Document:

exv10w70

 

Exhibit 10.70

 

 

ACADIA TARRYTOWN LLC,

formerly known as

Acadia-Noddle Tarrytown Development Co., LLC

TO

ANGLO IRISH BANK CORPORATION PLC

 

MORTGAGE CONSOLIDATION AND MODIFICATION AGREEMENT

 

	 	 	 	 	 	 	 
	 
	 	Dated:	 	As of October 30, 2007	 	 
	 
	 	Location:	 	124-134 Wildey Street	 	 
	 
	 	County:	 	Westchester	 	 
	 
	 	Town:	 	Greenburgh	 	 
	 
	 	Village:	 	Tarrytown	 	 
	 
	 	Section:	 	1	 	 
	 
	 	Sheet:	 	2	 	 
	 
	 	Lots:	 	P25 and P25B	 	 

RECORD AND RETURN TO:

Sullivan & Worcester LLP

1290 Avenue of the Americas

New York, New York 10104

Attention: Hugh P. Finnegan, Esq.

 

 

 

 

TABLE OF CONTENTS

	 	 	 
	Section 1.

	 	Definitions
	 
	 	 
	Section 2.

	 	Consolidation; Spreader; Granting Clause
	 
	 	 
	Section 3.

	 	Obligations Secured
	 
	 	 
	Section 4.

	 	Representations and Warranties
	 
	 	 
	Section 5.

	 	Mortgagor’s Covenants
	 
	 	 
	5.1

	 	Title
	5.2

	 	Payment and Performance of Obligations
	5.3

	 	Insurance
	5.4

	 	Payment of Taxes and Liens
	5.5

	 	Insurance and Tax Deposits
	5.6

	 	Maintenance and Inspections
	5.7

	 	Alterations and Additions
	5.8

	 	Management and Operation
	5.9

	 	Compliance with Laws and Restrictions
	5.10

	 	Hazardous Waste
	5.11

	 	Condemnation
	5.12

	 	Records and Financial Statements
	5.13

	 	Alienation
	5.14

	 	Senior or Junior Indebtedness
	5.15

	 	Preservation of Easements, Licenses and Zoning
	5.16

	 	Mortgagee’s Right to Pay or Perform Mortgagor’s Covenants
	5.17

	 	Proceedings and Indemnification
	5.18

	 	Further Assurances
	5.19

	 	Expenses
	5.20

	 	Required Repairs
	5.21

	 	Estoppel Certificates
	5.22

	 	Undertakings
	 
	 	 
	Section 6.

	 	Assignment of Leases and Rents
	 
	 	 
	Section 7.

	 	Security Agreement
	 
	 	 
	Section 8.

	 	Events of Default
	 
	 	 
	Section 9.

	 	Remedies
	 
	 	 
	9.1

	 	Rights upon Default
	9.2

	 	Right to Release and Negotiate

1

 

	 	 	 
	9.3

	 	Mortgagor to Surrender Possession
	9.4

	 	Rights under UCC
	 
	 	 
	Section 10.

	 	Miscellaneous
	 
	 	 
	10.1

	 	Notices
	10.2

	 	Captions
	10.3

	 	Modifications
	10.4

	 	Non-Waiver
	10.5

	 	Cumulative Nature of Rights and Remedies
	10.6

	 	Limitation of Third-Party Rights
	10.7

	 	Interpretation
	10.8

	 	Assignability of Mortgagee’s Interest
	10.9

	 	Integration
	10.10

	 	Singular Includes Plural
	10.11

	 	Severability
	10.12

	 	Governing Law
	10.13

	 	Incorporation of Exhibits
	10.14

	 	Successors and Assigns Bound
	10.15

	 	Waiver of Jury Trial
	 
	 	 
	Section 11.

	 	New York Provisions.
	 
	 	 
	11.1

	 	Non-Residential Property
	11.2

	 	Trust Fund
	11.3

	 	Maximum Amount Secured

Signature of Mortgagor

Acknowledgment(s)

2

 

MORTGAGE CONSOLIDATION AND MODIFICATION AGREEMENT

     This Mortgage Consolidation and Modification Agreement, dated as of this 30th day of October,
2007, is made by ACADIA TARRYTOWN LLC, formerly known as Acadia-Noddle Tarrytown Development Co.,
LLC, a New York limited liability company, having an address at c/o Acadia Realty Trust, 1311
Mamaroneck Avenue, Suite 260, White Plains, New York 10605, (“Mortgagor”) in favor of ANGLO IRISH
BANK CORPORATION PLC, a banking corporation organized under the laws of the Republic of Ireland
having its principal place of business at Stephen Court, 18/21 St. Stephen’s Green, Dublin 2,
Ireland (“Mortgagee”).

RECITALS:

     WHEREAS, Mortgagor is the owner of the fee estate in the premises described in Exhibit
A attached hereto (the “Premises”) and Mortgagee is the owner and holder of certain mortgages
covering the fee estate of Mortgagor in the Premises, as more particularly described in Exhibit
C attached hereto (collectively, the “Existing Mortgages”) and of the notes, bonds or other
obligations secured thereby, as more particularly described in Exhibit C attached hereto
(collectively, the “Existing Notes”);

     WHEREAS, there is, prior to the execution of the note and the mortgage dated the date hereof,
presently owing on the Existing Notes and the Existing Mortgages the principal balance of
$1,859,478.61 and interest;

     WHEREAS, Mortgagor and Mortgagee have agreed in the manner hereinafter set forth (a) to spread
the Existing Mortgages and the respective liens thereof over those portions of the Mortgaged
Property not already covered thereby, if any, and (b) to modify the terms and provisions of the
Existing Mortgages;

     NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the
receipt and legal sufficiency of which is hereby acknowledged, Mortgagor hereby represents and
warrants to and covenants and agrees with Mortgagee as follows:

     Section 1. Definitions. Each reference in this Mortgage to the following terms shall
be deemed to have the following meaning:

     Bankruptcy Code: The federal bankruptcy code, 11 U.S.C. § 101 et
seq., as the same now exists or may hereafter be amended.

     Collateral: Collectively, the Personal Property, the Proceeds, the Leases, Rents and
Security Deposits.

     Commitment Letter: Mortgagee’s term sheet, dated September 6, 2007, setting forth the
general terms of the Loan.

3

 

     Continuing Expenses: Normal operating expenses of the Mortgaged Property that are
incurred during the period of any loss due to a casualty with respect to the Mortgaged Property.

     Cost to Repair: The term “Cost to Repair” is defined in Section 5.3.9 hereof.

     Default Condition: The existence of any Event of Default or the existence of any
condition or state of facts which, with the giving of notice or passage of time, or both, would
constitute an Event of Default.

     Default Rate: The rate of interest payable under the Note at maturity or upon the
occurrence of an Event of Default.

     Deposited Funds: Any and all sums deposited with Mortgagee pursuant to Section 5.5
hereof for payment of Impositions and insurance premiums.

     Environmental Site Assessment Report: The report, dated October 9, 2007 prepared by
ATC Associates Inc. and provided to Mortgagee in connection with the Loan.

     Event of Default: Any event of default listed in Section 8 hereof.

     Existing Mortgages: The term “Existing Mortgages” is defined in the Recitals.

     Existing Notes: The term “Existing Notes” is defined in the Recitals.

     Guarantor: The term “Guarantor” shall mean Acadia Strategic Opportunity Fund, LP.

     Guaranty Documents: The term “Guaranty Documents” shall collectively mean that certain
Non-Recourse Carve Out Guaranty Agreement, dated the date hereof, executed by Mortgagor and
Guarantor in favor of Mortgagee and that certain Environmental Indemnity Agreement, dated the date
hereof, executed by Mortgagor and Guarantor in favor of Mortgagee.

     Governmental Authority: Each and every national, state and local governmental body,
department, agency or subdivision having jurisdiction over Mortgagor, any Guarantor or the
Mortgaged Property or any part thereof or any use, operation or occupancy thereof.

     Hazardous Waste: Any “oil,” “hazardous material,” “hazardous wastes” or “hazardous
substances” as defined in the Hazardous Waste Laws, including, without limitation (whether or not
included in the definition contained in the Hazardous Waste Laws), PCBs, asbestos, radon and other
chemicals which would be materially dangerous to the environment or to human beings.

     Hazardous Waste Laws: Collectively, any present and future federal, state and local
laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to
protection of human health or the environment, relating to Hazardous Substances, relating to
liability for or costs of remediation or prevention of releases of Hazardous Substances or relating
to liability for or costs of other actual or threatened danger to human health or the environment,

4

 

including, but not limited to, the following statutes, as amended, any successor thereto, and
any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules,
regulations and the like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including but
not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the
Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act;
the Occupational Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act.

     Hedging Agreement: The term “Hedging Agreement” shall mean any swap, collar, option
or similar contract entered into or to be entered into between the Mortgagor and the Mortgagee in
connection with the Loan.

     Impositions: Any and all taxes, assessments, water and sewer charges, and other
charges of whatever nature which may at any time be assessed against, levied upon or constitute a
lien on the whole or any part of the Mortgaged Property, or which otherwise might become a lien
prior to this Mortgage or otherwise have priority in the distribution of the proceeds of a judicial
sale, and any and all interest, costs or penalties with respect to any and all unpaid taxes,
assessments or charges.

     Improvements: Any and all buildings and improvements now or hereafter located on the
Premises.

     Lease: Each and every agreement providing for use or occupancy of all or any part of
the Mortgaged Property, whether written or oral, whether now existing or hereafter arising, and any
and all amendments, renewals and extensions thereof including all guaranties thereof.

     Lessee: Any tenant pursuant to a Lease.

     Licenses: Any and all franchises, licenses and permits whether issued by a
Governmental Authority or otherwise, relating to construction on the Premises or any part thereof,
or the use, operation or occupancy of the Premises and Improvements or any part thereof or any
business conducted thereon.

     Loan: The loan evidenced by the Note.

     Loan Documents: Collectively, the Note, the Security Instruments and the Other
Documents.

     Mortgage: The term “Mortgage” is defined in Section 2.2 hereof.

     Mortgaged Property: The term “Mortgaged Property” as defined in Section 2.1 hereof.

5

 

     Net Proceeds: The net amount of all insurance proceeds received by Mortgagee pursuant
to the provisions of this Mortgage as a result of damage or destruction of the Mortgaged Property,
after deducting Mortgagee’s reasonable costs and expenses, if any, in collecting the same available
for the repair and restoration of the Improvements.

     Note: The term “Note” means that certain Note Consolidation and Modification
Agreement, dated the date hereof, executed by Mortgagor in favor of Mortgagee in the principal
amount of up to $9,800,000.00.

     Obligations: The term “Obligations” as defined in Section 3 hereof.

     Other Documents: Any document, instrument or agreement now or hereafter securing the
Note or executed by Mortgagor or any Other Liable Party in connection with the Loan, other than the
Note and the Security Instruments, including, without limitation, any Hedging Agreement.

     Other Liable Party: Each and every person, corporation, limited liability company,
partnership or other entity (other than Mortgagor) now or hereafter liable, absolutely or
contingently, for the whole or any part of the indebtedness evidenced by the Note, including,
without limitation, the Guarantor.

     Permitted Encumbrances: The liens and encumbrances, if any, listed on Exhibit
B attached hereto and incorporated herein by reference and any real estate taxes and
assessments with respect to the Premises and Improvements to the extent that the same are not yet
due and payable.

     Permitted Use: Retail uses permitted by applicable law.

     Personal Property: Any and all fixtures, machinery, equipment and other personal
property of every kind, now or hereafter located in or upon or affixed to the Premises or
Improvements, or any part thereof, or now or hereafter used or to be used in connection with any
present or future operation of the Premises or Improvements, or any part thereof, and now owned or
hereafter acquired by Mortgagor, or in which Mortgagor now or hereafter has an interest, including,
without limitation, any and all (i) heating, lighting, incinerating, refrigerating, ventilating,
air conditioning, air cooling, lifting, fire extinguishing, plumbing, cleaning, communications and
power equipment and apparatus, (ii) gas, water and electrical equipment, (iii) elevators,
escalators, switchboards, engines, motors, tanks, pumps, partitions, conduits, ducts and
compressors, (iv) electrical and/or gas appliances, incinerators, carpeting, furniture and
furnishings, draperies, storm windows and doors, and screens and awnings and (v) Licenses; and any
and all renewals of, replacements, accessions or additions to, substitutions for and proceeds of
any and all of the foregoing.

     Premises: The term “Premises” is defined in the Recitals.

     Proceeds: Any and all proceeds payable or paid for or with respect to any or as a
result of damage or loss to the Premises, Improvements and Personal Property, or any part thereof,

6

 

including, without limitation, insurance proceeds, and all awards in connection with any
condemnation or other taking of the Premises, Improvements and Personal Property, or any part
thereof, or for conveyance in lieu thereof.

     Rents: Any and all rents and other payments of every kind due or payable and to
become due or payable to Mortgagor by virtue of the Leases, or otherwise due or payable and to
become due or payable to Mortgagor as the result of any use, possession or occupancy of all or any
part of the Mortgaged Property.

     Security Deposits: All tenant security deposits held by or deposited with Mortgagor
or Mortgagee in connection with any of the Leases, whether in the form of cash, letter of credit or
otherwise.

     Security Instruments: (i) this Mortgage, (ii) an Assignment of Leases and Rents from
Mortgagor to Mortgagee of even date herewith, (iii) any guaranty or indemnity of the obligations of
Mortgagor under the Note or any of the other Loan Documents and (iv) the UCC-1 Financing Statements
perfecting the security interest granted herein.

     Section 2. Consolidation; Spreader; Granting Clause.

     2.1. The Existing Mortgages and the respective liens thereof are hereby spread over those
portions of the Mortgaged Property not already covered thereby, and for consideration paid and for
other good and valuable consideration, the receipt and legal adequacy of which are hereby
acknowledged, Mortgagor hereby grants, bargains, sells, conveys, transfers and assigns to
Mortgagee, its successors and assigns, forever, WITH MORTGAGE COVENANTS, and Mortgagor hereby
grants to Mortgagee, its successors and assigns a security interest in and to all of Mortgagor’s
right, title and interest, if any, in the following property, rights and interests (such property,
rights and interests being heretofore and hereinafter collectively referred to as the “Mortgaged
Property”):

          (i) the Premises;

          (ii) the Improvements;

          (iii) the Personal Property;

          (iv) any and all easements, rights of way, privileges, hereditaments and appurtenances now or
hereafter belonging to or inuring to the benefit of the Premises and/or Improvements or any part
thereof, all right, title and interest of Mortgagor in and to the land lying within any street or
roadway adjoining the Premises or any part thereof, and all right, title and interest of Mortgagor
in and to any now or hereafter vacated streets or roads adjoining the Premises or any part thereof;

          (v) any and all issues, benefits and profits of the Premises and/or Improvements;

7

 

          (vi) the Leases, Rents and Security Deposits;

          (vii) the Proceeds;

          (viii) the Deposited Funds;

          (ix) any and all records and books of account now or hereafter maintained by Mortgagor in
connection with the operation of the Premises, Improvements and Personal Property or any part
thereof;

          (x) all of Mortgagor’s right, title and interest in and to any name under which the Premises
and/or Improvements may at any time be operated and any variation thereof and the goodwill of
Mortgagor in connection herewith or therewith;

          (xi) all of Mortgagor’s right, title and interest in and to any Hedging Agreement.

All of which Premises, Improvements, Personal Property and other property hereby granted, sold and
conveyed, or intended so to be, are collectively referred to as the “Mortgaged Property.”

TO HAVE AND TO HOLD the Mortgaged Property unto and to the use of Mortgagee, its successors and
assigns forever.

     2.2. The Existing Mortgages and the respective liens thereof, as so spread, constitute in law
but one mortgage, a single first mortgage lien, covering the Mortgaged Property and securing the
principal sum of up to $9,800,000.00, together with interest thereon as hereinafter provided (the
Existing Mortgages, as modified, amended, restated, ratified and confirmed pursuant to the
provisions of this Mortgage hereinafter set forth, being hereinafter collectively referred to as
the “Mortgage”).

     2.3. The terms, covenants and provisions of the Mortgage are hereby modified, amended and
restated in their entirety so that henceforth the terms, covenants and provisions of the Mortgage
shall read the same as the paragraphs set forth herein, and the Mortgage, as so modified, amended
and restated, is hereby ratified and confirmed in all respects by Mortgagor.

     2.4. Mortgagor represents, warrants and covenants that there are no offsets, counterclaims or
defenses against the Note or this Mortgage and that Mortgagor (and the undersigned representative
of Mortgagor) has full power, authority and legal right to execute this Mortgage and to keep and
observe all of the terms of this Mortgage on Mortgagor’s part to be observed and performed.

     Section 3. Obligations Secured.

     This conveyance is made to secure the following obligations (collectively, the “Obligations”):

8

 

          (i) Payment of the indebtedness of Mortgagor to Mortgagee evidenced by the Note;

          (ii) payment by Mortgagor to Mortgagee of any and all sums expended or advanced by Mortgagee
pursuant to any term or provision of this Mortgage;

          (iii) performance and observance by Mortgagor of each and every covenant, condition and
obligation contained in the Note, this Mortgage, the other Security Instruments and any other
document, instrument or agreement now or hereafter given by Mortgagor as additional security for
the payment of the indebtedness hereby secured, or otherwise executed in connection therewith;

          (iv) payment by Mortgagor to Mortgagee of any and all sums expended or advanced by Mortgagee
pursuant to any term or provision of any Hedging Agreement entered into between Mortgagor and
Mortgagee; and

          (v) performance and observance by Mortgagor of every condition and obligation contained in any
Hedging Agreement entered into between Mortgagor and Mortgagee.

     Section 4. Representations and Warranties.

     4.1. Mortgagor is duly organized, validly existing and in good standing under the laws of the
state of its organization and is duly qualified to transact business in the state in which the
Premises is located;

     4.2. Mortgagor has the requisite power and authority (a) to own its properties and to carry on
its business as now being conducted and as contemplated under this Mortgage and each Lease, (b) to
place mortgages and liens upon its assets and (c) to execute and deliver or cause to be executed
and delivered the Loan Documents and to perform its obligations thereunder;

     4.3. The execution and delivery of the Loan Documents and the performance of the terms and
conditions thereof by Mortgagor, have been duly authorized by all requisite action, and create the
valid and binding obligations of Mortgagor, enforceable in accordance with their respective terms;

     4.4. Neither the execution, delivery and performance of this Mortgage by Mortgagor, nor the
execution, delivery and performance, by Mortgagor or any other party (except for Mortgagee), of any
of the other Loan Documents or any and all other documents, instruments and agreements required by
Mortgagee in connection with the Loan, including, without limitation, the execution and delivery of
any guaranty by the Guarantor, will violate any provision of (a) law, (b) any order of any court or
other Governmental Authority, (c) Mortgagor’s organizational documents or operating agreement, (d)
any indenture, agreement or other instrument to which Mortgagor or any Guarantor is a party, or by
which Mortgagor or any Guarantor is bound, or be in conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such indenture, agreement
or other instrument, or result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever

9

 

upon any of the property or assets of Mortgagor or any Guarantor, other than as provided
herein and in the Security Instruments;

     4.5. All financial data, reports and other information prepared by or for the benefit of
Mortgagor or Guarantor and furnished Mortgagee in connection with the Loan are accurate and
complete and fairly present the financial position and the results of operations for the periods
indicated therein, and there has been no material adverse change in the condition, financial or
otherwise, of Mortgagor or the Guarantor since the dates of the most recent financial statements;

     4.6. Neither Mortgagor, nor any Guarantor, nor any corporation, partnership or other legal
entity in which Mortgagor or any Guarantor is a principal, is in default under any of their
respective material obligations and agreements (including the payment of all federal, state and
local taxes), to the best of Mortgagor’s and Guarantor’s knowledge, no condition or state of facts
exists which with the giving of notice or passage of time or both would constitute such a default,
and there is no action, suit or proceeding at law or in equity or by or before any Governmental
Authority now pending, or, to the knowledge of Mortgagor or any Guarantor, threatened against or
affecting Mortgagor, any Guarantor, the Mortgaged Property or any properties adjacent to the
Mortgaged Property, which, if adversely determined, would have a material adverse effect on the
business, operations, properties (including without limitation, the Mortgaged Property), assets or
condition, financial or otherwise, of Mortgagor or any Guarantor;

     4.7. To Mortgagor’s knowledge and except as otherwise previously disclosed to Mortgagee in
writing, there is no default under and there exists no condition or state of facts which, with the
giving of notice or passage of time or both, would constitute a default under any Lease;

     4.8. To the best of Mortgagor’s knowledge, the Mortgaged Property and the use thereof for the
Permitted Use does not violate (a) any building, zoning, subdivision, land-use, health, sanitation,
environmental protection or other law, ordinance, rule or regulation promulgated by any
Governmental Authority or (b) any deed, plat or other restriction of any kind applicable to the
Mortgaged Property;

     4.9. To the best of Mortgagor’s knowledge, all utilities and services necessary for the
operation of the Mortgaged Property for the Permitted Use and in accordance with each Lease, (a)
are available at the boundary of the Premises and are connected to the Improvements, (b) are
operational and (c) are of sufficient capacity to adequately service the operation of the
Improvements;

     4.10. Except as may be set forth in that certain Title Commitment dated the date hereof issued
by Commonwealth Land Title Insurance Company under Title Number 07NYW10958 (the “Title
Commitment”), there are no party wall agreements or easements across or affecting the Mortgaged
Property which have any adverse effect upon the operation of the Mortgaged Property;

10

 

     4.11. To the best of Mortgagor’s knowledge, the Improvements are not located in a designated
flood hazard area, as defined in the Flood Disaster Protection Act of 1973 (P.L. 93-234), as
amended;

     4.12. There is unrestricted access for the passage of motor vehicles to and from the Premises
to and from the public road upon which the Premises fronts and all required curb cut or access
permits (if any) have been obtained; and

     4.13. Neither the making of the Loan nor Mortgagee’s acceptance of the Loan Documents will
subject Mortgagee to any claim for a brokerage commission, finder’s fee or like charge by virtue of
any action of Mortgagor.

