earlier date;

 

 

     (B) The most recent financial statements of Borrower delivered pursuant to the Mortgage (as
defined in the Credit Agreement) present fairly the financial position and results of operations of
Borrower and the other Financial Covenant Parties as of the date of, and for the periods presented
in, such financial statements, and since the date of such financial statements there has not been
any material adverse change in the financial condition or operations of Borrower or any other
Financial Covenant Party;

     (C) Borrower is in full compliance with all covenants contained in Articles V and VI of the
Credit Agreement;

     (D) No event has occurred and is continuing, or would result from such Requested Borrowing,
that constitutes or would constitute an Event of Default or a Default under the Credit Agreement;
and

     (E) The Unused Commitment is not less than zero nor will it be less than zero immediately
after giving effect to the Requested Borrowing.

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ACADIA REALTY LIMITED PARTNERSHIP, a 
Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Acadia Realty Trust, a Maryland real estate

investment trust, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	Title:	 	 

2

 

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATE

          This
Certificate, dated as of                     , 20___ is executed and delivered by the undersigned
(“Borrower”). Borrower and WASHINGTON MUTUAL BANK (“Lender”) are the Borrower and Lender,
respectively, under the terms of an unsecured Revolving Credit Agreement (the “Credit Agreement”)
dated as of                     , 20___. Capitalized terms used in this Certificate and not otherwise
defined have the meanings given to those terms in the Credit Agreement.

          The undersigned hereby certifies to Lender as follows:

     1. I have reviewed, and am familiar with, the terms of the Credit Agreement and the other Loan
Documents. I have made, or have caused to be made, an analysis of the condition and affairs of
Borrower as of the end of the fiscal quarter ending
                    , 20___ (the “Applicable
Period-End”).

     2. Such analysis did not disclose, and I am not aware of, the existence of any Event of
Default as of either the Applicable Period-End or the date of this Certificate.

     3. Such analysis did not disclose, and I am not aware, that any representation or warranty set
forth in the Credit Agreement or the other Loan Documents was or is untrue in any material respect
as of either the Applicable Period-End or the date of this Certificate, in each case as if remade
on and as of such date.

     4. Without limiting the generality of the foregoing, Borrower and the other Financial Covenant
Parties were in full compliance with all financial covenants set forth in Schedule 2 to the
Credit Agreement at the Applicable Period-End. Attached to this Certificate are detailed
computations demonstrating compliance with those financial covenants.

     5. All information and calculations set forth in this Certificate and its attachments, or
submitted to Lender with this Certificate, is true and correct in all material respects.

 

 

          DATED as of the date first set forth above.

	 	 	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	ACADIA REALTY LIMITED PARTNERSHIP, a 
Delaware limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Acadia Realty Trust, a Maryland real estate

investment trust, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	Title:	 	 

2

 

Computations Supporting Financial Covenant Compliance

3

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	ARTICLE I	 	DEFINITIONS AND ACCOUNTING TERMS	 	 	1	 
	 

	 	Section 1.1.
	 	Certain Defined Terms
	 	 	1	 
	 

	 	Section 1.2.
	 	Computation of Time Periods
	 	 	5	 
	 

	 	Section 1.3.
	 	Accounting Terms
	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II	 	AMOUNTS AND TERMS OF THE BORROWINGS	 	 	5	 
	 

	 	Section 2.1.
	 	The Commitment
	 	 	5	 
	 

	 	Section 2.2.
	 	Fees
	 	 	5	 
	 

	 	Section 2.3.
	 	The Borrowings
	 	 	5	 
	 

	 	Section 2.4.
	 	Procedure for Borrowings
	 	 	6	 
	 

	 	Section 2.5.
	 	Interest Rate
	 	 	6	 
	 

	 	Section 2.6.
	 	Payment of Interest
	 	 	7	 
	 

	 	Section 2.7.
	 	Unavailability of LIBOR Rate
	 	 	7	 
	 

	 	Section 2.8.
	 	Default Rate
	 	 	7	 
	 

	 	Section 2.9.
	 	Maximum Interest
	 	 	7	 
	 

	 	Section 2.10.
	 	Late Charge
	 	 	7	 
	 

	 	Section 2.11.
	 	Prepayments
	 	 	7	 
	 

	 	Section 2.12.
	 	Reduction of Balance to Zero
	 	 	7	 
	 

	 	Section 2.13.
	 	Maturity; Extension of Maturity Date
	 	 	8	 
	 

	 	Section 2.14.
	 	Evidence of Indebtedness
	 	 	8	 
	 

	 	Section 2.15.
	 	Illegality
	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III	 	CONDITIONS OF BORROWING	 	 	9	 
	 

	 	Section 3.1.
	 	Conditions Precedent to Initial Advance
	 	 	9	 
	 

	 	Section 3.2.
	 	Conditions Precedent to Each Advance
	 	 	11	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV	 	REPRESENTATIONS AND WARRANTIES	 	 	12	 
	 