     Section 5. Mortgagor’s Covenants. The Mortgagor covenants and agrees with Mortgagee
as follows:

     5.1. Title.

          5.1.1 Mortgagor has good and clear, record and marketable title in fee simple to the Mortgaged
Property subject only to the Permitted Encumbrances; this Mortgage is and will remain a valid and
enforceable lien on the Mortgaged Property; Mortgagor has full power and lawful authority to grant,
sell and convey the Mortgaged Property in the manner and form herein done; and Mortgagor will
preserve such title, will forever warrant and defend the same to Mortgagee and will forever warrant
and defend the validity and priority of the lien hereof against the claims of all persons
whatsoever, except the holders of the Permitted Encumbrances.

          5.1.2 Mortgagor agrees to deliver, within thirty (30) days after the date hereof, an ALTA
standard form of Mortgagee’s loan policy of title insurance with respect to the Premises, in the
amount of the Note, insuring the lien of this Mortgage as a good and valid first lien subject only
to the Permitted Encumbrances, and containing such endorsements and affirmative coverage as have
been requested by or on behalf of Mortgagee in writing prior to the recording hereof or as
Mortgagee otherwise reasonably may require.

     5.2. Payment and Performance of Obligations.

          5.2.1 Mortgagor shall pay all indebtedness hereby secured at the time or times and in the
manner provided herein, in the Note, or in any other instrument secured hereby.

          5.2.2 Mortgagor will perform and observe all the terms, provisions, covenants and conditions
imposed upon Mortgagor under each and every of the Loan Documents, all at the time or times and in
the manner provided therein.

     5.3. Insurance.

          5.3.1 Mortgagor shall keep the Improvements continuously insured against loss by fire and the
risks covered under a so-called “extended coverage endorsement”, flood, explosion of boilers,
heating apparatus and other pressure vessels, and such other hazards,

11

 

casualties and contingencies as Mortgagee from time to time reasonably may require, in an
amount equal to one hundred percent (100%) of the replacement cost of the Improvements. The
insurance policy evidencing such coverage: (a) shall be endorsed with an Agreed Amount Endorsement,
(b) shall be endorsed with a Loss of Rents Endorsement (or equivalent endorsement) for a twelve
(12) month period, and (c) shall contain a deductible satisfactory to Mortgagee. The amount of
such insurance coverage shall be reviewed not less than annually and increased whenever necessary
so as to provide the required coverage.

          5.3.2 Mortgagor shall continuously keep in full force and effect a policy of public liability
insurance and (if relevant) elevator insurance, against claims for bodily injury, death or property
damage occurring upon, in or about the Mortgaged Property or any part thereof in which the limits
of liability shall not be less than One Million Dollars (US$1,000,000) per occurrence and Two
Million Dollars (US$2,000,000) general aggregate, together with an umbrella form liability policy
in the amount of Five Million Dollars (US$5,000,000), which shall be in addition to the limits
above set forth. Mortgagor agrees to increase the limits of such liability insurance to such
higher amounts as Mortgagee from time to time reasonably may require.

          5.3.3 All such insurance shall be evidenced by valid and enforceable policies in form and
substance satisfactory to Mortgagee. Without limiting the generality of the foregoing: (a) all
such insurance policies shall contain an endorsement requiring thirty (30) days written notice to
Mortgagee prior to cancellation or change in the coverage, scope or amount of any such policy or
policies, (b) all such insurance policies and certificates thereof shall name Mortgagee, its
successors and assigns, as mortgagee, loss payee and additional insured, and (c) any and all
policies evidencing casualty insurance shall provide that any and all loss shall be payable to
Mortgagee and such loss shall be payable to Mortgagee notwithstanding any act or omission of
Mortgagor which might otherwise result in cancellation or forfeiture of said insurance.

          5.3.4 Mortgagor shall deliver to Mortgagee evidence satisfactory to Mortgagee of the issuance
of renewal or replacement policies not less than thirty (30) days prior to the expiration date of
the policy to be renewed or replaced, accompanied, if requested by Mortgagee, by evidence
satisfactory to Mortgagee that all premiums payable with respect to such policies have been paid in
full by Mortgagor. In addition, Mortgagor shall provide such other insurance as may be reasonably
requested by Mortgagee from time to time.

          5.3.5 From time to time, upon the request of Mortgagee, Mortgagor shall provide Mortgagee with
the originals of all policies evidencing the insurance coverage required under this Mortgage. In
any event Mortgagor shall furnish to Mortgagee (a) concurrently with the execution of this
Mortgage, a certificate of insurance or other evidence of insurance satisfactory to Mortgagee
evidencing that Mortgagor has in full force and effect the insurance coverage required hereunder,
and (b) from time to time at the request of Mortgagee, a certificate of insurance or other evidence
of insurance satisfactory to Mortgagee evidencing that Mortgagor has in full force and effect the
insurance coverage required hereunder.

          5.3.6 Mortgagor shall have the right of free choice in the selection of the agent or insurer
through or by which the insurance required hereunder is to be placed; provided,

12

 

however, said insurer is authorized to write such insurance in the state in which the Premises
is located, has a licensed resident agent in said state and has, at all times while this mortgage
is in effect, a general policyholder’s rating of A-VIII or better in Best’s latest rating guide.

          5.3.7 Mortgagee shall be, and is hereby, authorized and empowered, for and in the name or
names and on behalf of Mortgagor and/or Mortgagee, and for the purposes hereinafter set forth,
shall be and is hereby made, constituted and appointed the true and lawful attorney-in-fact of
Mortgagor (with full power of substitution and revocation), and in the sole and uncontrolled
discretion of said attorney, (a) to demand, adjust, sue for, settle, compromise and collect any
amounts due under such insurance polices in the event of loss, and (b) to give releases for any and
all amounts received in settlement of loss under such policies; provided, however, so long as no
Default Condition exists, Mortgagee shall not exercise such power of attorney unless and until
three (3) months have elapsed from the date of such loss without settlement having been made.
Unless the settlement of such loss is in excess of the amount of the Obligations, no settlement
therefor shall be made without the prior written consent of Mortgagee. The foregoing appointment,
being coupled with an interest, is irrevocable until the Obligations are paid and otherwise
satisfied in full.

          5.3.8 (a) If the Mortgaged Property shall be damaged or destroyed, in whole or in part, by
fire or other casualty, Mortgagor shall give prompt notice thereof to Mortgagee. Mortgagor hereby
authorizes and empowers Mortgagee, at Mortgagee’s option and at Mortgagee’s sole discretion, as
attorney-in-fact for Mortgagor, to make proof of loss, to adjust and compromise any claim under any
insurance policy, to appear in and prosecute any action arising from any policy, to collect and
receive insurance proceeds and to deduct therefrom Mortgagee’s expenses incurred in the collection
process, to endorse any checks, drafts or other instruments representing any proceeds of such
insurance, whether payable by reason of loss thereunder or otherwise, and to make any election
required or permitted under any insurance policy relating to repair or restoration; provided,
however, so long as no Default Condition exists, Mortgagee shall not exercise such power of
attorney unless and until three (3) months have elapsed from the date of such loss without
settlement having been made. So long as no Default Condition exists, Mortgagee shall disburse any
Rents and Continuing Expenses received under any insurance policy to Mortgagor. Mortgagee shall
make the Net Proceeds available for the repair and restoration of the Improvements, provided that
(i) no Default Condition shall exist, (ii) Mortgagor shall proceed with the repair and restoration
of the Improvements as nearly as reasonably possible to the condition the Improvements were in
immediately prior to such fire or other casualty promptly after the insurance claims are settled,
(iii) no Lease shall be terminated as a result of such fire, (iv) Mortgagee shall be reasonably
satisfied that upon the completion of such repair and restoration the gross cash flow and the net
cash flow of the Mortgaged Property will be restored to a level at least equal to the level the
same were at prior to the date of such fire or other casualty and (v) the estimated cost of repair,
restoration, rebuilding or replacement (hereinafter, collectively, the “Cost to Repair”) does not
exceed $500,000.00. If the Cost to Repair is greater than $500,000.00 but does not exceed
$1,000,000.00, provided the conditions set forth in (i), (ii), (iii) and (iv) above have been
satisfied, Mortgagee shall release so much of the Net Proceeds as may be required to pay for the
actual Cost to Repair directly to the Mortgagor in accordance with the provisions of this Section
5.3.9. If the Cost to Repair is greater than or equal to $1,000,000.00 or if the casualty occurs
within one hundred and eighty

13

 

(180) days of the Maturity Date (as such term is defined in the Note) the Mortgagee, in its
sole and absolute discretion, may either apply the proceeds of insurance to reduce the Mortgagor’s
Obligations or, provided the conditions set forth in (i), (ii), (iii) and (iv) above have been
satisfied, release so much of the Net Proceeds as may be required to pay for the actual Cost of the
repair work to repair, restore, rebuild or replace the Improvements (collectively, the “Repair
Work”) directly to the Mortgagor in accordance with the provisions of this Section 5.3.9.

               (b) Upon satisfaction of the provisions of the preceding paragraph (a), the Net Proceeds will
be disbursed by Mortgagee to Mortgagor to pay for the costs of the Repair Work. The Net Proceeds
shall be held by Mortgagee in escrow until expended in connection with the Repair Work, it being
agreed that any Net Proceeds so held by Mortgagee may be commingled with the general funds of
Mortgagee, shall bear interest at such rate as reasonably determined by Mortgagee, and shall
constitute additional security for the payment of the Obligations. The Net Proceeds shall be paid
by Mortgagee to, or as directed by, Mortgagor from time to time during the course of the Repair
Work upon satisfaction of the following conditions: (i) all plans, specifications, costs estimates,
contracts and bonds, if any, for the Repair Work, have been obtained and are satisfactory to
Mortgagee in its commercially reasonable discretion and (ii) Mortgagee has received satisfactory
evidence that: (x) all materials installed and work and labor performed (except to the extent that
they are to be paid for out of the requested payment) in connection with the repair and restoration
have been paid for in full, (y) there exists no notices of intention, mechanics or other liens and
encumbrances on the Mortgaged Property arising out of the Repair Work, and (z) the balance of the
Net Proceeds plus the balance of any deficiency deposits made by Mortgagor pursuant to the
provisions of this paragraph hereinafter set forth shall be sufficient to pay in full the balance
of the cost of the Repair Work. The Repair Work shall be done and completed by Mortgagor in an
expeditious and diligent fashion and in compliance with all applicable laws, rules and regulations,
and all plans and specifications required in connection with the repair and restoration shall be
subject to the prior review and approval in all respects by an independent inspecting engineer
selected by Mortgagor and reasonably acceptable to Mortgagee (the “Inspecting Engineer”). All
costs and expenses incurred by Mortgagee in connection with making the Net Proceeds available for
the Repair Work, including, without limitation, counsel fees and disbursements and the Inspecting
Engineer’s fees incurred by Mortgagee, shall be paid by Mortgagor. In no event shall Mortgagee be
obligated to make disbursements of the Net Proceeds in excess of an amount equal to the value of
the work in place as part of the repair and restoration, as certified by the Inspecting Engineer,
minus 10% of such costs (such 10% being hereinafter referred to as the “Retainage”). Once fifty
percent (50%) of the Repair Work has been completed, the Retainage shall be reduced to 5%.
Mortgagee shall not be obligated to make disbursements of the Net Proceeds more than once every
thirty (30) days. If the Cost to Repair does not exceed $500,000.00, only one disbursement of the
Net Proceeds shall be made by Mortgagee, which disbursement shall be made upon certification by the
Inspecting Engineer that the Repair Work has been completed in accordance with the provisions of
this paragraph, and upon receipt by Mortgagee of evidence satisfactory to Mortgagee that the costs
of the repair and restoration have been paid in full or will be paid in full out of such
disbursement. The Retainage shall not be released until the Inspecting Engineer certifies that the
repair and restoration have been completed in accordance with the provisions of this paragraph, and
Mortgagee receives evidence satisfactory to Mortgagee that the costs of the repair and restoration
have been paid in full or will be paid in full out of the

14

 

Retainage. The excess, if any, of the Net Proceeds after the completion of the Repair Work and the
payment in full of all costs incurred in connection therewith shall be applied by Mortgagee in
reduction of the Obligations in such priority and proportions as Mortgagee in its commercially
reasonable discretion shall deem proper. If at any time the Net Proceeds, or the undisbursed
balance thereof, shall not, in the commercially reasonable opinion of Mortgagee, be sufficient to
pay in full the balance of the costs which will be incurred in connection with the completion of
the Repair Work, Mortgagor shall deposit the deficiency with Mortgagee before any further
disbursement of the Net Proceeds shall be made, which deficiency deposit may be commingled with the
general funds of Mortgagee, shall bear interest at such rate as reasonably determined by Mortgagee
and shall be disbursed for costs actually incurred in connection with the Repair Work on the same
conditions applicable to the Net Proceeds. Any such deficiency deposit, until disbursed pursuant
to this paragraph, shall constitute additional security for the payment of the Obligations. The
balance, if any, of any such deficiency deposit remaining after the Inspecting Engineer certifies
that the Repair Work has been completed in accordance with the provisions of this paragraph and the
receipt by Mortgagee of evidence satisfactory to Mortgagee that all costs incurred in connection
with the Repair Work have been paid in full shall be returned by Mortgagee to Mortgagor. All costs
of the Repair Work in excess of the Net Proceeds shall be paid for by Mortgagor. If Mortgagee
shall receive and retain such Net Proceeds, the lien of this Mortgage shall be reduced only by the
amount thereof received and retained by Mortgagee and actually applied by Mortgagee in reduction of
the Obligations. Mortgagee shall not be obligated to see to the proper application of insurance
money paid over to Mortgagor, and if Mortgagee receives and retains any Net Proceeds, the lien of
this Mortgage shall be affected only by a reduction of the amount of said lien by the amount of
such insurance money so received and retained by Mortgagee. Nevertheless, if prior to the receipt
by Mortgagee of any insurance proceeds, the Mortgaged Property shall have been sold on foreclosure
of this Mortgage, as between Mortgagor and Mortgagee, Mortgagee shall have the right to receive
said insurance proceeds, and Mortgagor shall pay over to Mortgagee said insurance proceeds as, if
and when Mortgagor receives same, to the extent of (i) any deficiency found to be due upon such
sale, with legal interest thereon, whether or not a deficiency judgment on this Mortgage shall have
been sought or recovered, and (ii) of the attorneys’ fees, costs and disbursements incurred by
Mortgagee in connection with the collection of such insurance proceeds. Mortgagor will not permit
any condition to exist on the Mortgaged Property that would wholly or partially invalidate the
insurance policies.

          5.3.9 If Mortgagee shall by any manner acquire title to the Mortgaged Property, it shall
thereupon become the sole and absolute owner of all insurance policies held by or required
hereunder to be delivered to Mortgagee, with the sole right to collect and retain all unearned
premiums and dividends thereon, and Mortgagor shall only be entitled to a credit, in reduction of
the then outstanding indebtedness secured hereby, in the amount of the short rate cancellation
refund. Without limiting the generality of the foregoing, in the event of foreclosure of this
Mortgage or any transfer of title to the Mortgaged Property to a third-party purchaser pursuant to
the power(s) in this Mortgage granted Mortgagee, Mortgagee shall be and is hereby authorized and
empowered, for and in the name or names and on behalf of Mortgagor and/or Mortgagee, and for the
purposes hereinafter set forth, shall be and is hereby made, constituted and appointed the true and
lawful attorney-in-fact of Mortgagor (with full power of substitution and revocation) in the name
place and stead of Mortgagor, and in the sole and uncontrolled

15

 

discretion of said attorney, to surrender up the policies of insurance covering the Mortgaged
Property and any part thereof and to collect any amounts due thereunder or, at its option, to
transfer all right, title and interest in and to said policies and the proceeds thereof to any
purchaser of the Mortgaged Property or any part thereof without obligation to account therefor to
any person claiming title to the Mortgaged Property; provided, however, that any
amounts received by Mortgagee under said policies by way of refunds, dividends or otherwise, as
aforesaid, shall be applied to the payment of the Obligations, and any surplus shall be paid over
as a surplus on foreclosure. The foregoing appointment being coupled with an interest is
irrevocable. Upon the occurrence of an Event of Default, Mortgagee shall have no obligation to
disburse any funds to Mortgagor and all monies held by Mortgagee may be applied toward satisfaction
of the Obligations. Notwitstanding the foregoing, this Section 5.39 shall not apply with respect
to any blanket insurance policies of Mortgagor which do not relate solely to the Mortgaged
Property. The provisions of Subsection 4 of Section 254 of the Real Property Law of New York
covering the insurance of buildings against loss by fire shall not apply to the terms of this
Mortgage.

          5.3.10 Mortgagee consents to Mortgagor providing the insurance coverage required under this
Section 5.3 by causing one or more tenants leasing the entire or a portion of the Mortgaged
Property to provide such insurance in the same form and amounts as set forth in this Section 5.3.

     5.4. Payment of Taxes and Liens.

          5.4.1 Mortgagor shall pay, when due, all Impositions and shall furnish to Mortgagee, promptly
after payment of the same, certificates, receipts or other evidence reasonably satisfactory to
Mortgagee of such payment; provided, however, Mortgagor shall not be required to pay and discharge
any such Imposition, if and so long as (a) the validity thereof shall be contested by Mortgagor
with diligence and in good faith by appropriate proceedings and (b) Mortgagor shall have deposited
with Mortgagee a sum equal to the amount being so contested and any additional charge, penalty or
expense which may be incurred as a result of such contest; and provided further, however, that any
such Imposition and any such additional charge, penalty or expense shall be paid in full before the
Mortgaged Property, or any part thereof, shall be seized and sold in satisfaction thereof.

          5.4.2 Mortgagor shall pay, when the same shall become due and payable, all claims and demands
of mechanics, materialmen, laborers and others which, if unpaid, might result in or permit the
creation of a lien on the Mortgaged Property or any part thereof, provided, however, Mortgagor
shall not be required to pay any such claim or demand, if and so long as (a) the validity thereof
shall be contested by Mortgagor with diligence and in good faith by appropriate proceedings and (b)
in the event that such claim or demand results in a lien or notice of record against the Mortgaged
Property or any part thereof, Mortgagor shall have bonded or otherwise caused such lien to be
removed or discharged.

          5.4.3 Mortgagor shall pay to Mortgagee, within thirty (30) days after Mortgagee’s demand, an
amount equal to any and all taxes, assessments or charges of whatever nature which may at any time
be assessed against Mortgagee with respect to the Note or this Mortgage or its ownership or holding
thereof, whether under statutes now or hereafter in effect.

16

 

In the event any such tax, assessment or charge is not or, under applicable law, cannot be so
paid by Mortgagor, at the option of Mortgagee, the Obligations shall become immediately due and
payable.

     5.5. Insurance and Tax Deposits.

     Mortgagee, at any time if an Event of Default has occurred and is continuing or if Mortgagor
has failed to pay the Impositions for the immediately preceding due date, upon ten (10) days notice
to Mortgagor, may require Mortgagor to pay to Mortgagee, on the first day of each calendar month, a
sum equal to (a) one-twelfth (1/12) of the Impositions and (b) one-twelfth (1/12) of the annual
premiums for the insurance required hereunder to be maintained on the Mortgaged Property, the
respective amounts of such Impositions and premiums to be reasonably estimated from time to time by
Mortgagee. Mortgagee shall apply the Deposited Funds to the payment of such Impositions and
premiums and shall render an annual accounting to Mortgagor of all disbursements of the Deposited
Funds. Although each such monthly payment of Deposited Funds are to be in a lump sum, each
component thereof shall be deemed to be held separately by Mortgagor for, and shall be applied only
to, the particular item for which payment was made by Mortgagor, unless Mortgagee, in its
discretion, elects otherwise. If at any time Mortgagee estimates that there shall or will not be
on deposit with it, at least one (1) month prior to the due date (a) of any item constituting part
of the Impositions and/or (b) of any annual insurance premium, a sum sufficient for the payment of
such item and/or premium in full, Mortgagor, upon demand, shall pay the amount of such deficiency
to Mortgagee notwithstanding that there may already be deposited with Mortgagee sums for the
payment of other items which are not yet due. If the amount of the Deposited Funds shall exceed
the amount necessary to pay such Impositions and premiums for the then current year, such excess
shall be credited against future monthly deposits required hereunder. Unless otherwise required by
applicable law, no interest shall be paid on the Deposited Funds, and the Deposited Funds may be
commingled with Mortgagee’s general funds. Upon payment and other satisfaction in full of the
Obligations, any excess Deposited Funds shall be refunded to Mortgagor. Upon the occurrence of any
Event of Default, Mortgagee may apply against the Obligations, in such manner as Mortgagee may
determine, any or all of the Deposited Funds then held by Mortgagee.

     5.6. Maintenance and Inspections.

          5.6.1 Mortgagor shall at all times keep and maintain the Mortgaged Property and each part
thereof in sound condition and in a first-class state of decoration and repair.

          5.6.2 Mortgagor shall not: permit any strip or waste of the Mortgaged Property; permit the
violation of any law, ordinance or rule or regulation of any Governmental Authority affecting the
same or the use thereof, permit any conditions to exist which would wholly or partially invalidate
any insurance on the Mortgaged Property; or do or permit anything to be done to the Mortgaged
Property or any part thereof that might materially diminish the value thereof.

          5.6.3 Mortgagor shall permit Mortgagee, its officers, agents and representatives to enter upon
the Mortgaged Property at all reasonable times to view and inspect the same.

17

 

          5.6.4 Mortgagor, within thirty (30) days after demand by Mortgagee (or immediately upon demand
in cases which Mortgagee deems to be an emergency), shall make such repairs, replacements,
renewals, or additions, or perform such items of maintenance to the Mortgaged Property or any part
thereof as Mortgagee reasonably may require in order to maintain the Mortgaged Property at the
standards required by this Section.

     5.7. Alterations and Additions.

     Mortgagor shall not remove or demolish any Improvements, or make any material alteration or
addition to the Improvements (each an “Alteration”), including, without limitation, changes to the
character, design, structure or size of the Improvements, without the prior written consent of the
Mortgagee. Notwithstanding the foregoing, Mortgagor shall have the right to make any Alteration
with respect to the Improvements without Mortgagee’s prior written consent provided the cost of
such Alteration is equal to or less than Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00).

     5.8. Management and Operation.

          5.8.1 Mortgagor shall at all times provide management for the Mortgaged Property reasonably
satisfactory to Mortgagee. Mortgagor represents and warrants that , as of the date hereof, no
third party management company has been engaged to manage the Mortgaged Property. In the event
that (i) Mortgagor decides to engage a third-party management company to manage the Mortgaged
Property, or (ii) Mortgagee requires Mortgagor to engage a third-party management company pursuant
to Section 5.8.2, Mortgagor agrees to engage a management company satisfactory to Mortgagee,
pursuant to a management agreement satisfactory to Mortgagee, and to execute, and to cause such
management company to execute, an agreement assigning the management agreement to Mortgagee,
subordinating such management agreement and the terms thereof, including but not limited to such
management company’s right to payment of management fees, and containing certain other agreements
of Mortgagor and such management company, in Mortgagee’s then-current form of such agreement (the
“Assignment of Management Agreement”), and to deliver to Mortgagee promptly upon such engagement, a
fully-executed copy of the management agreement, together with the Assignment of Management
Agreement signed by Mortgagor and such manager.

          5.8.2 If Mortgagee reasonably determines at any time that the Mortgaged Property is not being
managed in accordance with generally accepted management practices for similarly situated projects,
Mortgagee may deliver written notice thereof to Mortgagor, which notice shall specify in reasonable
detail the grounds for Mortgagee’s determination. If Mortgagee reasonably determines that the
conditions specified in Mortgagee’s notice are not remedied to Mortgagee’s reasonable satisfaction
by Mortgagor within 30 days after the date of such notice, Mortgagee may direct Mortgagor to engage
a management company acceptable to Mortgagee in Mortgagee’s sole discretion. In addition, if an
Event of Default has occurred, Mortgagee may direct Mortgagor to engage a management company
acceptable to Mortgagee in Mortgagee’s sole discretion.

18

 

          5.8.3 Mortgagor will continuously operate the Mortgaged Property for the Permitted Use.

     5.9. Compliance with Laws and Restrictions.

          5.9.1 Mortgagor promptly shall comply with all present and future laws, ordinances, rules,
regulations, directives and other requirements of all Governmental Authorities; provided, however,
Mortgagor may postpone such compliance provided such non-compliance shall not (a) subject Mortgagee
to liability, criminal prosecution or any other penalty, (b) impair the value, or jeopardize the
safety or condition, of the Mortgaged Property, or (c) constitute a default under any Lease, if and
so long as the validity or legality of any such governmental requirement shall be contested by
Mortgagor with diligence and in good faith by appropriate proceedings.

          5.9.2 Mortgagor shall comply with all restrictive covenants and other private restrictions, if
any, applicable to the Mortgaged Property.

     5.10. Hazardous Waste.

          5.10.1 Mortgagor hereby warrants and represents to Mortgagee that, except as set forth in the
Environmental Site Assessment Report, (a) Mortgagor has never released, generated, stored or
disposed of any Hazardous Waste on the Mortgaged Property, (b) Mortgagor is not aware of the
existence, release or threat of release of any Hazardous Waste on or from the Mortgaged Property or
on or from any property adjacent to the Mortgaged Property, and (c) Mortgagor has not received any
notice, order, claim or demand from the United States Environmental Protection Agency (“EPA”) or
any state or local governmental agency, authority or body having jurisdiction over Hazardous Waste
or the storage or removal thereof (collectively, a “State Agency”) with respect to the existence,
release or threat of release of any Hazardous Waste.

          5.10.2 Mortgagor shall not release, generate, store or dispose of any Hazardous Waste on the
Mortgaged Property or on any property adjacent to the Mortgaged Property.

          5.10.3 Mortgagor shall immediately notify Mortgagee in writing of (a) any and all enforcement,
clean-up, removal or other action instituted or threatened by the EPA or any State Agency pursuant
to any Hazardous Waste Laws, and (b) any and all claims made or threatened by any third party
against Mortgagor or the Mortgaged Property or any part thereof, relating to the existence of, or
damage, loss or injury from, any Hazardous Waste; and Mortgagee, to the extent permitted by
applicable law, shall have the right to join and participate in, as a party if it so elects, any
proceedings or actions initiated in connection with any such claim and to have all of its costs and
expenses, including, without limitation, reasonable attorney’s fees, in connection therewith paid
by Mortgagor.

          5.10.4 In the event that any Hazardous Waste is found on or in the Mortgaged Property,
Mortgagor shall immediately contain and remove the same in compliance with all Hazardous Waste
Laws.

19

 

          5.10.5 Mortgagor agrees to indemnify and hold Mortgagee harmless from and against any and all
claims, liabilities, costs and expenses incurred by Mortgagee, including, without limitation, costs
of litigation and reasonable attorney’s fees, arising from the release, existence or removal of,
any Hazardous Waste on or in the Mortgaged Property or on any properties adjacent to the Mortgaged
Property. THIS RIGHT OF INDEMNIFICATION SHALL SURVIVE THE PAYMENT IN FULL OF THE NOTE,
NOTWITHSTANDING ANY DISCHARGE OF THIS MORTGAGE.

          5.10.6 Mortgagee, at its election and in its sole discretion, at any time and from time to
time, whether or not a Default Condition shall exist hereunder, upon receipt of evidence of the
existence of Hazardous Materials at the Mortgaged Property that were not disclosed in the
Environmental Site Assessment Report or upon substantial belief that a discharge of Hazardous
Materials may have occurred on or about the Mortgaged Property, may cause one or more environmental
site assessments of the Mortgaged Property to be undertaken. Environmental site assessments may
include, without limitation, a detailed visual inspection of the Mortgaged Property and any part
thereof, as well as the taking of soil samples, water samples and such other investigation or
analysis as is necessary or appropriate for a complete assessment of whether any Hazardous Waste
exists on or in the Mortgaged Property or any part thereof and the compliance of the Mortgaged
Property with all Hazardous Waste Laws provided that no soil samples or destructive tests shall be
made except on at least five (5) days notice to Mortgagor. If Mortgagee causes any such
environmental site assessment to be undertaken because Mortgagee has reason to suspect Hazardous
Waste may be present on the Mortgaged Property or any part thereof, or, if Mortgagee causes the
same to be undertaken without such reason but such environmental site assessment discloses
Hazardous Waste is so present, or, if Mortgagee causes such environmental site assessment to be
undertaken in contemplation of foreclosure of this Mortgage, Mortgagor shall pay the cost thereof
to Mortgagee on demand of Mortgagee, and until paid the cost thereof shall be added to the unpaid
principal of the Obligations, shall bear interest at the Default Rate, and the payment thereof,
together with such interest, shall be secured by the lien of this Mortgage and the other Security
Instruments.

          5.10.7 Mortgagee, at its election and in its sole discretion, may (but shall not be obligated
to) cure any failure on the part of Mortgagor or any Lessee or other user of the Mortgaged Property
or any part thereof (any such Lessee or other user being, in this Section 5, hereinafter referred
to as a “User”) to comply with the Hazardous Waste Laws; such cure may include, without limitation,
the following actions:

               (a) arranging for the cleanup or containment of Hazardous Waste found in, on or near the
Mortgaged Property and paying for such cleanup and containment costs and other costs associated
therewith;

               (b) paying on behalf of Mortgagor or any User, any fines or penalties imposed on Mortgagor or
any User by the EPA or any State Agency in connection with Hazardous Waste; and

               (c) making any other payment or performing any other act which may

20

 

prevent a release of Hazardous Waste, facilitate the cleanup thereof, or prevent a lien from
attaching to the Mortgaged Property.

          Any partial exercise by Mortgagee of the remedies hereinabove set forth or any partial
undertaking on the part of Mortgagee to cure the failure of Mortgagor or any User to comply with
the Hazardous Waste Laws, shall not obligate Mortgagee to complete any action taken or require
Mortgagee to expend further sums to cure Mortgagor’s or any User’s noncompliance; and the exercise
of any such remedies shall not place upon the Mortgagee any responsibility for the operation,
control, care, management or repair of the Mortgaged Property, or make the Mortgagee the “owner” or
“operator” of the Mortgaged Property or a “responsible party” within the meaning of any of the
Hazardous Waste Laws. Any amounts paid or costs incurred by the Mortgagee in the exercise of any
of its rights under this subsection 5.10.7 shall be paid by Mortgagor on demand of Mortgagee, and
until paid shall be added to the unpaid principal of the Obligations, shall bear interest at the
Default Rate, and the payment thereof, together with such interest, shall be secured by the lien of
this Mortgage and by the other Security Instruments. Mortgagee, by making any such payment or
incurring any such costs, shall be subrogated to any rights of Mortgagor or any User to seek
reimbursement from any third parties, including, without limitation, any predecessor in interest to
Mortgagor’s title to the Mortgaged Property or any part thereof.

          5.10.8 Mortgagor shall: (i) promptly cause, but no later than ten (10) days from the date
hereof, the proposed scope of work for additional investigations specified in the Supplemental
Investigation Work Plan, revised as of September 20, 2007, and prepared by J.R. Holzmacher, P.E.,
LLC for The Robert Martin Company, to be implemented at the Mortgaged Property; and (ii) promptly
commence, but no later than ten (10) days from the date hereof, the development and implementation
of an asbestos Operations and Maintenance Program (the “O&M Program”), as recommended in the
Environmental Site Assessment Report. In addition, Mortgagor shall, during the term of the Loan,
including any extension or renewal thereof, comply with the terms and conditions of the O&M
Program.

     5.11. Condemnation.

          5.11.1 Upon the receipt by Mortgagor of notice of the institution of any proceeding or
negotiations for the taking of the Mortgaged Property, or any part thereof, in condemnation or by
the exercise of the power of eminent domain, Mortgagor shall give notice thereof to Mortgagee.
Mortgagee may appear in any such proceedings and participate in any such negotiations and may be
represented by counsel. Mortgagor, notwithstanding that Mortgagee may not be a party to any such
proceeding, will promptly give to Mortgagee copies of all notices, pleadings, judgments,
determinations and other papers received by Mortgagor therein. Mortgagor will not enter into any
agreement for the taking of the Mortgaged Property, or any part thereof, with anyone authorized to
acquire the same in condemnation or by eminent domain unless Mortgagee shall first have consented
thereto in writing, which consent shall not be unreasonably withheld or delayed.

          5.11.2 Any award, whether paid as a result of a negotiated settlement or judgment, shall be
paid to Mortgagee, and Mortgagee shall have the right and is hereby

21

 

constituted and appointed the true and lawful attorney of Mortgagor, in the name and stead of
Mortgagor, and in the discretion of said attorney, to collect and receive the total amount of such
award, including interest, and to give proper receipts and acquittances therefor. The foregoing
appointment, being coupled with an interest, is irrevocable until the Obligations are paid and
otherwise satisfied in full.

          5.11.3 In the event of any taking of the Premises and/or Improvements or any part thereof in
condemnation or by exercise of the power of eminent domain, at the option of Mortgagee, the
Obligations shall become immediately due and payable, and, at the option of Mortgagee, all awards
paid or payable to Mortgagor on account of such taking shall be applied to the payment and
discharge of the Obligations, whether or not then due, such application to be in the following
order of priority: (a) payment of all amounts expended, advanced or incurred by Mortgagee in the
discharge of Mortgagor’s obligations hereunder; (b) payment of all expenses referenced in
subsection 5.19 hereof, (c) payment of accrued interest under the Note; (d) payment of unpaid
principal under the Note; and (e) payment and satisfaction of any and all other Obligations. To
the extent that such award or awards exceed the amount required to pay in full the principal and
interest under the Note and all other sums and charges then secured hereby, Mortgagee shall pay
over to the person or persons legally entitled thereto the amount of such excess; provided,
however, that until the actual vesting of title in the condemning authority in such proceeding or
pursuant to any agreement in lieu or in settlement thereof, the obligations of Mortgagor to pay,
perform and observe the terms, covenants and conditions of the Note and this Mortgage shall
continue unimpaired. In no event shall Mortgagee be required to satisfy or discharge this Mortgage
until the Obligations are paid and otherwise satisfied in full.

          5.11.4 In the event of any taking of a portion of the, as opposed to the entire, Premises
and/or Improvements in condemnation or by exercise of the power of eminent domain, notwithstanding
anything to the contrary set forth herein, if the Premises is condemned and Mortgagee determines
that all of the conditions specified in this section have been satisfied, then Mortgagee shall
apply the condemnation proceeds (a) first to reimbursing itself for all reasonable costs incurred
by it in the collection of such proceeds and (b) second to reimbursing Mortgagor for such actual
costs as shall have been incurred by Mortgagor in restoring the Premises and shall be approved by
Mortgagee, which approval shall not be unreasonably withheld or delayed. Condemnation proceeds
shall be applied to such restoration solely if (A) Mortgagee reasonably determines that: (i) the
Premises is capable of being suitably restored in accordance with applicable governmental
requirements to the value, condition, character and general utility existing prior to such damage
or destruction; (ii) sufficient funds are unconditionally available (from condemnation proceeds or
from funds to Mortgagor) to enable Mortgagor promptly to commence, and thereafter diligently to
prosecute to completion, such restoration; (iii) no Default Condition exists; and (iv) neither the
validity, enforceability nor priority of the lien of this Mortgage shall be adversely affected; (B)
Mortgagor has entered into a written agreement, satisfactory in form and substance to Mortgagee,
containing such conditions to disbursements as are employed at the time by Mortgagee for
construction loans; (C) Mortgagor has delivered to Mortgagee such security as Mortgagee might have
reasonably required to assure completion of restoration in accordance with the standards specified
above; and (D) Mortgagor has complied with such further reasonable requirements as Mortgagee might
have specified. To the extent that

22

 

the foregoing conditions are not satisfied, Mortgagee may apply such proceeds to the payment
of the Obligations.

          5.11.5 Mortgagor shall pay interest on the Note and other indebtedness forming part of the
Obligations at the rate or rates provided for therein, notwithstanding any lesser rate required to
be paid by the authorities making such award or awards.

     5.12. Records and Financial Statements; Financial Covenants.

          5.12.1 Mortgagor will keep proper and separate books of account, in accordance with generally
accepted accounting principles, and make full and true entries of all dealings and transactions of
every kind relating to the Mortgaged Property.

          5.12.2 Within one hundred twenty (120) days after the end of each fiscal year of Mortgagor,
Mortgagor shall furnish to Mortgagee: (a) a copy of the annual financial statements for such fiscal
year accurately reflecting the financial condition of Mortgagor and the results of its operations,
including, without limitation, balance sheets and profit and loss statements, all prepared in
accordance with generally accepted principles of accounting consistently applied; the financial
statements of Mortgagor shall be internally prepared by managment of Mortgagor and shall set forth
separately the property included in, the liabilities relating to and the results of the operations
of, the Mortgaged Property; and (b) a “rent roll,” dated as of the end of such fiscal year and
stating with respect to each unit in the Mortgaged Property the name of the tenant thereof, the
rent paid by such tenant, the date to which such rent is paid, the date on which such tenant’s
leasehold interest terminates and the amount held by Mortgagor by way of security deposit from each
such tenant (a “Rent Roll”); all such financial statements and such Rent Rolls to be certified to
as being accurate by the chief financial officer of Mortgagor.

          5.12.3 Within thirty (30) days after the end of each quarter in each fiscal year of Mortgagor,
Mortgagor shall furnish to Mortgagee: (a) a financial report accurately reflecting the results of
the operations of the Mortgaged Property, including without limitation, a balance sheet and a
profit and loss statement for such quarter and on a year-to-date basis, (b) a Rent Roll dated as of
the end of such fiscal quarter; and (c) a gross sales report accurately reflecting the gross sales
of any Lessee obligated to report such sales to Mortgagor pursuant to the terms of the respective
Lease, including, but not limited to, Walgreen Eastern Co., Inc., its successors and assigns
(collectively, “Walgreen”); all such financial reports, such Rent Rolls and such gross sales report
to be certified to as being accurate by the chief financial officer of Mortgagor.

          5.12.4 Mortgagor shall cause each Guarantor, (i) within one hundred twenty (120) days after
the end of each fiscal year of Guarantor, to furnish to Mortgagee a signed audited financial
statement accurately reflecting the financial condition of Mortgagor and the results of its
operations, including, without limitation, audited balance sheets and audited profit and loss
statements, in form reasonably satisfactory to Mortgagee, prepared by a certified public accountant
reasonably satisfactory to Mortgagee and in accordance with generally accepted principles of
accounting consistently applied; and (ii) within sixty (60) days after filing, a copy of each
Guarantor’s current signed Federal income tax returns (with all schedules and exhibits).

23

 

          5.12.5 Upon Mortgagee’s request, Mortgagor shall furnish such other information bearing on the
financial condition of Mortgagor and the Guarantor, and the status and progress of the operation of
the Mortgaged Property, as Mortgagee may from time to time reasonably request.

          5.12.6 All books and records of Mortgagor with respect to the Mortgaged Property shall be kept
at the Mortgaged Property or at Mortgagor’s principal place of business and shall be open to
inspection by Mortgagee at all reasonable times. Upon the occurrence of any Default Condition, on
demand of Mortgagee, Mortgagor forthwith shall deliver to Mortgagee all such books and records.

          5.12.7 At all times during the term of the Loan, Mortgagor shall maintain the financial
covenants set forth in the Note.

     5.13. Alienation.

          5.13.1 Mortgagor shall not, directly or indirectly, sell, convey, mortgage, pledge,
hypothecate, encumber, lease, assign or otherwise transfer the Mortgaged Property or any part
thereof or any interest therein without the prior written consent of Mortgagee.

          5.13.2 Without limiting the generality of the foregoing, Mortgagor will not create, join or
consent to any private restrictive covenant or other restriction affecting the Mortgaged Property
or any part thereof, without the prior written consent of Mortgagee.

          5.13.3 Acadia Realty Trust, or an affiliate or subsidiary of Acadia Realty Trust in which it
directly owns and controls, in the aggregate, at least fifty-one percent (51%) of such affiliate or
subsidiary (collectively, “ART”) may assume the Loan provided that: (i) no Event of Default has
occurred or is continuing; (ii) ART executes an assumption agreement in form and substance
satisfactory to the Mortgagee, (iii) ART provides a replacement guarantor or guarantors for the
Loan, which replacement guarantor(s) shall be satisfactory to Mortgagee in its sole discretion; and
(iv) ART pays all costs and expenses reasonably incurred in connection with such assumption of the
Loan, including, but not limited to, Mortgagee’s reasonable attorneys’ fees and disbursements,
title charges and recording fees, if any. Additionally, the replacement guarantor(s) shall execute
documents (the “Replacement Guaranty Documents”) similar in form and substance to the Guaranty
Documents, which documents shall contain financial covenants acceptable to Mortgagee and the
replacement guarantor(s), and any other documents as reasonably required by Mortgagee. The
foregoing right shall only be exercised one time during the term of the Loan. If it is exercised
in accordance with the foregoing, the assumption right shall thereafter be a nullity.

          5.13.4 Notwithstanding Section 5.13.1, Mortgagee’s consent shall not be required for any
public offering or transfer of shares of Acadia Realty Trust on a national recognized stock
exchange.

24

 

     5.14. Senior or Junior Indebtedness.

     Mortgagor shall pay any and all indebtedness secured by any mortgage creating a senior and
prior lien, if any, or junior and subordinate lien, if any, on the whole or any part of the
Mortgaged Property and perform all covenants, terms and conditions contained in any such mortgage
on the part of Mortgagor to be performed and observed, all within the periods provided for payment,
performance and observance in any such mortgage; provided, however, the foregoing shall not be
deemed to be a consent by Mortgagee to the creation of any such senior or junior indebtedness.

     5.15. Preservation of Easements, Licenses and Zoning

          5.15.1 Mortgagor, to the extent reasonably within its control, shall maintain, preserve and
renew (a) any and all easements, rights of way, privileges and hereditaments now or hereafter
belonging or inuring to the benefit of the Premises and/or Improvements or any part thereof, and
(b) any and all Licenses.

          5.15.2 Without the prior consent of the Mortgagee, Mortgagor will not initiate, create, join
in or consent to any change of zoning with respect to the Mortgaged Property or any part thereof.

     5.16. Mortgagee’s Right to Pay or Perform Mortgagor’s Covenants.

     If Mortgagor fails, as required under this Mortgage, (a) to maintain insurance or pay the
premiums therefor, (b) to pay and furnish receipts for all Impositions, (c) to pay for all labor
and materials or to otherwise pay any claim which might result in or permit the creation of a lien
on the Mortgaged Property or any part thereof, (d) to maintain or repair the Improvements, (e) to
provide management or security for the Mortgaged Property, or (f) to pay any indebtedness secured
by a lien or encumbrance on the Mortgaged Property or any part thereof (other than the Note), or if
Mortgagor fails to otherwise pay, perform or observe any of Mortgagor’s other covenants contained
in this Mortgage, Mortgagee, at its option upon ten (10) days written notice to Mortgagor, may
procure such insurance, pay such Impositions and any penalty and interest thereon, redeem the
Mortgaged Property or any part thereof from any tax sale, procure such receipts, pay for such labor
and materials, pay any such claim, do such maintenance or make such repairs, retain and pay for
such management and/or security, pay any and all such liens and encumbrances and/or otherwise
disburse such sums and/or take such action as Mortgagee deems necessary or appropriate (a) to cause
compliance with Mortgagor’s covenants under this Mortgage and/or (b) to protect Mortgagee’s
interest and/or the Mortgaged Property or any part thereof, and all amounts advanced by Mortgagee
for the payment thereof and all expenses so incurred by Mortgagee, unless otherwise agreed in
writing, shall be paid by Mortgagor to Mortgagee on demand of Mortgagee, and until paid such
amounts shall be added to the unpaid principal of the Obligations, shall bear interest at the
Default Rate, and the payment thereof, together with such interest, shall be secured by the lien of
this Mortgage and the other Security Instruments. The failure of Mortgagee to take any such action
shall not render Mortgagee liable to Mortgagor or any third party.