	 	Section 4.1.
	 	Organization
	 	 	12	 
	 

	 	Section 4.2.
	 	Authorization; No Breach
	 	 	12	 
	 

	 	Section 4.3.
	 	Financial Information
	 	 	12	 
	 

	 	Section 4.4.
	 	Legal Effect
	 	 	12	 
	 

	 	Section 4.5.
	 	Compliance with Law
	 	 	12	 
	 

	 	Section 4.6.
	 	Hazardous Substances
	 	 	12	 
	 

	 	Section 4.7.
	 	Litigation and Claims
	 	 	13	 
	 

	 	Section 4.8.
	 	Taxes
	 	 	13	 
	 

	 	Section 4.9.
	 	Employee Benefit Plans
	 	 	13	 
	 

	 	Section 4.10.
	 	Regulated Entities
	 	 	13	 
	 

	 	Section 4.11.
	 	Information
	 	 	13	 
	 

	 	Section 4.12.
	 	Survival of Representations and Warranties
	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V	 	AFFIRMATIVE COVENANTS	 	 	14	 
	 

	 	Section 5.1.
	 	Changes in Financial Condition; Litigation
	 	 	14	 
	 

	 	Section 5.2.
	 	Financial Records
	 	 	14	 
	 

	 	Section 5.3.
	 	Reporting Requirements
	 	 	14	 
	 

	 	Section 5.4.
	 	Other Agreements
	 	 	14	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	 

	 	Section 5.5.
	 	Executive Personnel
	 	 	14	 
	 

	 	Section 5.6.
	 	Compliance With Law
	 	 	14	 
	 

	 	Section 5.7.
	 	Inspection
	 	 	14	 
	 

	 	Section 5.8.
	 	Existence
	 	 	14	 
	 

	 	Section 5.9.
	 	Maintenance of Insurance
	 	 	14	 
	 

	 	Section 5.10.
	 	Use of Proceeds
	 	 	15	 
	 

	 	Section 5.11.
	 	Information for Participants, Etc.; Publicity
	 	 	15	 
	 

	 	Section 5.12.
	 	Additional Assurances
	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI	 	NEGATIVE COVENANTS	 	 	15	 
	 

	 	Section 6.1.
	 	Business Activities
	 	 	15	 
	 

	 	Section 6.2.
	 	Loans and Guaranties
	 	 	15	 
	 

	 	Section 6.3.
	 	Dividends and Distributions
	 	 	16	 
	 

	 	Section 6.4.
	 	Liquidation, Merger, Sale of Assets
	 	 	16	 
	 

	 	Section 6.5.
	 	Transactions with Affiliates
	 	 	16	 
	 

	 	Section 6.6.
	 	Financial Covenants
	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII	 	DEFAULT AND REMEDIES	 	 	16	 
	 

	 	Section 7.1.
	 	Events of Default
	 	 	16	 
	 

	 	Section 7.2.
	 	Remedies
	 	 	18	 
	 

	 	Section 7.3.
	 	Right of Offset
	 	 	18	 
	 

	 	Section 7.4.
	 	Cumulative Remedies
	 	 	19	 
	 

	 	Section 7.5.
	 	Application of Payments
	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII	 	MISCELLANEOUS	 	 	19	 
	 

	 	Section 8.1.
	 	Amendments
	 	 	19	 
	 

	 	Section 8.2.
	 	Notices
	 	 	19	 
	 

	 	Section 8.3.
	 	No Waiver; Remedies
	 	 	19	 
	 

	 	Section 8.4.
	 	Costs and Expenses; Indemnification
	 	 	20	 
	 

	 	Section 8.5.
	 	Binding Effect; Assignments and Participations
	 	 	20	 
	 

	 	Section 8.6.
	 	Execution in Counterparts
	 	 	20	 
	 

	 	Section 8.7.
	 	Governing Law
	 	 	21	 
	 

	 	Section 8.8.
	 	Jurisdiction and Venue
	 	 	21	 
	 

	 	Section 8.9.
	 	Further Assurances
	 	 	21	 
	 

	 	Section 8.10.
	 	No Fiduciary Duty
	 	 	21	 
	 

	 	Section 8.11.
	 	Severability
	 	 	21	 
	 

	 	Section 8.12.
	 	Entire Agreement
	 	 	22	 
	 

	 	Section 8.13.
	 	Descriptive Headings
	 	 	22	 
	 

	 	Section 8.14.
	 	Gender and Number
	 	 	22	 
	 

	 	Section 8.15.
	 	Prior Agreement Amended and Restated
	 	 	22	 
	 

	 	Section 8.16.
	 	Non-Recourse/Limited Liability
	 	 	22	 

	 	 	 
	SCHEDULE 1

	 	Certain Specified Provisions
	SCHEDULE 2

	 	Financial Covenants
	SCHEDULE 3

	 	Financial Reporting
	EXHIBIT A

	 	Form of Borrowing Request
	EXHIBIT B

	 	Form of Compliance Certificate

ii

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