25

 

     5.17. Proceedings and Indemnification.

          5.17.1 If Mortgagor becomes a party defendant to any action or other proceeding brought by a
third party concerning or otherwise affecting (a) this Mortgage or any of the other Loan Documents,
(b) the Loan or (c) the Mortgaged Property or any part thereof or any interest therein or the
construction, operation or occupancy thereof, or (d) title to the Mortgaged Property and/or the
priority, perfection, enforceability or validity of any lien or security interest granted to secure
the Obligations, including any action to foreclose any lien or security interest affecting
Mortgagor or all or any part of the Mortgaged Property, Mortgagor shall:

          (i) promptly inform Mortgagee of the commencement thereof and thereafter timely apprise
Mortgagee of all material developments therein;

          (ii) not take any position therein which would materially and adversely affect the interest of
the Mortgagee;

          (iii) cooperate fully with Mortgagee with respect thereto; and

          (iv) consent to Mortgagee’s becoming a party thereto, at the election of Mortgagee and to the
extent permitted by law.

          5.17.2 If Mortgagee becomes a party defendant to, or is compelled to testify or produce
documents in, any action or other proceeding described in subsection 5.17.1 above, whether before
or after payment in full of the Obligations, Mortgagor shall indemnify, defend and hold Mortgagee,
its officers, directors and employees harmless from any and all liability by reason of each and
every such action, including, without limitation, reasonable attorneys’ fees and expenses incurred
by Mortgagee in any such action, whether or not any such action is prosecuted to judgment. This
right of indemnification shall survive the payment in full of the Note, notwithstanding any
discharge of this Mortgage.

          5.17.3 Mortgagor agrees to indemnify Mortgagee with respect to any and all loss, cost or
damage (including, without limitation, reasonable attorneys’ fees) incurred or suffered by
Mortgagee as a result of (1) any fraud or material misrepresentation made by or on behalf of
Mortgagor; (2) any and all condemnation awards or insurance proceeds which are not applied in
accordance with the provisions of the Security Instruments; (3) any and all rents, revenues,
incomes, issues, proceeds or profits of the Mortgaged Property (“Rents and Profits”) collected by
or on behalf of the Mortgagor following an Event of Default which are not applied, (i) first, to
the payment of customary and usual operating expenses of the Mortgaged Property as the same become
due and payable, and (ii) then, to the payment of principal, interest and other sums due under the
Note and other Loan Documents; (4) the Mortgagor’s failure following an Event of Default to deliver
to the Mortgagee, on demand, all Rents and Profits, security deposits and books and records
relating to the Mortgaged Property; (5) the Mortgagor’s failure to procure and maintain any
insurance policy required by the Security Instruments; (6) any damage or material waste of the
Mortgaged Property, or any portion thereof, caused by the willful, wanton or tortious act or
omission of the Mortgagor, any of its representatives or agents or any Guarantor; (7) any violation
of or failure to comply with the provisions of Section 5.10 of this Mortgage;

26

 

and (8) the failure of the Mortgagor to pay any Impositions or insurance premiums with respect
to the Mortgaged Property or any charges for labor or materials which may result in the creation of
liens on the Mortgaged Property.

     5.18. Further Assurances.

          5.18.1 Mortgagor shall not do or suffer any act or thing to be done which would impair all or
any part of the security for the payment of the Obligations or this Mortgage or the other Security
Instruments.

          5.18.2 Mortgagor and Mortgagee, within ten (10) days after request by the other, shall furnish
to the requesting party a written statement, duly acknowledged, of the amount of the unpaid balance
of the Note and containing such other information Mortgagee or Mortgagor, as the case may be, may
reasonably request.

          5.18.3 At any time and from time to time until payment in full of the Obligations, upon
request of Mortgagee, Mortgagor will promptly execute, acknowledge and deliver to Mortgagee such
additional instruments, and shall take such further actions, all at the expense of Mortgagor, as
Mortgagee may reasonably require to further confirm, evidence or protect the lien of this Mortgage,
the security position of Mortgagee with respect to the Mortgaged Property or any part thereof and
the property and rights hereby conveyed to or conferred on Mortgagee, or intended to so be,
including, without limitation, the execution, acknowledgment of delivery of additional mortgages,
security agreements, financing statements, continuation statements and the like.

     5.19. Expenses.

     Mortgagor shall pay to Mortgagee on demand of Mortgagee any and all expenses reasonably
incurred or paid by Mortgagee in connection with or incident to (a) negotiation, closing and
administration of the Loan, including, without limitation, the examination of the title to the
Premises, the cost of title insurance, charges for examining public records in connection with
advances of the proceeds of the Loan, inspections, drawing of papers, recording and filing fees,
value added taxes and other taxes, revenue stamps, if any, and fees and disbursements of attorneys,
accountants, appraisers, tax advisors, architects and engineers engaged by the Mortgagee, and (b)
the collection or enforcement of any or all of the Obligations or rights of the Mortgagee under the
Note, the Security Instruments or any Other Document, whether by litigation, foreclosure or
otherwise, including, without limitation, attorneys’ fees to the extent permitted by law and
further including, without limitation, attorneys’ fees for any and all appellate proceedings, to
the extent permitted by law; and all such expenses, until paid, shall be added to the unpaid
principal of the Obligations, shall bear interest at the Default Rate, and the payment thereof,
together with such interest, and shall be secured by the lien of this Mortgage and the other
Security Instruments.

     5.20. Required Repairs.

     Mortgagor shall repair, within one hundred eight (180) days from the date hereof, all of

27

 

the cracked exterior masonry of the buildings located on the Premises as recommended in the
Property Condition Assessment, revised as of October 16, 2007, prepared ATC Associated, Inc. and
certified to Mortgagee (collectively, the “Required Repairs”). Immediately upon completion of the
Required Repairs, but in no event later than one hundred eight (180) from the date hereof,
Mortgagor shall provide evidence of the completion of said Required Repairs, which evidence shall
be satisfactory to Mortgagee in its reasonable discretion. If Mortgagor fails to complete the
Required Repairs (or deliver satisfactory evidence to Mortgagee of the completion of said Required
Repairs) within one hundred eight (180) from the date hereof, such failure shall constitute an
Event of Default.

     5.21. Estoppel Certificates.

     Mortgagor has, as of the date hereof, executed and delivered to Mortgagee, a landlord form
estoppel certificate, in form and substance satisfactory to Mortgagee (“Landlord Estoppel
Certificate”) with respect to the certain Lease between Mortgagor and Walgreen. Mortgagor shall,
within thirty (30) days from the date hereof, obtain from Walgreen and deliver to Mortgagee, a
tenant’s form estoppel certificate, in form and substance satisfactory to Mortgagee (“Walgreen
Estoppel Certificate”). Failure of Mortgagor to comply with the provisions of this Section 5.21
shall constitute an Event of Default.

     5.22. Undertakings.

     Mortgagor shall, within thirty (30) days from the date hereof, obtain and deliver to
Mortgagee, Subordination, Non-Disturbance and Attornment Agreements from each of the following
Lessees: (i) JPMorgan Chase Bank, N.A., and (ii) FAC West Donuts, LLC. Mortgagor shall pay all
costs and expenses incurred by Mortgagee in connection with such Subordination, Non-Disturbance
and Attornment Agreements, including, without limitation, reasonable attorneys’ fees. Failure of
Mortgagor to comply with the provisions of this Section 5.22 shall constitute an Event of Default.

     Section 6. Assignment of Leases and Rents.

     6.1. Mortgagor does hereby transfer, assign and deliver unto Mortgagee, grant to Mortgagee a
security interest in, the Leases and the Rents and all right, title and interest of Mortgagor in
and to any and all guarantees of any of the Leases; TO HAVE AND TO HOLD the Leases and the Rents
and said guarantees, together with all the rights, privileges and appurtenances now or hereafter in
any wise belonging or pertaining thereto, unto Mortgagee, its successors and assigns, forever,
subject, however, to the terms and conditions hereinafter provided in this Section 6. Mortgagee
shall have all rights against tenants of the Mortgaged Property as set forth in Section 291-f of
the Real Property Law of New York.

     6.2. Mortgagor hereby authorizes and empowers Mortgagee to collect the Rents as the same shall
become due, and hereby irrevocably directs each and all of the Lessees and sublessees to pay to
Mortgagee, upon demand by Mortgagee, the Rents as may now be due or payable and/or shall hereafter
become due or payable; provided however, no such demand shall be made by Mortgagee unless and until
there shall have occurred a default or an Event of Default hereunder beyond any applicable notice
and cure period. Until such demand is made, Mortgagor

28

 

shall have the license to collect or continue to collect the Rents; upon such demand such
license shall cease.

          6.2.1 Mortgagor’s right to collect or to continue to collect the Rents as aforesaid, shall not
authorize collection by Mortgagor of any installment of rent or any other payment (exclusive of
security deposits) more than one (1) month in advance of the respective dates prescribed in the
Leases or otherwise for the payment thereof without the written consent of Mortgagee.

          6.2.2 No lessee, sublessee, tenants or other occupant of the Mortgaged Property making any
payment to Mortgagee pursuant to this Section 6 shall be under any obligation to inquire into or
determine the actual existence of any default claimed by Mortgagee.

     6.3. Mortgagee shall be and hereby is authorized and empowered, for and in the name or names
and on behalf of Mortgagor and/or Mortgagee, and for the purposes hereinafter set forth, shall be
and hereby is made, constituted and appointed the true and lawful attorney-in-fact of Mortgagor
(with full power of substitution and revocation) and in the name, place and stead of Mortgagor, and
in the sole and uncontrolled discretion of said attorney, to cause the assignment to Mortgagee of
any Lease which has not been so assigned after request therefor by Mortgagee. The foregoing
appointment, being coupled with an interest, is irrevocable until the Obligations are paid and
otherwise satisfied in full.

     6.4. Mortgagor shall not enter into any Lease in excess of 2,000 square feet without first
obtaining Mortgagee’s written approval of the terms and conditions thereof and the Lessee
thereunder, which approval shall not be unreasonably withheld or delayed. In the event Mortgagor
intends to enter into any Lease for less than 2,000 square feet, Mortgagor shall promptly notify
Mortgagee of the terms and conditions thereof. If requested by Mortgagor, Mortgagee will grant
conditional approvals of proposed Leases requiring Mortgagee’s approval hereunder or proposed
renewals, extensions or modifications of existing Leases at any stage of the leasing process, from
initial “term sheet” through negotiated Lease drafts; provided, however, that the final approval of
Mortgagee shall only be given following receipt of a final draft version of the Lease in question.
Provided that no Event of Default is continuing, if Mortgagor provides Mortgagee with a written
request for approval (which written request shall specifically refer to this Section 6.4 and shall
explicitly state that failure by Mortgagee to approve or disapprove within ten (10) business days
will constitute a deemed approval) and Mortgagee fails to reject the request in writing delivered
to Mortgagor within ten (10) business days after receipt by Mortgagee of the request, the proposed
Lease or proposed renewal, extension or modification of an existing Lease shall be deemed approved
by Mortgagee, and Mortgagor shall be entitled to enter into such proposed Lease or proposed
renewal, extension or modification of an existing Lease.

     6.5. Notwithstanding anything in this Section 6 to the contrary, at Mortgagor’s written
request, Mortgagee shall enter into a subordination non-disturbance and attornment agreement on
Mortgagee’s then-current standard form with any national tenant or any other creditworthy tenant
leasing in excess of ten (10%) percent of the Mortgage Property. Mortgagor shall reimburse
Mortgagee upon demand for all reasonable costs and expenses incurred by Mortgagee

29

 

in connection with the preparation and negotiation of such subordination, non-disturbance and
attornment agreements.

     6.6. The provisions of the Assignment of Leases and Rents and the powers granted to Mortgagee
under Section 9 hereof shall in no respect operate to place upon Mortgagee any responsibility or
obligation to take any action whatsoever with respect to the operation, control, care, management
or repair of the Mortgaged Property and that any action taken or failure or refusal to act by
Mortgagee shall be at Mortgagee’s election and without any liability on its part.

     Section 7. Security Agreement.

     7.1. This Mortgage also shall constitute a security agreement, financing statement, and
fixture filing within the meaning of the applicable Uniform Commercial Code, and is to be filed or
recorded in the office where a mortgage on the Premises would be filed or recorded.

     7.2. Mortgagor warrants and covenants that:

          7.2.1 Except for the security interest granted hereby, Mortgagor is, or upon acquiring rights
in any of the Collateral will be, the owner of the Collateral free from any other lien, security
interest or encumbrance; and Mortgagor will defend the security interest of the Mortgagee in the
Collateral against claims and demands of all persons at any time claiming the same or any interest
therein; and

          7.2.2 No financing statement covering any Collateral is on file in any public office, and at
the request of Mortgagee, Mortgagor will join with Mortgagee in executing one or more financing
statements pursuant to the Uniform Commercial Code in form satisfactory to Mortgagee and will pay
the cost of filing or recording the same in all public offices wherever filing or recording is
deemed by Mortgagee to be necessary or desirable.

     7.3. Mortgagor hereby authorizes Mortgagee to file financing and continuation statements with
respect to the Collateral without the signature of Mortgagor whenever lawful.

     7.4. The Personal Property will be kept at the Premises, and until installed will be suitably
and safely stored thereon.

     7.5. Mortgagor will not remove or permit to be removed from the subject property any of the
Personal Property without the prior written consent of Mortgagee unless the same is immediately
replaced with unencumbered fixtures, chattels or articles of personal property, as the case may be,
of a quality, value and utility equal or superior to those which they replace. All such
replacements, renewals and additions shall become and be immediately subject to the security
interest of this Mortgage and be covered thereby.

     7.6. Mortgagor, from time to time, on request of Mortgagee, shall deliver to Mortgagee an
inventory of the Personal Property in reasonable detail, including an itemization of all items
leased to Mortgagor or subject to conditional bill of sale, security agreement or other title
retention agreement.

30

 

     Section 8. Events of Default.

     The occurrence of any one or more of the following events shall constitute an Event of
Default:

     8.1. Nonpayment of any installment of principal and/or interest due under the Note when it
shall become due and payable (no prior demand therefore being necessary) and such nonpayment shall
have continued for more than ten (10) days.

     8.2. Nonpayment of any other sum payable under this Mortgage, the Note, any of the other
Security Instruments or any of the Other Documents and, unless a different grace or notice period
is elsewhere specified, such nonpayment shall have continued for more than ten (10) days after
notice thereof from Mortgagee to Mortgagor.

     8.3. Nonperformance or nonobservance of any of the other covenants, agreements, or conditions
of this Mortgage, any of the other Security Instruments or any of the Other Documents, and, unless
a different grace or notice period is elsewhere specified, such nonperformance or nonobservance
shall have continued for more than thirty (30) days after notice thereof from Mortgagee to
Mortgagor; provided, however, that if (a) the curing of such default cannot be accomplished with
due diligence within said thirty (30) day period, (b) Mortgagor commences to cure such default
promptly after receipt of notice thereof from Mortgagee and thereafter diligently and continuously
prosecutes the cure of such default, and (c) the extension of the period for effecting a cure will
not result in any material impairment of the Mortgaged Property or any portion thereof, or the
value thereof or Mortgagee’s lien thereon, then such period of thirty (30) days shall be extended
for such period of time as Mortgagee reasonably deems necessary for Mortgagor so acting to cure
such default; provided further, however, such extended cure period shall not be applicable to any
default which may be cured by the payment of money only. The foregoing shall not be deemed to
provide a grace or notice period for nonperformance or nonobservance of any covenant, agreement or
condition which is specifically listed as an Event of Default in any other subsection of this
Section 8.

     8.4. The occurrence of any “Event of Default” under the Note, any of the other Security
Instruments or any of the Other Documents, or the occurrence of any event or condition which would
entitle Mortgagee to exercise any of its remedies under any of the Security Instruments or any of
the Other Documents.

     8.5. Title to the Mortgaged Property is not satisfactory to the Mortgagee by reason of any
lien, charge, encumbrance, title condition or exception (other than Permitted Encumbrances) and
such condition continues for more than thirty (30) days after notice thereof from Mortgagee to
Mortgagor.

     8.6. Any survey, report or examination discloses that the Improvements or any portion thereof
encroach upon or project over a street or upon or over adjoining property, and such condition shall
have continued for more than thirty (30) days after notice thereof from Mortgagee to Mortgagor.

31

 

     8.7. The cancellation, lapse or termination of any insurance coverage required to be
maintained by Mortgagor under this Mortgage or any of the other Security Instruments.

     8.8. The Mortgaged Property or any part thereof or any interest therein is conveyed,
voluntarily encumbered or otherwise transferred directly or indirectly in any way without the prior
written consent of Mortgagee.

     8.9. If any notice of responsibility, notice of violation, notice letter or other similar
notice or claim is issued or filed by the EPA or any State Agency against Mortgagor or the
Mortgaged Property under any of the Hazardous Waste Laws and within sixty (60) days after the
issuance or filing thereof either (a) the condition referenced therein is not cured or (b) a
consent agreement reasonably satisfactory to Mortgagee has not been entered into between Mortgagor
and the EPA or the State Agency in question.

     8.10. Breach of, or the proving false or misleading, in any material respect, of any
representation or warranty now or hereafter made to Mortgagee by on behalf of, or for the benefit
of Mortgagor, or contained in:

               (a) any of the Security Instruments or Other Documents;

               (b) the Note; or

               (c) any loan application, statement, financial statement, certificate or other document,
agreement or instrument furnished, signed or executed in connection herewith by, on behalf of, or
for the benefit of Mortgagor.

     8.11. The occurrence of any “event of default” under any document, agreement or instrument now
or hereafter (a) evidencing or securing any other obligation or indebtedness of Mortgagor or any
Other Liable Party to Mortgagee now existing or hereafter arising or (b) evidencing any obligation
or other indebtedness secured in whole or in part by any or all of the property covered by any of
the Security Instruments, or the nonpayment nonperformance or nonobservance of any of the
covenants, agreements or conditions of any such documents, agreements or instruments, which
nonpayment, nonperformance or nonobservance shall have continued beyond the expiration of any
applicable grace or notice period, or the occurrence of any event or condition which would entitle
the obligee of or under any such documents, agreements or instruments to exercise any of its
remedies thereunder.

     8.12. Nonpayment of any indebtedness of the Mortgagor or any Other Liable Party (other than
the Note or other indebtedness referred to in the preceding subsection) if the effect of such
nonpayment is to accelerate the maturity of such indebtedness or to permit the holder thereof to
cause such indebtedness to become due prior to the stated maturity thereof, or if any other
indebtedness, the validity of which is not being contested in good faith by appropriate
proceedings, is not paid when due and payable in accordance with the terms of such indebtedness or
customary trade practice.

32

 

     8.13. (a) (i) The insolvency or inability of Mortgagor or any Other Liable Party to pay his or
its debts as they mature; (ii) the appointment of a receiver, trustee, custodian or other
fiduciary, for, or for any of the property of, Mortgagor or any Other Liable Party; (iii) the
making of an assignment for the benefit of creditors, or the making of or entering into a trust
mortgage or deed or other instrument of similar import for the benefit of creditors, by Mortgagor
or any Other Liable Party; or (iv) the convening of a meeting of the creditors, or the selection of
a committee representing the creditors of Mortgagor or any Other Liable Party; or

          (b) The filing of a petition, complaint, motion or other pleading seeking any relief under any
receivership, insolvency, or debtor relief law, or seeking any readjustment of indebtedness,
reorganization, composition, extension or any similar type of relief, or the filing of a petition,
complaint, or motion under any chapter of the Bankruptcy Code, by Mortgagor or any Other Liable
Party; or

          (c) The filing of a petition, complaint, motion or other pleading seeking any relief under any
receivership, insolvency, or debtor relief law, or under any chapter of the Bankruptcy Code, or
seeking any readjustment of indebtedness, reorganization, composition, extension or any similar
type of relief, or the entry of any order for relief under any chapter of the Bankruptcy Code,
against Mortgagor or any Other Liable Party; provided, however, that if Mortgagor shall immediately
notify Mortgagee in writing of the filing of any such petition complaint, motion or other pleading
against Mortgagor or any Other Liable Party, and shall provide evidence satisfactory to Mortgagee
that Mortgagor or such Other Liable Party, as the case may be, has in good faith and within ten
(10) days after the filing of any such petition, complaint, motion or other pleading filed an
answer thereto contesting same, then there shall be no Event of Default under this subparagraph (c)
until the earliest of (i) the entry of an order for relief or a judgment under any proceedings
referred to in this subparagraph (c), (ii) the appointment of a receiver, trustee, custodian or
other fiduciary in any such proceeding or (iii) the expiration of a period of thirty (30) days, at
the end of which such petition, complaint, motion or other pleading remains undismissed; or

          (d) The entry of any judgment against, or the attachment or garnishment of any of the
property, goods or credits of, Mortgagor or any Other Liable Party which remains unpaid, unstayed,
undismissed or unbonded for a period of thirty (30) days; or if any foreclosure is instituted (by
judicial proceedings, by publication of notice pursuant to a power of sale or otherwise) against
Mortgagor under any mortgage, deed of trust or security agreement granted by Mortgagor and is not
dismissed or terminated for a period of fifteen (15) days.

     8.14. The dissolution, liquidation or termination of existence of Mortgagor or any Other
Liable Party or a sale of assets of Mortgagor or any other Liable Party out of the ordinary course
of business.

     8.15. Any material adverse change in the financial condition of, or any act or omission of
Mortgagor or any Other Liable Party, or any act or omission of any officer or director of Mortgagor
or any Other Liable Party which leads Mortgagee reasonably to believe that performance of any of
the covenants, agreements, or conditions of the Note, any of the Security Instruments or any Other
Document, is or may be substantially impaired.

33

 

     8.16. The death, incompetence, or incapacity to act of any Guarantor, unless a replacement
guarantor is provided by Mortgagor within ninety (90) days of such death, which replacement
guarantor shall be acceptable to Mortgagee in its sole discretion and which replacement guarantor,
together with the other Guarantor, satisfies the financial covenants set forth in the Security
Instruments.

     8.17. Except as permitted by Section 5.13 herein, (a) the transfer of any membership interest
in Mortgagor or (b) the transfer of any membership interest in Mortgagor held directly or
indirectly, through one or more intermediate entities, by any Guarantor or (c) the dilution of the
percentage membership interest in Mortgagor held directly or indirectly, through one or more
intermediate entities, by any Guarantor, without the prior written consent of Mortgagee.

     8.18. The merger or consolidation with any entity by Mortgagor, or the transfer of any of the
membership interests of Mortgagor by any of the present members thereof or dilution of the
percentage of the membership interests in Mortgagor held by any of the present members thereof, or
the acquisition of any of the membership interests of Mortgagor by any person, corporation or
entity not presently a member thereof, without the prior written consent of Mortgagee.

     8.19. If Mortgagor shall breach the financial covenants set forth in the Note beyond any
applicable cure period.

     8.20. If Mortgagor fails to promptly notify Mortgagee, in writing, and in any event within ten
(10) days, of the occurrence of any event or condition of which Mortgagor is aware which
constitutes a Default Condition, and together with such notice, furnish a written statement to
Mortgagee which shall set forth the details of any action Mortgagor proposes to take with respect
thereto.

     8.21. If any Hedging Agreement (i) fails or ceases in any respect to be in full force and
effect and to be continuing, (ii) is terminated, (iii) is disputed or (iv) becomes invalid or
unenforceable based on Mortgagor’s default thereunder.

     8.22. If it becomes unlawful under the laws of the State of New York for Mortgagor to perform
all or any of Mortgagor’s obligations under any Hedging Agreement.

     8.23. If any Hedging Agreement is not, or is alleged by Mortgagor not to be, binding on or
enforceable against Mortgagor or effective to create the security intended to be created by it.

     Section 9. Remedies.

     9.1. Rights Upon Default.

     Upon the occurrence of any Event of Default beyond any applicable notice and cure period
hereunder, Mortgagee, in addition to the remedies provided above, shall have each and every of the
following rights and remedies, all of which rights and remedies shall be cumulative

34

 

and not exclusive and in addition to any and all other rights and/or remedies granted to
Mortgagee under this Mortgage, the Note, any of the other Security Instruments or Other Documents:

          9.1.1 Mortgagee shall have the right forthwith, at its election, to exercise any and all
rights and remedies available to it at law or in equity.

          9.1.2 Mortgagee shall have the right forthwith, at its election, and without further notice or
demand (except as otherwise specifically provided in the Note, this Mortgage or the other Security
Instruments) and without the commencement of any action to foreclose this Mortgage or exercise any
power of sale Mortgagee may have under this Mortgage, to enter immediately upon and take possession
of the Mortgaged Property, or any part thereof, without further consent or assignment by Mortgagor,
and to do, execute and perform any act, deed, matter or thing whatsoever that ought to be done,
executed and performed in and about or with respect to the Mortgaged Property and the leasing,
management, or operation thereof as fully as Mortgagor might do, including, without limitation, the
right to institute summary proceedings against any Lessee who shall fail to comply with the
provisions of the applicable Lease, with the right to lease the Mortgaged Property, or any part
thereof, and to collect and receive all of the Rents, issues and profits, and all other amounts
past due or to become due to Mortgagor by reason of its ownership of the Mortgaged Property and to
apply the same, after the payment of all necessary charges and expenses in connection with the
operation of the Mortgaged Property (including, without limitation, any managing agent’s
commission, at the option of Mortgagee), on account of the Obligations. If Mortgagor or any other
person claiming by, through or under it, (other than any Lessee whose tenancy Mortgagee has agreed
not to disturb or whose tenancy Mortgagee, in its sole and uncontrolled discretion, is willing not
to disturb) are occupying all or any part of the Mortgaged Property, it is hereby agreed that
Mortgagor and such other persons shall either immediately surrender possession of the Mortgaged
Property to Mortgagee and vacate the premises so occupied or pay a reasonable rental for the use
thereof, monthly in advance, to Mortgagee.

          9.1.3 Mortgagee shall have the right to seek the immediate appointment by any court of
competent jurisdiction of a receiver for the Mortgaged Property and the business of Mortgagor in
connection therewith and of the Rents and profits arising therefrom, which receiver shall be
entitled to immediate possession of the entire Mortgaged Property, whether or not occupied by
Mortgagor. Mortgagee shall be entitled to the appointment of such a receiver as a matter of right
without consideration of the value of the Mortgaged Property or other security for the Obligations
or the solvency of any person or corporation liable for the payment thereof. If Mortgagor is then
in possession of the Mortgaged Property or any part thereof, Mortgagor shall immediately, upon the
appointment of such receiver, vacate the Mortgaged Property or such part thereof, as the case may
be, or pay a reasonable rental for the use thereof during such receivership, the amount of such
rental to be agreed upon between said receiver and Mortgagor or to be fixed by the court in which
said receiver shall have been appointed; and the relationship between said receiver and Mortgagor
shall be that of landlord and tenant.

          9.1.4 Mortgagee, to the extent permitted by law, may choose to utilize the procedures set
forth in Article 14 of the Real Property Actions and Proceedings Law and

35

 

commence a non-judicial foreclosure by power of sale of this Mortgage. To the extent
permitted by law, Mortgagor waives any right granted pursuant to Section 1421, or any other
provision of the Real Property Actions and Proceedings Law, to challenge Mortgagee’s election to
enforce this Mortgage by means of such non-judicial power of sale unless Mortgagor in good faith
believes there is one or more specific factual, meritorious defenses to the foreclosure action.

     9.2. Mortgagee’s Right to Release and Negotiate.

     Without affecting the liability of Mortgagor or any Other Liable Party (except any person
expressly released in writing), and without affecting any lien or other security not expressly
released in writing, Mortgagee, at any time and from time to time, either before or after maturity
of the Note, irrespective of whether any Default Condition then exists and without notice or
consent, may do any one or more of the following:

          (a) release any person liable for payment of or performance of any or all of the Obligations;

          (b) make any agreement extending the time, or otherwise altering the terms of payment of the
Obligations or any part thereof, or modifying or waiving any of the Obligations, or subordinating,
modifying or otherwise dealing with the lien or liens securing payment of the Obligations;

          (c) exercise or refrain from exercising or waive any right Mortgagee may have;

          (d) accept additional security of any kind;

          (e) release or otherwise deal with any property, real or personal, securing the Obligations or
any part thereof, including all or any part of the Mortgaged Property; and

          (f) (in the event of any conveyance of Mortgagor’s interest in the Mortgaged Property to
parties not appearing in this instrument), deal with such successor or successors in interest with
reference to this Mortgage and the Obligations secured hereby, either by way of forbearance on the
part of Mortgagee or extension of the time of payment of the Note or any other sum forming part of
the Obligations, or otherwise, without in any way modifying or affecting the conveyance under this
Mortgage or the original liability of Mortgagor for the Obligations, either in whole or in part.
Nothing in this subsection, however, shall be deemed a consent by Mortgagee to the conveyance by
Mortgagor of any interest in the Mortgaged Property.

     9.3. Mortgagor to Surrender Possession.

     In the event of any sale of the Mortgaged Property under the provisions hereof, Mortgagor
shall forthwith surrender possession thereof to the purchaser. Upon failure to do so, Mortgagor
shall thereupon be a tenant at sufferance of such purchaser, and upon its failure to surrender
possession of the Mortgaged Property upon demand, such purchaser, his heirs, legal

36

 

representatives, successors or assigns, shall be entitled to institute and maintain an
appropriate action for possession of the Mortgaged Property.

     9.4. Uniform Commercial Code. Upon the occurrence of any Event of Default, Mortgagee
shall have and may exercise all of the rights and remedies of a secured party under the Uniform
Commercial Code then in effect in the state in which the Premises is located. Without limiting the
generality of the foregoing:

               (a) Mortgagee, at its option, pursuant to the applicable provisions of Article 9 of the
Uniform Commercial Code, may proceed as to both the real and personal property covered by this
Mortgage in accordance with its rights and remedies in respect of said real property, in which
event (i) the other provisions of the Uniform Commercial Code shall not apply to disposition of the
Collateral, and (ii) the sale of the Collateral in conjunction with and as one parcel with said
real estate shall be deemed to be a commercially reasonable manner of sale; or

               (b) Mortgagee, at its option, may proceed as to the Collateral separately from said real
property, in which event the requirement of reasonable notice shall be met by mailing notice of the
sale, postage prepaid, to Mortgagor or any other person entitled thereto at least ten (10) days
before the time of the sale or other disposition of any of the Collateral.

     Section 10. Miscellaneous.

     10.1. Notices. Any notice, demand, request, instruction, document, or other
communication to be given under or in connection with this Mortgage shall be in writing and
hand-delivered, receipt requested or sent by registered or certified mail, postage prepaid, return
receipt requested, or sent by Federal Express or other similar courier service, addressed as
follows:

     If to Mortgagee:

          Anglo Irish Bank Corporation plc

          Stephen Court

          18/21 St. Stephen’s Green

          Dublin 2, Ireland

          Attn: Owen O’Neill, Director

     Copy by ordinary

     first class mail to:

          Anglo Irish New York Corporation

          222 East 41st Street, 24th Floor

          New York, New York 10017

          Attn: Peter Lennon, Vice President

          and

37

 

          Sullivan & Worcester LLP

          1290 Avenue of the Americas

          New York, New York 10104

          Attn: Hugh P. Finnegan, Esq.

     If to Mortgagor:

          Acadia Tarrytown LLC

          c/o Acadia Realty Trust

          1311 Mamaroneck Avenue, Suite 260

          White Plains, New York 10605

          Attn.: Robert Masters, Esq.

     Copy by ordinary

     first class mail to:

          Acadia Realty Trust

          1311 Mamaroneck Avenue, Suite 260

          White Plains, New York 10605

          Attn.: Robert Masters, Esq.

Any party may change the address to which notices are to be sent to it by giving written notice of
such change of address to the other party in the manner herein provided for giving notice. Any
such notice, demand, request, or other communication shall be deemed given when mailed as
aforesaid.

     10.2. Captions. The captions in this Mortgage are for convenience and reference only
and do not define, limit or describe the scope of the provisions hereof.

     10.3. Modifications. The provisions of this Mortgage may be modified or terminated
only in a writing signed by Mortgagor and Mortgagee.

     10.4. Non-Waiver. Mortgagee shall not be deemed to have waived or amended any of its
rights or remedies under any of the Loan Documents unless such waiver or amendment be in writing
and signed by it. No delay or omission on the part of Mortgagee in exercising any such right or
remedy shall operate as a waiver of such right or remedy or any other right or remedy. A waiver on
any one occasion shall not be construed as a bar to or a waiver of the same right or remedy on any
future occasion. Without limiting the generality of the foregoing, the acceptance by Mortgagee of
any sum after the occurrence of any Event of Default shall not constitute a waiver of the right to
require prompt performance of all of the covenants and conditions contained in the Loan Documents.
The acceptance by Mortgagee of any sum less than the sum then due shall be deemed an acceptance on
account only and shall not constitute a waiver of the obligation of Mortgagor to pay the entire sum
then due, and Mortgagor’s failure to pay said entire sum due shall be and continue to be an Event
of Default notwithstanding such acceptance of such lesser amount on account, and Mortgagee shall be
entitled at all times thereafter to

38

 

exercise all rights and remedies conferred upon it following an Event of Default,
notwithstanding the acceptance by Mortgagee thereafter of future sums on account.

     10.5. Cumlative Nature of Rights and Remedies. The rights and remedies provided
Mortgagee in the Loan Documents and any of them, or otherwise available by law, shall be cumulative
and may be exercised concurrently or successively. Any one or more of such rights or remedies may
be exercised by Mortgagee, at its option, without regard to the adequacy of its security.

     10.6. Limitation of Third-Party Rights. The Mortgagor and Mortgagee do not intend the
benefits of any one or more of the Loan Documents to inure to, or otherwise exist for, the benefit
of any third party who has a contractual relationship with Mortgagor, who is a creditor of
Mortgagor with respect to the Mortgaged Property, or any part thereof, or who otherwise succeeds to
Mortgagor’s interest or rights, and none of the Loan Documents shall be construed to make or render
Mortgagee liable to any materialman, supplier, contractor, subcontractor, successor in title to the
Mortgaged Property, or any part thereof, or any Lessee, or for debts or claims accruing to any such
persons against Mortgagor. Notwithstanding anything contained in any of the Loan Documents, or any
conduct or course of conduct by Mortgagor or Mortgagee or both, whether before or after signing
this Mortgage, none of the Loan Documents shall be construed as creating any right, claim or cause
of action against Mortgagee, or any of its officers, directors, agents or employees, in favor of
any materialman, supplier, contractor, subcontractor, successor in title to the Mortgaged Property,
or any part thereof, or any Lessee or to any other person, corporation or other entity, other than
Mortgagor.

     10.7. Interpretation. Mortgagor acknowledges that Mortgagor, Mortgagee and their
respective counsel have reviewed and revised the Loan Documents and the Commitment Letter and agree
that any rule of construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of the Loan Documents or said Commitment
Letter.

     10.8. Assignability of Mortgagee’s Interest. Mortgagee may assign, negotiate, or
pledge all or any portion of its rights under the Loan Documents or any of them, and, in case of
such assignment, Mortgagor shall accord full recognition thereto. Without limiting the generality
of the foregoing, Mortgagee shall have the right to sell or otherwise grant participations in the
Loan to one or more of the participating financial institutions and to disclose all information in
its possession with respect to Mortgagor and the Mortgaged Property to such institutions; Mortgagor
shall cooperate with Mortgagee, if requested by Mortgagee, with respect to any of Mortgagee’s
efforts to obtain such participants.

     10.9. Integration. The Loan Documents and the Commitment Letter reflect the entire
agreement between Mortgagor and Mortgagee; provided, however, to the extent there shall exist a
conflict between any term or provision of the Commitment Letter and any term or provision of the
Loan Documents, the term or provision of the Loan Documents shall prevail.

39

 

     10.10. Singular Includes Plural. Every word herein purporting to the neuter gender
only shall extend to and include males and females and every word herein importing the singular
number only shall be construed to extend to and include the plural number also.

     10.11. Severability. In the event any term or provision of this Mortgage or the
application thereof to any person or circumstance shall, to any extent, be held invalid or
unenforceable, the remainder of this Mortgage or the application of such term or provision to
persons or circumstances other than those to which it is held invalid or unenforceable, shall be
valid and enforceable to the fullest extend permitted by law.

     10.12. Governing Law. This Mortgage shall be construed in accordance with and
governed by the laws of the State of New York in the United States of America, without resort to
that state’s conflict of laws rules.

     10.13. Incorporation of Exhibits. All Exhibits referred to in this Mortgage are by
such references fully incorporated herein.

     10.14. Successors and Assigns Bound. This Mortgage shall inure to the benefit of and
be binding on the successors and assigns of Mortgagee and the heirs, legal representatives,
successors and assigns of Mortgagor; provided, however, the foregoing shall not be deemed to allow
any assignment by Mortgagor in violation of the terms hereof.

     10.15. Waiver of Jury Trial. Mortgagor and Mortgagee by acceptance of this Mortgage,
expressly acknowledge and agree that the Loan involves a sophisticated commercial real estate
finance transaction and that disputes arising in connection with the Loan would be most fairly
resolved by a judge applying applicable federal and state laws, rather than by arbitration rules or
jury trial. To the fullest extent permitted by law, Mortgagor hereby waives, for Mortgagor and
Mortgagor’s heirs, legal representatives, successors and assigns, and by acceptance of this
Mortgage, Mortgagee hereby waives, for itself, its successors and assigns, any right to a trial by
jury in respect to any litigation directly or indirectly arising out of, under, or in connection
with this Mortgage, the Note or any of the other Loan Documents. Mortgagor hereby (a) certifies
that no employee, attorney or other agent or representative of Mortgagee has represented, expressly
or otherwise, that Mortgagee, in the event of litigation, would not seek to enforce the foregoing
waiver, and (b) acknowledges that Mortgagee has been induced to make the Loan, by, among other
things, the waiver, acknowledgments and certification contained in this subsection.

     Section 11. State of New York Provisions.

     11.1. Non-Residential Property. This Mortgage does not cover real property
principally improved by one or more structures containing in the aggregate six (6) or less
residential dwelling units having their own separate cooking facilities.

40

 

     11.2. Trust Fund. Pursuant to Section 13 of the Lien Law of New York, Mortgagor shall
receive the advances secured by this Mortgage and shall hold the right to receive such advances as
a trust fund to be applied first for the purpose of paying the cost of any improvement on the
Mortgaged Property before using any part of the total of the same for any other purpose.

     11.3. Liability. If Mortgagor consists of more than one person or entity, the
obligations and liabilities of each such person or entity hereunder shall be joint and several.

     11.4. Multiple Parcels. In addition to all other rights and remedies of Mortgagee set
forth herein, upon the occurrence of an Event of Default, Mortgagee may institute a non-judicial
foreclosure proceeding in compliance with applicable law in effect on the date foreclosure is
commenced (including, without limitation, non-judicial foreclosure proceedings pursuant to New York
Real Property Actions and Proceedings § 1401 et seq.) for Mortgagee to sell the
Premises either as a whole or in separate parcels as Mortgagee may determine at public sale or
sales to the highest bidder for cash, in order to pay the Indebtedness. If the Premises is sold as
separate parcels, Mortgagee may direct the order in which the parcels are sold. Mortgagee shall
deliver to the purchaser a Mortgagee’s deed or deeds without covenant or warranty, express or
implied. Mortgagee may postpone the sale of all or any portion of the Premises by public
announcement at the time and place of sale, and from time to time may further postpone the sale by
public announcement in accordance with applicable law.

     11.5. Maximum Amount Secured. Notwithstanding anything contained herein to the
contrary, the maximum amount of indebtedness secured by this Mortgage at execution or which under
any contingency may become secured hereby at any time hereafter is (i) the principal sum of NINE
MILLION EIGHT HUNDRED THOUSAND AND 00/100 DOLLARS (US$9,800,000.00) plus interest and late charges
thereon (at such rates as provided for in the Note or herein, as applicable), plus (ii) amounts
expended by Mortgagee to maintain the lien of this Mortgage or to protect the property secured by
this Mortgage, including, without limitation, amounts in respect of insurance premiums, real estate
taxes, litigation expenses to prosecute or defend the rights, remedies and lien of this Mortgage or
title to the Mortgaged Property secured hereby, and any costs, charges or amounts to which
Mortgagee becomes subrogated upon payment, whether under recognized principles of law or equity or
under express statutory authority, together with interest on all the foregoing amounts at such
rates as provided for in the Note or herein, as applicable.

[remainder of page intentionally left blank]

41

 

     IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed, under seal, hereunto
duly authorized, as of the date first above written.

	 	 	 	 	 
	 	ACADIA TARRYTOWN LLC,

formerly known as

Acadia-Noddle Tarrytown Development Co., LLC,

a New York limited liability company

 	 
	 	By:  	 	 
	 	 	Name:  	Robert Masters 	 
	 	 	Title:  	Senior Vice President 	 
	 

State of                        )

                                     : ss:

County of                     )

     On
this ___ day of                     , 2007, before me, the undersigned notary public, personally
appeared Robert Masters, proved to me through satisfactory evidence of identification, which were
                                        , to be the person whose name is signed on the preceding or attached
document, and acknowledged to me that he signed it voluntarily for its stated purpose.

	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	(official signature and seal of notary) 	 
	 	 	 	 

Execution Page-Mortgage Consolidation and Modification Agreement

 

 

	 	 	 	 	 

EXHIBIT A

Legal Description

 

 

EXHIBIT B

Permitted Encumbrances

 

 

EXHIBIT C

The term “Notes” shall mean all of the notes secured by the mortgages set forth below and
“Mortgages” shall mean, collectively:

     1. Mortgage made by RMC Development Company, LLC in favor of Emigrant Savings Bank in the
principal amount of $2,000,000.00, dated as of September 9, 1999 and recorded April 25, 2000 in the
Office of the County Clerk, Westchester County (the “Register’s Office”) under Control Number
400410557, as assigned by Assignment of Mortgage made by Emigrant Savings Bank to Acadia Realty
Limited Partnership, dated May 13, 2004 and recorded April 8, 2005 in the Register’s Office under
Control Number 450620831, and as further assigned by an Assignment of Mortgage made by Acadia
Realty Limited Partnership to Mortgagee, dated as of October 30, 2007 and intended to be recorded
in the Register’s Office simultaneously herewith.

     2. Mortgage, dated the date hereof, in the principal amount of $7,940,521.39, executed by
Mortgagor in favor of Mortgagee and intended to be recorded in the Register’s Office simultaneously
herewith.exv10w71

 

Exhibit 10.71

PROJECT LOAN AGREEMENT

Dated as of December 10, 2007

Between

P/A-ACADIA PELHAM MANOR, LLC,

as Borrower

and

BEAR STEARNS COMMERCIAL MORTGAGE, INC.,

as Lender

MERS MIN: 8000101-0000007140-6

 

 

TABLE OF CONTENTS

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

 

 

	 	 	 	 	 	 	 	 	 
	 
	 	Section 8.2	 	Remedies	 	 	33	 
	 
	 	Section 8.3	 	Remedies Cumulative; Waivers	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX. SPECIAL PROVISIONS	 	 	34	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X. MISCELLANEOUS	 	 	34	 
	 
	 	Section 10.1	 	Survival	 	 	34	 
	 
	 	Section 10.2	 	Lender’s Discretion	 	 	35	 
	 
	 	Section 10.3	 	Governing Law	 	 	35	 
	 
	 	Section 10.4	 	Modification, Waiver in Writing	 	 	36	 
	 
	 	Section 10.5	 	Delay Not a Waiver	 	 	36	 
	 
	 	Section 10.6	 	Notices	 	 	37	 
	 
	 	Section 10.7	 	Trial by Jury.	 	 	37	 
	 
	 	Section 10.8	 	Headings	 	 	38	 
	 
	 	Section 10.9	 	Severability	 	 	38	 
	 
	 	Section 10.10	 	Preferences	 	 	38	 
	 
	 	Section 10.11	 	Waiver of Notice	 	 	38	 
	 
	 	Section 10.12	 	Remedies of Borrower	 	 	38	 
	 
	 	Section 10.13	 	Expenses; Indemnity	 	 	38	 
	 
	 	Section 10.14	 	Schedules and Exhibits Incorporated	 	 	40	 
	 
	 	Section 10.15	 	Offsets, Counterclaims and Defenses	 	 	40	 
	 
	 	Section 10.16	 	No Joint Venture or Partnership; No Third Party Beneficiaries.	 	 	40	 
	 
	 	Section 10.17	 	Publicity	 	 	40	 
	 
	 	Section 10.18	 	Waiver of Marshalling of Assets	 	 	41	 
	 
	 	Section 10.19	 	Waiver of Counterclaim	 	 	41	 
	 
	 	Section 10.20	 	Identical Obligations; Conflict; Construction of Documents; Reliance	 	 	41	 
	 
	 	Section 10.21	 	Brokers and Financial Advisors	 	 	41	 
	 
	 	Section 10.22	 	Prior Agreements	 	 	42	 
	 
	 	Section 10.23	 	Joint and Several Liability	 	 	42	 
	 
	 	Section 10.24	 	Certain Additional Rights of Lender (VCOC)	 	 	42	 
	 
	 	Section 10.25	 	MERS	 	 	42	 

2

 

PROJECT LOAN AGREEMENT

          THIS PROJECT LOAN AGREEMENT, dated as of December 10, 2007 (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Agreement” or sometimes, this “Project
Loan Agreement”), is made by and between BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York
corporation, having an address at 383 Madison Avenue, New York, New York 10179 (“Lender”) and
P/A-ACADIA PELHAM MANOR, LLC, a Delaware limited liability company, having its principal place of
business c/o Acadia Realty Trust, 1311 Mamaroneck Avenue — Suite 260, White Plains, New York 10605
(“Borrower”).

WITNESSETH:

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

          WHEREAS, Lender is willing to make the Project Loan to Borrower, subject to and in accordance
with the terms of this Agreement and the other Loan Documents (as hereinafter defined).

          NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants,
agreements, representations and warranties set forth in this Agreement, the parties hereto hereby
covenant, agree, represent and warrant as follows:

ARTICLE I.

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

     Section 1.1 Definitions.

          For all purposes of this Agreement, except as otherwise expressly required or unless the
context clearly indicates a contrary intent, all capitalized terms used herein but not otherwise
defined shall have their respective meanings set forth in the Building Loan Agreement and:

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

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

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

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

 

 

          “Building Loan Agreement” shall mean that certain Building Loan Agreement dated as of the date
hereof between Borrower and Lender as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

          “Building Loan Amount” shall have the meaning set forth in the Building Loan Agreement.

          “Building Loan Assignment of Leases” shall have the meaning set forth in the Building Loan
Agreement.

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

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

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

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

          “Contingency Excess” shall have the meaning set forth in Section 2.1.7(b) hereof.

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

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

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

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

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

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

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

          “Final Building Loan Advance” shall mean the Final Advance as defined in Section 2.12.1 of the
Building Loan Agreement.

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

2

 

          “Home Depot Estoppel Certificate” shall have the meaning set forth in Section 2.10.8
hereof.

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

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

          “Initial Advance” shall have the meaning set forth in Section 2.10 hereof.

          “Initial Advance Conditions” shall have the meaning set forth in Section 2.10 hereof.

          “Interest Period” shall mean: (a) the period commencing on the Closing Date and ending on
the last day of the month in which the Closing Date occurs, both dates inclusive; and (b) the
period commencing on and including the first day of each calendar month thereafter during the term
of Loan and ending and including the last day of such calendar month.

          “Interest Rate” shall mean seven and one hundred eighty-two one thousandths percent (7.182%),
provided, however, in the event that (a) on or before June 1, 2009, the Property shall have
achieved a Debt Service Coverage Ratio as determined by Lender of 1.15 to 1.00, and Borrower
delivers to Lender a MAI appraisal performed, at Borrower’s sole cost and expense, by an appraiser
approved by Lender and dated, or updated, to a date within 30 days of such date made in compliance
with FIRREA and reasonably satisfactory to Lender in all respects; the appraisal value shall be
subject to review and confirmation and updating as to valuation by Lender’s internal appraisal
staff, whose decision shall be final absent manifest error showing that loan-to-value ratio for the
Property is no greater than 80% assuming a fully advanced Loan, Lender shall, upon Borrower’s
written request, reduce the Interest Rate to a per annum rate equal to five and ninety-three one
hundredth percent (5.93%), commencing on the first Payment Date after Borrower’s request, and (b)
on or before June 1, 2010, the Property shall have achieved a Debt Service Coverage Ratio as
determined by Lender of 1.15 to 1.00, and Borrower delivers to Lender a MAI appraisal performed, at
Borrower’s sole cost and expense, by an appraiser approved by Lender and dated, or updated, to a
date within 30 days of such date made in compliance with FIRREA and reasonably satisfactory to
Lender in all respects; the appraisal value shall be subject to review and confirmation and
updating as to valuation by Lender’s internal appraisal staff, whose decision shall be final absent
manifest error showing that loan-to-value ratio for the Property is no greater than 80% assuming a
fully advanced Loan, Lender shall, upon Borrower’s written request, reduce the Interest Rate to a
per annum rate equal to five and ninety-eight one hundredth percent (5.98%), commencing on the
first Payment Date after Borrower’s request. Any reduction in the Interest Rate as set forth above
shall be effective commencing on the first Payment Date after Borrower’s request for such reduction
and satisfaction of the conditions set forth above and no reduction in the Interest Rate shall be
retroactive. In the event that Borrower fails to satisfy the conditions for a reduction of the
Interest Rate within the time periods set forth above, time being of the essence, Borrower
shall have no further right to obtain a reduction in the Interest Rate. Notwithstanding
anything to the contrary contained herein, Lender shall have the right, in its sole discretion, at
any time

3

 

prior to a Securitization of the Loan, to increase the Interest Rate by up to two-tenths
of one percent (0.20%).

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

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

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

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

          “Loan Documents” shall mean collectively, the Building Loan Documents and the Project Loan
Documents, the Environmental Indemnity, the Guaranty of Completion, the Guaranty of Recourse
Carveouts, the Cash Management Agreement, the Clearing Account Agreement, the Collateral Assignment
of Condominium Documents, the Assignment of Contracts, the Administration Fee Agreement, the Rate
Lock Agreement and all other documents executed and/or delivered in connection with the Loan.

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

          “Monthly Debt Service Payment Amount” shall mean (a) an amount equal to interest only on the
outstanding principal balance of the Building Loan, calculated in accordance with Section
2.2 hereof, for each Payment Date commencing with the Payment Date occurring in February, 2008
through and including the Payment Date occurring in January, 2013, and (b) a constant monthly
payment of $85,625.17 commencing with the Payment Date occurring in February,
2013 and on each Payment Date thereafter, provided, however, that in the event that the Interest
Rate is modified in accordance with the provisions of the definition of “Interest Rate,” the
Monthly Debt Service Payment Amount shall be adjusted by Lender based upon the modified Interest
Rate and a thirty (30) year amortization schedule, Lender’s determination of the Monthly Debt
Service Payment Amount being binding absent manifest error.

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

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

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

          “Other Obligations” shall have the meaning as set forth in the Mortgage.

4

 

          “Payment Date” shall mean February 1, 2008, and the 1st day of every month
thereafter during the term of the Loan until and including the Maturity Date or, if such day is not
a Business Day, the immediately preceding Business Day.

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

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

          “Project Loan Amount” shall mean Twelve Million Six Hundred Thirty-Seven Thousand Ninety-Three
and 40/100 Dollars ($12,637,093.40).

          “Project Loan Assignment of Leases” shall mean that certain Project Loan Assignment of Leases
and Rents, dated the date hereof, from Borrower, as assignor, to Lender, as assignee, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time to time.

          “Project Loan Documents” shall mean, collectively, this Agreement, the Project Loan Note, the
Project Loan Mortgage, the Project Loan Assignment of Lease as well as all other documents not or
hereafter executed and/or delivered with respect to the Project Loan.

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

          “Project Loan Mortgage” shall mean that certain Project Loan Fee and Leasehold Mortgage and
Security Agreement dated the date hereof, executed and delivered by Borrower to Lender as security
for the Project Loan and encumbering the Property, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

          “Project Loan Note” shall mean that certain Project Loan Promissory Note, dated the date
hereof, in the principal amount of up to the Project Loan Amount made by Borrower in favor of
Lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

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

          “Retaining Wall Letter” shall have the meaning set forth in Section 2.10.10 hereof.

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

          “Security Agreement” shall have the meaning set forth in Section 2.5.1(a)(v) hereof.

          “Severed Loan Documents” shall have the meaning set forth in Section 8.2(c). hereof.

5

 

          “Shortfall” shall have the meaning set forth in Section 2.1.10 hereof.

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

     Section 1.2 Principles of Construction.

          (a) All references to sections and schedules are to sections and schedules in or to this
Agreement unless otherwise specified. All uses of the word “including” shall mean “including,
without limitation” unless the context shall indicate otherwise. Any reference in this Agreement
or in any other Loan Document to any Loan Document shall be deemed to include references to such
documents as the same may hereafter be amended, modified, supplemented, extended, replaced and/or
restated from time to time (and, in the case of any note or other instrument, to any instrument
issued in substitution therefor). Unless otherwise specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all
meanings attributed to defined terms herein shall be equally applicable to both the singular and
plural forms of the terms so defined.

          (b) With respect to any cross-reference to the Building Loan Documents or the Project Loan
Documents or any combination thereof, as the case may be, for terms defined therein or provisions
set forth therein or Schedules or Exhibits thereto, such cross-references shall be to referenced
defined terms or provisions or Schedules or Exhibits, as the case may be, as the same are set forth
in the Building Loan Documents or the Project Loan Documents or any combination thereof, as the
case may be, as of the date hereof, and as the same may be amended, modified, supplemented,
extended, replaced or restated or any combination thereof from time to time, and shall survive the
repayment or satisfaction of the Building Loan or the Project Loan as the case may be, or the
termination of the Building Loan Agreement or this Agreement or any combination thereof, as the
case may be, for so long as the Project Loan remains outstanding.

ARTICLE II.

GENERAL TERMS

          Section 2.1 Loan Commitment; Disbursement to Borrower.

          2.1.1 Agreement to Lend and Borrow. Subject to and upon the terms and conditions set
forth herein, Lender hereby agrees to make and Borrower hereby agrees to accept Advances in respect
of the Project Loan as more particularly set forth in Section 2.10.

          2.1.2 No Reborrowings. Any amount borrowed and repaid hereunder in respect of the Building Loan may not be
reborrowed.

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

          2.1.4 Use of Proceeds. Borrower hereby agrees that Borrower shall use the proceeds of
the Project Loan to pay or reimburse itself for Project-Loan Costs actually incurred

6

 

in connection
with the construction of the Project Improvements if and to the extent that such Project-Loan Costs
are reflected in the Project Loan Budget, subject to reallocation pursuant to Sections
2.1.6 and 2.1.7 hereof, and 5.1.33 of the Building Loan Agreement (or other
reallocations approved by Lender in its sole discretion).

          2.1.5 Advances. The Project Loan Budget shall reflect, by category and line item, the
purposes and amounts for which funds to be advanced by Lender under this Agreement are to be used.
Lender shall not be required to Advance funds hereunder for any category or line item of Project
Loan Costs in excess of the amount specified for such line item or category in the Project Loan
Budget, subject to Sections 2.1.6 and 2.1.7 hereof and 5.1.33 of the Building Loan Agreement (or
other reallocations approved by Lender in its sole discretion). No Advances shall be made to pay
for Affiliate Fees.

          2.1.6 Cost Overruns. If Borrower becomes aware of any change in actual or projected
Project Loan Costs which will increase any one or more category or line item of costs reflected in
the Project Loan Budget, Borrower shall immediately notify Lender in writing and promptly submit to
Lender for its approval a revised Project Loan Budget. Any reallocation of any category or line
items in the Project Loan Budget in connection with cost overruns shall be subject to Lender’s
approval in Lender’s sole discretion except as set forth in Sections 2.1.7 hereof and
5.1.33 of the Building Loan Agreement, provided, however, under no circumstances shall
Borrower be permitted, or Lender obligated to approve, the reallocation of line items from the
Building Loan Budget to the Project Loan Budget. Lender shall have no obligation to make any
further Advances unless and until the revised Project Loan Budget so submitted by Borrower is
approved by Lender and Borrower has satisfied its obligations with respect to any resulting
Shortfall under Section 2.1.10. Lender reserves the right to approve or disapprove any
revised Project Loan Budget in its sole and absolute discretion (except with respect to
reallocations in accordance with Sections 2.1.7 and 5.1.33).

          2.1.7 Contingency Reserve.

          (a) Following the satisfaction of the Initial Advance Conditions, and subject to the prior
approval of Lender in its sole discretion, Borrower may revise the Project Loan Budget to move
amounts available under any Line Item that are designated to “Contingency” to other Line Items in
the Project Loan Budget. In no event may the Contingency Line Item of the Building Loan Budget be
reallocated to any Line Item in the Project Loan Budget. Provided no Event of Default exists and
with Lender’s consent (which shall not be unreasonably withheld), after Completion of the
Improvements, Borrower may draw amounts available under the Contingency Line Item of the Project
Loan Budget to fund Shortfalls in monthly interest due, which amounts shall be deposited in the
Interest Reserve. Such drawing shall be in addition to any Interest Reserve Line Item advanced
under the Project Loan pursuant to Section 2.14.10 hereof.

          (b) Following the occurrence of Final Completion, Lender shall reasonably cooperate with
Borrower to amend the Project Loan Budget, Building Loan Budget, Project Loan Documents and
Building Loan Documents such that: (x) the Building Loan Budget is amended to remove the amounts
then available under the Building Loan Budget either in the contingency Line Item or as cost
savings from other Line Items (the “Contingency Excess”) and

7

 

the Building Loan Amount is reduced by
the Contingency Excess; and (y) the contingency line item of the Project Loan Budget and the
Project Loan Amount are increased by the Contingency Excess. Borrower and Lender shall execute and
deliver such documents, certificates and instruments as may be reasonably required to effect the
above described re-allocation, including, without limitation, the filing of an amended Section 22
Affidavit and the modification of the Project Loan Documents and Building Loan Documents to reflect
the respective changes in the Project Loan Amount and the Building Loan Amount and Borrower shall
obtain such other evidence as Lender may reasonably request to confirm that none of the foregoing
shall adversely impact the validity or priority of its security interests in the Property or
otherwise adversely impact its rights and remedies under the Loan Documents including, without
limitation, appropriate endorsements to the title insurance policy. Borrower shall pay any and all
title insurance, recording and other charges and all reasonable costs and expenses (including legal
fees) incurred by Lender in connection with the foregoing.

          2.1.8 Intentionally Omitted.

          2.1.9 Amount of Advances. In no event shall any Advance exceed the full amount of
Project Loan Costs theretofore paid or to be paid with the proceeds of such Advance plus any
Project Loan Costs incurred by Borrower through the date of the Draw Request for such Advance
minus (i) the applicable Retainage for each Contract and Subcontract, and (ii) the
aggregate amount of any Advances previously made by Lender. It is further understood that the
Retainage described above is intended to provide a contingency fund protecting Lender against
failure of Borrower or Guarantor to fulfill any obligations under the Loan Documents, and that
Lender may charge amounts to pay for Project Loan Costs against such Retainage in the event Lender
is required or elects to expend funds to cure any Default or Event of Default, in either instance,
in accordance with the terms of this Agreement. No Advance of the Loan by Lender shall be deemed
to be an approval or acceptance by the Lender of any work performed thereon or the materials furnished
with respect thereto.

          2.1.10 Loan-In-Balance. As used herein, a “Shortfall” shall mean, as to any Line Item
in the Development Budget as of any date, the amount determined by Lender, in Lender’s sole but
reasonable judgment, by which (A) the cost of completing or satisfying such Line Item, exceeds
(B) the remaining undisbursed portion of the Loan allocated to such Line Item in the Development
Budget plus any sums deposited with Lender pursuant to this Section 2.1.10 to pay for such
Line Item and not previously disbursed plus any Reserve Funds to the extent such Reserve Funds are
available hereunder for the payment of such Line Item. From time to time and at any time during
the Construction Period, Lender shall have the right, but not the obligation, to notify Borrower
that it has determined a Shortfall exists as to any one or more Line Items. If Lender at any time
shall so notify Borrower, Borrower shall, at its option within five (5) days of Lender’s
notification as aforesaid, either: (i) deposit with Lender an amount equal to such Shortfall, which
Lender disburse to Borrower to the satisfaction of the costs of such Line Item prior to advancing
any further Loan proceeds on account of such costs; (ii) post an irrevocable standby Letter of
Credit in the amount of such Shortfall, in favor of Lender; (iii) to the extent permitted under
Sections 2.1.7 hereof and 5.1.33 of the Building Loan Agreement, and following the
satisfaction of the Initial Advance Conditions allocate the Contingency Reserve, with respect to
the Line Item(s) in question, to the Shortfall, and provided, further that the amount of the
remaining Contingency Reserve for such Line Item(s) (following the

8

 

allocation to the Shortfall) is
sufficient for such Line Item(s), as determined by Lender in its sole discretion; and (iv) to the
extent permitted under Section 5.1.33 of the Building Loan Agreement, and then only
following the satisfaction of the Initial Advance Conditions, reallocate cost savings from the
Development Budget in respect of the Loan (or other reallocations which are approved by Lender, in
its sole discretion) in accordance with the terms of this Agreement, but only to the extent such
cost savings can be allocated to the related Line Items. Borrower hereby agrees that Lender shall
have a lien on and security interest in, for the benefit of Lender, any sums deposited pursuant to
clause (i) above and that Borrower shall have no right to withdraw any such sums except for the
payment of the aforesaid costs as approved by Lender. Lender shall have no obligation to make any
further Advances of proceeds of the Loan as to any Line Item until the sums required to be
deposited pursuant to clause (i) above as to such Line Item have been exhausted, or until Borrower
has posted an irrevocable standby Letter of Credit pursuant to clause (iii) above, as the case may
be, and, in any such case, the Loan is back “in balance”. Any such sums not used as provided in
said clause (i) shall be released to Borrower when and to the extent that Lender reasonably
determines that the amount thereof is more than the excess, if any, of the remaining
Project-Related Costs over the undisbursed balance of the Loan, provided, however, that should an
Event of Default occur, Lender, in its sole discretion, may apply such amounts either to the
remaining Project-Related Costs or to the immediate reduction of outstanding principal and/or
interest under the Note.

          2.1.11 Quality of Work. No Advance or any portion thereof shall be made with respect
to defective work or to any contractor that has performed work that is defective and that has not
been cured, as confirmed by the report of the Construction Consultant, but Lender may disburse all or part of
any Advance before the sum shall become due if Lender believes it advisable to do so, and all such
Advances or parts thereof shall be deemed to have been made pursuant to this Agreement.

          2.1.12 Required Equity Funds. All Required Equity Funds shall be contributed (i.e.,
expended by Borrower and invested by Borrower in the Property, for Project Related Costs set forth
on the approved Development Budget) before the Closing Date.

          2.1.13 Trust Fund. Pursuant to Section 13 of the New York Lien Law, Borrower shall
receive the Advances hereunder and shall hold the right to receive the Advances as a trust fund to
be applied first for the purpose of paying the Costs of the Improvements and shall apply the
Advances first to the payment of the Cost of the Improvements on the Property before using any part
of the total of the same for any other purpose.

          2.1.14 Final Project Report and Development Budget. The provisions of Section
2.1.14 of the Building Loan Agreement are incorporated herein by reference as if fully set
forth herein.

          2.1.15 Miscellaneous.

          (a) The making of an Advance by Lender shall not constitute Lender’s approval or acceptance of
the construction theretofore completed. Lender’s inspection and approval of the Plans and
Specifications, the construction of the Project Improvements, or the workmanship and materials used
therein, shall impose no liability of any kind on Lender, the

9

 

sole obligation of Lender as the
result of such inspection and approval being to make the Advances if and to the extent, required by
this Agreement.

          (b) ALL POTENTIAL LIENORS ARE HEREBY CAUTIONED TO EXERCISE SOUND BUSINESS JUDGMENT IN THE
EXTENSION OF CREDIT TO BORROWER. NO POTENTIAL LIENOR SHOULD EXPECT LENDER TO MAKE ADVANCES OF THE
LOAN IN AMOUNTS AND AT TIMES SUCH THAT IT WILL NOT BE NECESSARY FOR EACH SUCH POTENTIAL LIENOR TO
EXERCISE SOUND BUSINESS JUDGMENT IN THE EXTENSION OF CREDIT TO BORROWER. MOREOVER, ALL POTENTIAL
LIENORS ARE REMINDED THAT SUBDIVISION (3) OF SECTION 13 OF THE NEW YORK LIEN LAW PROVIDES THAT
“NOTHING IN THIS SUBDIVISION SHALL BE CONSIDERED AS IMPOSING UPON THE LENDER ANY OBLIGATION TO SEE
THE PROPER APPLICATION OF SUCH ADVANCES BY THE OWNER,” AND LENDER DOES NOT IMPOSE SUCH AN
OBLIGATION ON ITSELF.

     Section 2.2 Interest Rate.

          2.2.1 Interest Rate. Interest on the outstanding principal balance of the Loan shall
accrue from (and include) the Closing Date to but excluding the Maturity Date at the Interest Rate
calculated as set forth in Section 2.2.2 below.

          2.2.2 Interest Calculation. Interest on the outstanding principal balance of the Loan
shall be calculated by multiplying (a) the actual number of days elapsed in the period for which
the calculation is being made by (b) a daily rate based on the Interest Rate and a three hundred
sixty (360) day year by (c) the outstanding principal balance.

          2.2.3 Default Rate. In the event that, and for so long as, any Event of Default shall
have occurred and be continuing, the outstanding principal balance of the Loan and, to the extent
permitted by law, all accrued and unpaid interest in respect of the Loan and any other amounts due
pursuant to the Loan Documents, shall accrue interest at the Default Rate, calculated from the date
such payment was due without regard to any grace or cure periods contained herein.

          2.2.4 Usury Savings. This Agreement, the Note and the other Loan Documents are subject
to the express condition that at no time shall Borrower be obligated or required to pay interest on
the principal balance of the Loan at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the Maximum Legal Rate. If, by the terms of this
Agreement or the other Loan Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the Maximum Legal Rate, the
Interest Rate or the Default Rate, as the case may be, shall be deemed to be immediately reduced to
the Maximum Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be
deemed to have been payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use, forbearance, or detention of
the sums due under the Loan, shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Loan until payment in full
so that the rate or amount of interest on account of the Loan does

10

 

not exceed the Maximum Legal
Rate of interest from time to time in effect and applicable to the Loan for so long as the Loan is
outstanding.

     Section 2.3 Loan Payment.

          2.3.1 Monthly Debt Service Payments. Borrower shall pay to Lender (a) on the Closing
Date, an amount equal to interest only on the outstanding principal balance of the Loan from and
including the Closing Date up to and including December 31, 2007, which interest shall be
calculated in accordance with the provisions of Section 2.2 hereof, and (b) on each Payment Date commencing on
the Payment Date occurring in February, 2008, and thereafter up to and including the Maturity Date,
Borrower shall make a payment to Lender equal to the Monthly Debt Service Payment Amount, which
payments shall be applied first to interest due for the related Interest Period at the Interest
Rate, for such related Interest Period and then to the principal amount of the Loan due in
accordance with this Agreement, and lastly, to any other amounts due and unpaid pursuant to the
Loan Documents hereto. Borrower and Lender acknowledge and agree that, on the 15th
calendar day of the month preceding each Payment Date during the Construction Term: (a) if and to
the extent undrawn funds remain available for Advance under the Project Loan from the Interest
Reserve Line Item of the Project Loan Budget, and provided that that no Event of Default or
monetary Default then exists under any of the Loan Documents or would occur as a result of such
Advance, the Monthly Debt Service Amount then due and owing shall be advanced by Lender by a
Advance under Interest Reserve Line Item of the Project Loan Budget; and (b) if no amount remains
available under the Interest Reserve Line Item but and to the extent Interest Reserve Funds are on
deposit in the Interest Reserve Account, and no Event of Default or monetary Default then exists
under any of the Loan Documents, the Monthly Debt Service Payment Amount then due and payable shall
be paid by application of funds from the Interest Reserve Account. Borrower and Lender acknowledge
and agree that Lender may automatically make an Advance or apply Interest Reserve Funds on deposit
in the Interest Reserve Account on each Payment Date occurring during the Construction Term, in
either instance, in accordance with this Section 2.3.1, without the need for Borrower to
submit a Draw Request or otherwise request such an Advance or application.

          2.3.2 Payments Generally. The first Interest Period hereunder shall commence on and
include the Closing Date and shall end on and include December 31, 2007. Thereafter each Interest
Period shall commence on the first (1st) day of each calendar month during the term of
this Agreement and shall end on and include the final calendar date of such calendar month. For
purposes of making payments hereunder, but not for purposes of calculating Interest Periods, if the
day on which such payment is due is not a Business Day, then amounts due on such date shall be due
on the immediately preceding Business Day and with respect to payments of principal due on the
Maturity Date, interest shall be payable at the Interest Rate or the Default Rate, as the case may
be, through and including the day immediately preceding such Maturity Date. All amounts due under
this Agreement and the other Loan Documents shall be payable without setoff, counterclaim, defense
or any other deduction whatsoever.

          2.3.3 Payment on Maturity Date. Borrower shall pay to Lender on the Maturity Date the
outstanding principal balance of the Loan, all accrued and unpaid interest and all other amounts
due hereunder and under the Note, the Mortgage and the other Loan Documents.

11

 

          2.3.4 Late Payment Charge. If any principal, interest or any other sums due under the
Loan Documents (including the amounts due on the Maturity Date) are not paid by Borrower on or
prior to the date on which it is due, Borrower shall pay to Lender upon demand an amount equal to the
lesser of five percent (5%) of such unpaid sum or the Maximum Legal Rate in order to defray the
expense incurred by Lender in handling and processing such delinquent payment and to compensate
Lender for the loss of the use of such delinquent payment. Any such amount shall be secured by the
Mortgage and the other Loan Documents to the extent permitted by applicable law.

          2.3.5 Method and Place of Payment. Except as otherwise specifically provided herein,
all payments and prepayments under this Agreement and the Note shall be made to Lender not later
than 11:00 A.M., New York City time, on the date when due and shall be made in lawful money of the
United States of America in immediately available funds at Lender’s office or as otherwise directed
by Lender, and any funds received by Lender after such time shall, for all purposes hereof, be
deemed to have been paid on the next succeeding Business Day.

     Section 2.4 Prepayments.

          2.4.1 Voluntary Prepayments. Except as otherwise provided in this Section
2.4.1 and Section 2.4.2, Borrower shall not have the right to prepay the Loan in whole
or in part prior to the Maturity Date. If for any reason Borrower prepays the Loan on a date other
than a Payment Date, Borrower shall pay Lender, in addition to the Debt, all interest which would
have accrued on the amount of the Loan through and including the Payment Date next occurring
following the date of such prepayment. Notwithstanding anything to the contrary contained herein,
commencing after the Payment Date three (3) months prior to the Maturity Date (the “Open Period
Date”), or on any Payment Date thereafter (or on any date thereafter, provided that interest is
paid through the next Payment Date), Borrower may, at its option, prepay the Debt in whole, but not
in part, without payment of the Yield Maintenance Premium.

          2.4.2 Mandatory Prepayments. On the next occurring Payment Date following the date on
which Lender actually receives any Net Proceeds, if Lender is not obligated to make such Net
Proceeds available to Borrower for the Restoration of the Property or otherwise remit such Net
Proceeds to Borrower pursuant to Section 6.4 of the Building Loan Agreement, Borrower shall prepay
or authorize Lender to apply Net Proceeds as a prepayment of all or a portion of the outstanding
principal balance of the Loan together with accrued interest through the end of the related
Interest Period and any other sums due hereunder in an amount equal to one hundred percent (100%)
of such Net Proceeds; provided, however, if an Event of Default has occurred and is continuing,
Lender may apply such Net Proceeds to the Debt (until paid in full) in any order or priority in its
sole discretion. Other than following an Event of Default, no Yield Maintenance Premium shall be
due in connection with any prepayment made pursuant to this Section 2.4.2.

          2.4.3 Prepayments After Default. If following an Event of Default, payment of all or any part of the Debt is tendered by
Borrower or otherwise recovered by Lender, such tender or recovery shall be (a) made on the next
occurring Payment Date together with the Monthly Debt Service Payment and (b) deemed a voluntary
prepayment by Borrower in

12

 

violation of the prohibition against prepayment set forth in Section
2.4.1 hereof and Borrower shall pay, in addition to the Debt, an amount equal to the Yield
Maintenance Default Premium.

          2.4.4 Prepayment Prior to Defeasance Expiration Date. If the Permitted Release Date has
occurred but the Defeasance Expiration Date has not occurred, the Debt may be prepaid in whole (but
not in part) prior to the date permitted under Section 2.4.1 hereof upon not less than thirty (30)
days prior written notice to Lender specifying the Payment Date on which prepayment is to be made
(a “Prepayment Date”) provided no Event of Default exists and upon payment of an amount equal to
the Yield Maintenance Premium. Lender shall notify Borrower of the amount and the basis of
determination of the required prepayment consideration. If any notice of prepayment is given, the
Debt shall be due and payable on the Prepayment Date. Lender shall not be obligated to accept any
prepayment of the Debt unless it is accompanied by the prepayment consideration due in connection
therewith. If for any reason Borrower prepays the Loan on a date other than a Payment Date,
Borrower shall pay Lender, in addition to the Debt, all interest which would have accrued on the
amount of the Loan through and including the Payment Date next occurring following the date of such
prepayment.

          2.4.5 Application of Prepayments to Components. Any prepayment of the principal of
the Loan, in whole or in part, voluntary or involuntary, shall be applied (a) first, to the
reduction of the outstanding principal balance of the Project Loan until reduced to zero, and (b)
second, to the reduction of the outstanding principal balance of the Building Loan until reduced to
zero. Subsequent to any Event of Default, any payment of principal from whatever source may be
applied by Lender between the various components of the Loan in Lender’s sole discretion.

     Section 2.5 Defeasance.

          2.5.1 Voluntary Defeasance (a) Provided no Event of Default shall then exist,
Borrower shall have the right at any time after the Defeasance Expiration Date and prior to the
date voluntary prepayments are permitted under Section 2.4.1 hereof to voluntarily defease all, but
not part, of the Loan by and upon satisfaction of the following conditions (such event being a
“Defeasance Event”):

     (i) Borrower shall provide not less than thirty (30) days prior written notice
to Lender specifying the Payment Date (the “Defeasance Date”) on which the
Defeasance Event is to occur;

     (ii) Borrower shall pay to Lender all accrued and unpaid interest on the
principal balance of the Loan to and including the Defeasance Date. If for any
reason the Defeasance Date is not a Payment Date, the Borrower shall also pay interest that would have accrued on the Note through and including the Payment
Date immediately preceding the next Payment Date, provided, however,
if the Defeasance Deposit shall include short-term interest computed from the date
of such prepayment through to the next succeeding Payment Date, Borrower shall not
be required to pay such short term interest pursuant to this sentence;

13

 

     (iii) Borrower shall pay to Lender all other sums, not including scheduled
interest or principal payments, then due under the Note, this Agreement, the
Mortgage and the other Loan Documents;

     (iv) Borrower shall use the Defeasance Deposit to purchase U.S. Obligations in
accordance with Section 2.5.1(b) below;

     (v) Borrower shall execute and deliver a pledge and security agreement, in form
and substance that would be reasonably satisfactory to a prudent lender creating a
first priority lien on the Defeasance Deposit and the U.S. Obligations purchased
with the Defeasance Deposit in accordance with the provisions of this Section
2.5 (the “Security Agreement”);

     (vi) Borrower shall deliver an opinion of counsel for Borrower that is standard
in commercial lending transactions and subject only to customary qualifications,
assumptions and exceptions opining, among other things, that Borrower has legally
and validly transferred and assigned the U.S. Obligations and all obligations,
rights and duties under and to the Note to the Successor Borrower, that Lender has a
perfected first priority security interest in the Defeasance Deposit and the U.S.
Obligations delivered by Borrower and that any REMIC Trust formed pursuant to a
Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a result of
such Defeasance Event;

     (vii) Borrower shall deliver confirmation in writing from each of the
applicable Rating Agencies to the effect that such release will not result in a
downgrade, withdrawal or qualification of the respective ratings in effect
immediately prior to such Defeasance Event for the Securities issued in connection
with the Securitization which are then outstanding. If required by the applicable
Rating Agencies, Borrower shall also deliver or cause to be delivered an Additional
Insolvency Opinion with respect to the Successor Borrower in form and substance
satisfactory to Lender and the applicable Rating Agencies;

     (viii) Borrower shall deliver an Officer’s Certificate certifying that the
requirements set forth in this Section 2.5.1(a) have been satisfied;

     (ix) Borrower shall deliver a certificate of Borrower’s independent certified
public accountant certifying that the U.S. Obligations purchased with the Defeasance
Deposit generate monthly amounts equal to or greater than the Scheduled Defeasance
Payments;

     (x) Borrower shall deliver such other certificates, documents or instruments as
Lender may reasonably request; and

     (xi) Borrower shall pay all costs and expenses of Lender incurred in connection
with the Defeasance Event, including (A) any costs and expenses associated with a
release of the Lien of the Mortgage as provided in Section 2.6 hereof, (B)
reasonable attorneys’ fees and expenses incurred in connection with

14

 

the Defeasance
Event, (C) the costs and expenses of the Rating Agencies, (D) any revenue,
documentary stamp or intangible taxes or any other tax or charge due in connection
with the transfer of the Note, or otherwise required to accomplish the defeasance
and (E) the costs and expenses of Servicer and any trustee, including reasonable
attorneys’ fees.

          (b) In connection with the Defeasance Event, Borrower shall use the Defeasance Deposit to
purchase U.S. Obligations which provide payments on or prior to, but as close as possible to, all
successive scheduled Payment Dates after the Defeasance Date upon which interest and principal
payments are required under this Agreement and the Note, and in amounts equal to the scheduled
payments due on such Payment Dates under this Agreement and the Note (including, without
limitation, scheduled payments of principal, interest, servicing fees (if any), and any other
amounts due under the Loan Documents on such Payment Dates) and assuming the Note is prepaid in
full on the Open Period Date (the “Scheduled Defeasance Payments”). Borrower, pursuant to the
Security Agreement or other appropriate document, shall authorize and direct that the payments
received from the U.S. Obligations may be made directly to the Clearing Account (unless otherwise
directed by Lender) and applied to satisfy the Debt Service obligations of Borrower under this
Agreement and the Note. Any portion of the Defeasance Deposit in excess of the amount necessary to
purchase the U.S. Obligations required by this Section 2.5 and satisfy Borrower’s other
obligations under this Section 2.5 and Section 2.6 shall be remitted to Borrower.

          2.5.2 Collateral. Each of the U.S. Obligations that are part of the defeasance
collateral shall be duly endorsed by the holder thereof as directed by Lender or accompanied by a
written instrument of transfer in form and substance that would be satisfactory to a prudent lender
(including, without limitation, such instruments as may be required by the depository institution
holding such securities or by the issuer thereof, as the case may be, to effectuate book-entry
transfers and pledges through the book-entry facilities of such institution) in order to perfect
upon the delivery of the defeasance collateral a first priority security interest therein in favor
of Lender in conformity with all applicable state and federal laws governing the granting of such
security interests.

          2.5.3 Successor Borrower. In connection with any Defeasance Event, Borrower shall
establish a successor entity (the “Successor Borrower”), which shall be a Special Purpose Entity,
which shall not own any other assets or have any other liabilities or operate other property
(except in connection with other defeased loans held in the same securitized loan pool with the
Loan). Borrower shall transfer and assign all obligations, rights and duties under and to the Note, together with
the pledged U.S. Obligations to such Successor Borrower. Such Successor Borrower shall assume the
obligations under the Note and the Security Agreement and Borrower shall be relieved of its
obligations under such documents. Borrower shall pay One Thousand and 00/100 Dollars ($1,000) to
any such Successor Borrower as consideration for assuming the obligations under the Note and the
Security Agreement. Notwithstanding anything in this Agreement to the contrary, no other
assumption fee shall be payable upon a transfer of the Note in accordance with this Section
2.5.3, but Borrower shall pay all costs and expenses incurred by Lender, including Lender’s
attorneys’ fees and expenses and any fees and expenses of any Rating Agencies, incurred in
connection therewith.

15

 

     Section 2.6 Release of Property. Except as set forth in this Section 2.6, no
repayment, prepayment or defeasance of all or any portion of the Loan shall cause, give rise to a
right to require, or otherwise result in, the release of the Lien of the Mortgage on the Property.

          2.6.1 Release of Property.

          (a) If Borrower has elected to defease the Loan and the requirements of Section 2.5
and this Section 2.6 have been satisfied, all of the Property shall be released from the
Lien of the Mortgage and the U.S. Obligations, pledged pursuant to the Security Agreement, shall be
the sole source of collateral securing the Note.

          (b) In connection with the release of the Mortgage, Borrower shall submit to Lender, not less
than thirty (30) days prior to the Defeasance Date, a release of Lien (and related Loan Documents)
for the Property for execution by Lender. Such release shall be in a form appropriate in the
jurisdiction in which the Property is located and that would be satisfactory to a prudent lender
and contains standard provisions, if any, protecting the rights of the releasing lender. In
addition, Borrower shall provide all other documentation Lender reasonably requires to be delivered
by Borrower in connection with such release, together with an Officer’s Certificate certifying that
such documentation (i) is in compliance with all Legal Requirements, and (ii) will effect such
releases in accordance with the terms of this Agreement.

          2.6.2 Release on Payment in Full. Lender shall, upon the written request and at the
expense of Borrower, upon payment in full of all principal and interest due on the Loan and all
other amounts due and payable under the Loan Documents in accordance with the terms and provisions
of the Note and this Agreement, release the Lien of the Mortgage on the Property.

     Section 2.7 Clearing Account/Cash Management. The provisions of Section 2.7
of the Building Loan Agreement are incorporated herein by reference as if fully set forth herein

     Section 2.8 Intentionally Omitted.

     Section 2.9 Payments Not Conditional. All payments required to be made by Borrower
hereunder or under the Note or the other Loan Documents shall be made irrespective of, and without
deduction for, any setoff, claim or counterclaim and shall be made irrespective of any defense
thereto.

     Section 2.10 Initial Advance The obligation of Lender to make the initial Advance of
the Project Loan (the “Initial Advance”) shall be subject to the following conditions precedent
(collectively, the “Initial Advance Conditions”) on or prior to the Required Initial Advance Date,
all of which conditions precedent must be satisfied prior to Lender making any such Initial
Advance:

          2.10.1 Prior Conditions Satisfied. All conditions precedent to closing shall continue
to be satisfied as of the date of the Initial Advance (in the same manner in which they were
satisfied for the closing without reimposing any one-time condition).

          2.10.2 Performance; No Default. Borrower shall have performed and complied with all
terms and conditions herein required to be performed or complied with by it at or prior to

16

 

the date
of such Initial Advance, and on the date of such Initial Advance there shall exist no Default or
Event of Default.

          2.10.3 Representations and Warranties. The representations and warranties made by
Borrower or Guarantor in the Loan Documents or otherwise made by or on behalf of Borrower or
Guarantor in connection therewith after the date thereof shall have been true and correct in all
material respects on the date on which made and shall also be true and correct in all material
respects on the date of the Initial Advance.

          2.10.4 No Damage. The Project Improvements shall not have been injured or damaged by
fire, explosion, accident, flood or other casualty, unless Lender shall be satisfied that
sufficient insurance proceeds will be available in the reasonable judgment of Lender to effect the
satisfactory restoration of the Project Improvements and to permit the Completion of the
Improvements prior to the Required Completion Date.

          2.10.5 Deliveries. Lender shall have received:

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

          (b) Intentionally Omitted;

          (c) Title Insurance Policy. A Title Insurance Policy for the full amount of the Loan,
which includes a pending disbursement clause to increase the coverage of the Title Insurance Policy
by the amount of the any Advance, insuring the lien of the Mortgage subject to no liens or
encumbrances other than the Permitted Encumbrances;

          (d) Lien Waivers. Duly executed lien waivers, which shall be conditional lien waivers
or unconditional lien waivers, as determined by Lender in its sole discretion, and otherwise
substantially in the form set forth in Exhibit J to the Building Loan Agreement from the
General Contractor and all Contractors and Subcontractors who have performed work, for the work so
performed, and/or who have supplied labor and/or materials, for the labor and/or materials so
supplied, except for such work or labor and/or materials for which payment thereof is requested, as
to which duly executed lien waivers shall be delivered to Lender with the next request for an
Advance;

          (e) Ratios. Evidence satisfactory to Lender that following the Initial Advance, the
Loan-to-Cost Ratio shall be no greater than 80%.

          (f) Evidence of Sufficiency of Funds. Evidence satisfactory to Lender that the
proceeds of the Loan plus the Required Equity Funds will be sufficient to cover all Project-Related
Costs reasonably anticipated to be incurred and to satisfy the Obligations of Borrower to Lender
and under this Agreement and the other Loan Documents;

          (g) Anticipated Costs Report. An Anticipated Costs Report; and

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

17

 

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

          2.10.7 Rate Lock Agreement. Simultaneously with the Initial Advance, Lender shall
return to Borrower, a pro-rata portion of the deposit held by Lender pursuant to the Rate Lock
Agreement in such proportion as the amount of the Initial Advance bears to the Total Loan Amount.

          2.10.8 Home Depot Estoppel Certificate. Borrower shall have delivered to Lender
estoppel certificates from Home Depot certifying to Lender that the Home Depot Lease is in full
force and effect and that there are no defaults by Borrower or Home Depot thereunder, and otherwise in form and substance
satisfactory to Lender in Lender’s sole discretion (the “Home Depot Estoppel Certificate”).

          2.10.9 Initial Reserve Deposits Borrower shall have deposited the Initial Tax and
Insurance Escrow Deposit and the Initial Interest Reserve Deposit with Lender. The Initial Tax and
Insurance Escrow Deposit and the Initial Interest Reserve Deposit shall be funded on the date of
the Initial Advance with a portion of the Initial Advance under the Project Loan.

          2.10.10 Retaining Wall Letter. Borrower shall have delivered to Lender a letter from
the Village of Pelham Manor evidencing resolution of the retaining wall issue in form and substance
satisfactory to Lender in Lender’s sole discretion (the “Retaining Wall Letter”).

          2.10.11 Satisfaction of Initial Advance Conditions. Borrower covenants and agrees
that, prior to the Required Initial Advance Date, time being of the essence, it shall cause all of
the Initial Advance Conditions to be satisfied. Borrower shall not perform any work at the
Property, including, without limitation, any demolition of the existing improvements, until all of
the Initial Advance Conditions have been satisfied. Borrower’s failure to satisfy, or cause the
satisfaction of, any of the Initial Advance Conditions on or prior to the Required Initial Advance
Date shall, at Lender’s election, constitute an Event of Default. In addition to any and all other
remedies that may be available to Lender hereunder, under the other Loan Documents, at law or in
equity, upon the occurrence of an Event of Default resulting from the failure of any Initial
Advance Condition to have been satisfied, Borrower hereby irrevocably empowers Lender, in the name
of Borrower as its true and lawful attorney-in-fact, with full power of substitution to complete or
undertake such steps as may be necessary, in Lender’s sole determination, to satisfy the Initial
Advance Condition in the name of Borrower. Such power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked. Borrower empowers said attorney-in-fact as
follows: (i) to employ such contractors, subcontractors, agents, architects and inspectors as shall
be required for such purposes; (iii) to pay, settle or compromise all existing bills and claims
which are or may become Liens against the Property, or as may be necessary or desirable for the
completion of such Initial Advance Conditions, or for clearance of title; (v) to execute all
applications and certificates in the name of Borrower which may be required by any of the contract
documents; (vi) to prosecute and defend all actions or proceedings in connection with the Property
or the Project; and (vii) to do any and every act which Borrower might do in its own behalf to
fulfill the terms of this Agreement and the other Loan Documents. In addition, upon such Event of
Default,. Lender shall have the right to unwind any interest rate hedge

18

 

entered into by Lender and
apply any deposits or other amounts held by Lender pursuant to the Rate Lock Agreement to costs and
expenses incurred by Lender under this Agreement, the Rate Lock Agreement or any of the other Loan
Documents.

     Section 2.11 Project Loan Advances. The obligation of Lender to make the Advances of the Project Loan after the Initial Advance
shall be subject to the following conditions precedent, all of which conditions precedent must be
satisfied prior to Lender making any such Advance:

          2.11.1 Prior Conditions Satisfied. All conditions precedent to any prior Advance (in
the same manner in which they were satisfied for the Initial Advance or prior Advance, as
applicable, and without reimposing any one-time requirement) shall continue to be satisfied as of
the date of such subsequent Advance.

          2.11.2 Performance; No Default. Borrower shall have performed and complied with all
terms and conditions herein required to be performed or complied with by it at or prior to the date
of such Advance, and on the date of such Advance there shall exist no Default or Event of Default
or Shortfall.

          2.11.3 Representations and Warranties. The representations and warranties made by
Borrower and Guarantor in the Loan Documents or otherwise made by or on behalf of Borrower or
Guarantor in connection therewith after the date thereof shall have been true and correct in all
material respects on the date on which made and shall also be true and correct in all material
respects on the date of such Advance.

          2.11.4 No Damage. The Improvements shall not have been injured or damaged by fire,
explosion, accident, flood or other casualty, unless Lender shall have received insurance proceeds
sufficient in the reasonable judgment of Lender to effect the satisfactory restoration of the
Improvements and to permit the Completion of the Improvements prior to the Required Completion
Date.

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

          (a) Anticipated Costs Report. An Anticipated Costs Report in the form set forth in
Exhibit I to the Building Loan Agreement executed by the General Contractor which sets
forth the anticipated costs to complete construction of the Project Improvements, after giving
effect to costs incurred during the previous month and any anticipated change orders;

          (b) Endorsement to Title Insurance Policy. A “datedown” endorsement to Lender’s title
insurance policy as described in the form set forth in Exhibit C to the Building Loan
Agreement which continuation or endorsement shall increase the coverage of the Title Insurance
Policy by the amount of the Advance through the pending disbursement clause (but not the overall
policy amount which shall be for the full amount of the Loan), amend the effective date of the
Title Insurance Policy to the date of such Advance, continue to insure the lien of the Mortgage
subject to no liens or encumbrances other than the Permitted Encumbrances and which shall state that since the last disbursement of the Loan there have been no changes
in

19

 

the state of title to the Property (other than Permitted Encumbrances) and that there are no
additional survey exceptions not previously approved by Lender;

          (c) Evidence of Sufficiency of Funds. Evidence satisfactory to Lender that the
proceeds of the Loan plus the Required Equity Funds will be sufficient to cover all Project-Related
Costs reasonably anticipated to be incurred and to satisfy the Obligations of Borrower to Lender
and under this Agreement and the other Loan Documents.

          (d) Draw Request. A Draw Request complying with the provisions of this Agreement
which shall constitute Borrower’s representation and warranty to Lender that: (a) any completed
construction is substantially in accordance with the Plans and Specifications, (b) all costs for
the payment of which Lender have previously advanced funds have in fact been paid, (c) all the
representations and warranties contained in Article IV of this Agreement continue to be true and
correct in all material respects, (d) no Event of Default shall have occurred and be continuing
hereunder, and (e) Borrower continues to be in compliance in all respects with all of the other
terms, covenants and conditions contained in this Agreement.

          (e) Affirmation of Payment. General Contractor’s Affirmation of Payment (AIA Form
G706) in the form attached as Exhibit E to the Building Loan Agreement.

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

          2.11.6 Construction Consultant Certificate. Each draw request relating to Hard Costs
shall be accompanied by a certificate or report of the Construction Consultant to Lender based upon
a site observation of the Property made by the Construction Consultant not more than thirty (30)
days prior to the date of such draw, in which the Construction Consultant shall in substance: (i)
verify that the portion of the Project Improvements completed as of the date of such site
observation has been completed substantially in accordance with the Plans and Specifications; and
(ii) state its estimate of (1) the percentages of the construction of the Project Improvements
completed as of the date of such site observation on the basis of work in place as part of the
Project Improvements and the Building Loan Budget, (2) the Hard Costs actually incurred for work in
place as part of the Improvements as of the date of such site observation, (3) the sum necessary to
complete construction of the Project Improvements in accordance with the Plans and Specifications,
and (4) the amount of time from the date of such inspection that will be required to achieve
Completion of the Improvements.

          2.11.8 Certification Regarding Chattels. Lender shall have received a certification
from the Title Company or other service satisfactory to Lender or counsel satisfactory to Lender
(which shall be updated from time to time at Borrower’s expense upon request by Lender in connection with future Advances)
that a search of the public records disclosed no significant or material changes since the Closing
Date including no judgment or tax liens affecting Borrower or Guarantor, the Property or the
Personal Property, and no conditional sales contracts, chattel mortgages, leases of personalty,
financing statements (other than those in favor of Lender) or title retention agreements which
affect the Property.

20

 

          2.11.9 Lien Waivers. Borrower shall have delivered duly executed lien waivers, which
shall be conditional lien waivers or unconditional lien waivers, as applicable, and otherwise
substantially in the form set forth as Exhibit J to the Building Loan Agreement, from the
General Contractor, all Major Contractors and Major Subcontractors for all work performed, and all
labor or material supplied for which payment thereof has been made prior to the date of the
Advance.

          2.11.10 Construction Consultant Approval. Lender has received advice from the
Construction Consultant, satisfactory to Lender, as to Construction Consultant’s determination,
acting seasonably, based on on-site inspections of the Improvements and the data submitted to and
reviewed by it as part of Borrower’s Requisition of the value of the labor and materials in place,
that the construction of the Project Improvements is proceeding satisfactorily and according to
schedule and that the work on account of which the Advance is sought has been completed in a good
and workmanlike manner to such Construction Consultant’s satisfaction and substantially in
accordance with the Plans and Specifications.

          2.11.11 Ratios. Following such Advance (and any Building Loan Advance being made on
such date), the Loan-to-Cost Ratio shall be no greater than 80%.

          2.11.12 Administration Fee. Borrower shall have paid the Administration Fee in
accordance with the provisions of the Administration Fee Agreement.

          2.11.13 Required Equity Funds. Borrower shall furnish Lender with evidence in form and
content satisfactory to Lender that, as of the date of each Advance, Borrower has invested Cash
equity in an amount equal to or greater than (a) $8,916,000 or (b) 20% of the Total Project Costs
or (c) the difference between the Development Budget and the maximum Loan amount of $35,664,000 for
approved Project-Related Costs (the “Required Equity Funds”). Notwithstanding the foregoing, if
the Borrower realizes cost savings from the development of the Project, either in the form of Hard
Costs or Soft Costs, Advances may be advanced to Borrower provided that (i) the Borrower would not
have less than $8,916,000 of cash equity in the Project through such Advance and (ii) the Debt
Service Coverage Ratio shall be equal to or greater than 1.15 to 1.0 assuming a fully advanced Loan using a debt service constant of 7.31%, and (iii) the loan-to-value ratio for the Property is
greater than 80% assuming a fully advanced Loan. If Borrower is in non-compliance solely with
respect to condition (i) above, at Borrower’s option, either (A) any excess cost savings
(funds in excess of the amount so that the Required Equity Funds shall continue to be satisfied)
shall be deposited as follows: (1) 100% into the Replacement Reserve Account until the amount on
deposit in such account equals the Replacement Reserve Cap, and then (2) 100% of any excess into
the Rollover Reserve Account until the amount on deposit in such account equals the Rollover
Reserve Cap, and then (3) 100% of any excess into any other Reserves required by Lender pursuant to
this Agreement, or (B) Borrower shall release Lender from its obligation to fund the remaining
amounts of the Loan and Borrower and any guarantor under the Rate Lock Agreement pays for the
breakage costs, if any, on the unfunded portion of the Loan payable pursuant to the Rate Lock
Agreement. If Borrower is in compliance with respect to condition (i) above but is not in
compliance with conditions (ii) and (iii) above, any excess cost savings shall, at
Borrower’s option, (A) be held back by Lender as additional collateral for the Loan until
satisfaction of each of the requirements are satisfied, or (B) be deposited as follows: (1) 100%
into the Replacement Reserve Account until the amount

21

 

on deposit in such account equals the
Replacement Reserve Cap, and then (2) 100% of any excess into the Rollover Reserve Account until
the amount on deposit in such account equals the Rollover Reserve Cap, and then (3) 100% of any
excess into any other Reserves required by Lender pursuant to this Agreement, or (C) Borrower shall
release Lender from its obligation to fund the remaining amounts of the Loan and Borrower and any
guarantor under the Rate Lock Agreement pays for the breakage costs, if any, on the unfunded
portion of the Loan payable pursuant to the Rate Lock Agreement.

          2.11.14 Rate Lock Agreement. Simultaneously with each Construction Advance, Lender
shall return to Borrower, a pro-rata portion of the deposit held by Lender pursuant to the Rate
Lock Agreement in such proportion as the amount of the Construction Advance bears to the Total Loan
Amount, provided, however, that in the event that any of the conditions of Section 2.11.13
are not satisfied, Lender shall have the right to apply the portion of the deposit under the Rate
Lock Agreement to be returned to Borrower to satisfy the conditions of Section 2.11.13.

          2.11.15 Home Depot Contribution. In the event that Borrower receives any portion of the
Tenant Contribution (as defined in the Home Depot Lease) payable to Borrower pursuant to that
certain Sublease dated as of December 21, 2006 (the “Home Depot Lease”), with Home Depot U.S.A.,
Inc. (“Home Depot”) or the proceeds of any letter of credit delivered by Home Depot pursuant to the
Home Depot Lease as security for Home Depot’s obligation to pay the Tenant Contribution, Borrower
shall apply such Tenant Contribution or the proceeds of such letter of credit, as applicable, to
the payment of Project Related Costs and shall provide Lender with evidence that such Tenant
Contribution or proceeds, as applicable, have been applied to the payment of Project Related Costs
prior to Lender making any further Advances under this Agreement.

     Section 2.12 Final Advance.

          2.12.1 Conditions to Release of Final Advance. In addition to the conditions set
forth in Section 2.10 and Section 2.11, above, Lender’s obligation to make the
final Advance in the amount calculated pursuant to Section 2.12.2 of this Agreement (the
“Final Advance”) shall be subject to receipt by Lender of the following:

          (a) Completion of Improvements. Evidence satisfactory to Lender and the Construction
Consultant that the Completion of the Improvements has occurred.

          (b) Final Building Loan Advance. All conditions to the Final Building Loan Advance
have been satisfied and the Final Building Loan Advance shall have been made or will be made
simultaneously therewith.

          (c) Lien Waivers. Duly executed final lien waivers, which shall be conditional lien
waivers or unconditional lien waivers, as determined by Lender in its sole discretion, and
otherwise substantially in the form as Exhibit J to the Building Loan Agreement from the
General Contractor and Major Contractors and Major Subcontractors who have performed work for the
work so performed, and/or who have supplied labor and/or materials for the labor and/or materials
so supplied.

22

 

          (d) “As-Built” Plans and Specifications. A full and complete set of “as built” Plans
and Specifications certified to by Borrower’s Architect.

          (e) Administration Fee. Borrower shall have paid the Administration Fee in accordance
with the provisions of the Administration Fee Agreement.

          (f) Certificates. Completed AIA Form G704 (Certificate of Substantial Completion) and
completed AIA Form G707 (Consent of Surety to Final Payments) shall have been executed and
delivered by Borrower’s Architect, General Contractor and each surety issuing any of the Required
Construction Bonds. .

          (g) Deposits to Reserves. All deposits to the Reserve Funds required under the
Building Loan Agreement have been made.

          (h) Other Documents. Such documents, letters, affidavits, reports and assurances, as
Lender, Lender’s counsel and the Construction Consultant may reasonably require.

          (i) Required Ratios at Completion. Lender shall have determined that, following the
Final Advance (and taking into consideration the Final Building Loan Advance to be made
simultaneously under the Building Loan) the Required Ratios at Completion have been satisfied, or
Borrower shall have deposited with Lender Cash or a Letter of Credit to satisfy the Required Ratios
at Completion in accordance with Section 2.12.2.

          (j) Tenant Estoppel Certificates. Borrower shall have delivered to Lender estoppel
certificates from all of the tenants at the Property in form and substance satisfactory to Lender.

          (k) Required Equity Funds. Borrower shall furnish Lender with evidence in form and
content satisfactory to Lender that, as of the date of the Final Advance, Borrower has invested
Cash equity in an amount equal to or greater than the Required Equity Funds or has otherwise
complied with the provisions of Section 2.11.13 with respect thereto.

          (l) Insolvency Opinion. The issuance of and delivery to Lender of six (6) original
counterparty Insolvency Opinions in the form attached hereto as Exhibit K to the Building
Loan Agreement from Wachtel & Masyr, LLP or another law firm reasonably acceptable to Lender.

          2.12.2 Amount of Final Advance. Except as expressly provided for below, the amount of
the Final Advance shall be equal to the sum of: (a) any Retainage not previously released and
advanced to Borrower; plus (b) the amount of any Punch List and Deferred Maintenance Reserve
Deposit not funded pursuant to the Building Loan Agreement; plus (c) the positive difference, if
any, between, (i) the Building Loan Amount and (ii) all amounts previously Advanced under the
Building Loan (including the amounts described in clauses (a) and (b) of the sentence). The portion
of the Final Advance described in clause (c) of the foregoing sentence is referred to herein as the
“Project Loan Earn Out Advance” and the corresponding portion of the Final Building Loan Advance is
referred to herein as the “Building Loan Earn Out Advance” and together with the Project Loan Earn
Out Advance, the “Earn

23

 

Out Advances”. Notwithstanding anything to the contrary provided for
herein, the Earn Out Advances shall be reduced, pro rata, but not below $0.00, if and to the extent
necessary for the Required Ratios at Completion to be achieved following the Final Advances. In
addition, if the Required Ratios at Completion cannot be achieved even if the Earn Out Advances are
reduced to $0.00, Lender shall have the right, but not the obligation, to apply any deposits held
by Lender pursuant to the Rate Lock Agreement and any Interest Reserve Funds to the payment of the
Building Loan and the Project Loan in such order and priority as Lender shall determine in its sole
discretion. If the Required Ratios at Completion cannot be achieved even if the Earn Out Advances
are reduced to $0.00 and the deposits, if any under the Rate Lock Agreement and the Interest
Reserve Funds are applied to the payment of the Loan, Borrower shall deposit with Lender Cash or a
Letter of Credit satisfactory to Lender in an amount equal to the amount which, if used to pay down
the Loan, would result in Stabilized Loan-to-Value Ratio of 80% and a Debt Service Coverage Ratio
of 1.15 to 1.00, calculated based upon Lender’s determination on a pro-forma basis of Lender’s
Stabilized Net Cash Flow for the 12 months immediately following and assuming a thirty (30) year
amortization schedule based upon a debt service constant equal to the greater of the actual debt
service constant and 7.31%.

          2.12.3 Rate Lock Agreement. Upon satisfaction of all of the conditions to the Final
Advance set forth in Section 2.12.1, and subject to the provisions of Section
2.12.2, Lender shall return to Borrower, the remaining deposits, if any, held by Lender under
the Rate Lock Agreement and not applied by Lender in accordance with the provisions of the Rate Lock Agreement and any Interest
Reserve Funds held by Lender pursuant to the Building Loan Agreement.

     Section 2.13 No Reliance. All conditions and requirements of this Agreement are for
the sole benefit of Lender and no other person or party (including, without limitation, the
Construction Consultant, the General Contractor and subcontractors (including, without limitation,
Major Contractors and Major Subcontractors) and materialmen engaged in the construction of the
Improvements) shall have the right to rely on the satisfaction of such conditions and requirements
by Borrower. Lender shall have the right, in its sole and absolute discretion, to waive any such
condition or requirement.

     Section 2.14 Method of Disbursement of Loan Proceeds.

          2.14.1 Draw Request to Be Submitted to Lender. At such time as Borrower shall desire
to obtain an Advance, Borrower shall complete, execute and deliver to Lender a Borrower’s
Requisition in the form attached as Exhibit L to the Building Loan Agreement.

          (a) Borrower’s Requisition shall be accompanied by a completed and itemized Application and
Certificate for Payment (AIA Document No. G702) attached as Exhibit M to the Building Loan
Agreement or similar form approved by Lender, containing the certification of the General
Contractor or contractor or subcontractor to whom such payment is made, as applicable, and
Borrower’s Architect as to the accuracy of same, together with invoices relating to all items of
Hard Costs covered thereby and accompanied by a cost breakdown showing the cost of work on, and the
cost of materials incorporated into, the Improvements to the date of the requisition. The cost
breakdown shall also show the percentage of completion of each line item on the Project Loan
Budget, and the accuracy of the cost breakdown shall be

24

 

certified by Borrower and by Borrower’s
Architect. All such applications for payment shall also show all contractors and subcontractors,
including Major Contractors and Major Subcontractors, by name and trade, the total amount of each
contract or subcontract, the amount theretofore paid to each subcontractor as of the date of such
application, and the amount to be paid from the proceeds of the Advance to each contractor and
subcontractor;

          (b) the completed construction will be reviewed by the Construction Consultant who will
certify to Lender as to the value of completed construction, percentage of completion and
compliance with Plans and Specifications;

          (c) lien waivers from each other Major Contractor and Major Subcontractors for work done and
materials supplied by them which were paid for pursuant to any prior Draw Request;

          (d) a written request of Borrower for any necessary changes in the Plans and Specifications,
the Project Loan Budget, the Disbursement Schedule or the Construction Schedule;

          (e) copies of all executed change orders, contracts and subcontracts, and, to the extent
requested by Lender, of all inspection or test reports and other documents relating to the
construction of the Project Improvements not previously delivered to Lender; and

          (f) such other information, documentation and certification as Lender shall reasonably
request.

          2.14.2 Procedure of Advances.

          (a) Each Draw Request shall be submitted to Lender and Construction Consultant at least ten
(10) Business Days prior to the Requested Advance Date, and no more frequently than monthly.
Lender shall make the requested Advance on the Requested Advance Date so long as all conditions to
such Advance are satisfied or waived.

          (b) Not later than 11:00 A.M. New York City time, on the Requested Advance Date, Lender shall
make such Advance available to Borrower in accordance with the terms of this Section 2.14.

          (c) Each Advance (other than the Final Advance) shall be in an amount of not less than
$500,000.00.

          (d) Each Advance shall be made on a Payment Date.

          2.14.3 Funds Advanced. Each Advance shall be made by Lender by wire transfer to such
checking account of Borrower as specified to Lender in writing or as provided in Section
2.14.4 below. All proceeds of all Advances shall be used by Borrower only for the purposes for
which such Advances were made. Borrower shall not commingle such funds with other funds of
Borrower.

25

 

          2.14.4 Direct Advances to Third Parties. Lender may make, at Lender’s option, any or
all Advances directly or through the Title Company to (i) any Contractor, as applicable, for
construction expenses which shall theretofore have been approved by Lender and for which Borrower
shall have failed to make payment after receipt by Borrower of such applicable Advance, (ii)
Borrower’s Architect to pay its fees to the extent funds are allocated thereto in the Building Loan
Budget if Borrower shall have failed to do so, (iii) the Construction Consultant to pay its fees,
(iv) Lender’s counsel to pay its fees, (v) to pay (x) any installment of interest due under the
Note, (y) any expenses incurred by Lender which are reimbursable by Borrower under the Loan
Documents (including, without limiting the generality of the foregoing, reasonable attorneys’ fees
and expenses and other fees and expenses incurred by Lender), provided that Borrower shall
theretofore have received notice from Lender that such expenses have been incurred and Borrower shall have failed to reimburse
Lender for said expenses beyond any grace periods provided for said reimbursement under the Note,
this Agreement or any of the other Loan Documents, or (z) following the occurrence and continuation
of an Event of Default, any other sums due to Lender under the Note, this Agreement or any of the
other Loan Documents, all to the extent that the same are not paid by the respective due dates
thereof, and (vi) any other Person to whom Lender in good faith determines payment is due and any
portion of the Loan so disbursed by Lender shall be deemed disbursed as of the date on which the
Person to whom payment is made receives the same. The execution of this Agreement by Borrower
shall, and hereby does, constitute an irrevocable authorization so to advance the proceeds of the
Loan directly to any such Person or through the Title Company to such Persons in accordance with
this Section 2.14.4 as amounts become due and payable to them hereunder and any portion of
the Loan so disbursed by Lender shall be deemed disbursed as of the date on which the Person to
whom payment is made receives the same. No further authorization from Borrower shall be necessary
to warrant such direct Advances to such relevant Person, and all such Advances shall satisfy pro
tanto the obligations of Lender hereunder and shall be secured by the Mortgage and the other Loan
Documents as fully as if made directly to Borrower.

          2.14.5 One Advance Per Month. Lender shall have no obligation to make Advances of the
Loan more often than once in each calendar month except that Lender, in its sole discretion, shall
have the right but not the obligation, to make additional advances per month for interest, fees and
expenses due under the Loan Documents.

          2.14.6 Advances Do Not Constitute a Waiver. No Advance shall constitute a waiver of
any of the conditions of Lender’s obligation to make further Advances nor, in the event Borrower is
unable to satisfy any such condition, shall any Advance have the effect of precluding Lender from
thereafter declaring such inability to be an Event of Default hereunder.

          2.14.7 Trust Fund Provisions. All proceeds advanced hereunder shall be subject to the
trust fund provisions of Section 13 of the Lien Law. Nothing contained in this Agreement
is intended to constitute a promise by Borrower, express or implied, or to create any obligation,
express or implied, on the part of Borrower, to make an “improvement,” as such term is defined in
the Lien Law of the State of New York, and no advance of proceeds of the Loan shall at any time be
conditioned, directly or indirectly, upon the making of any such “improvement”.

26

 

          2.14.8 Advances and Disbursements Under Completion Guaranty. Notwithstanding anything
to the contrary contained in this Agreement or in any other Loan Document, Borrower hereby
irrevocably and unconditionally authorizes Lender to make any disbursements of proceeds of the Loan
or of any Reserve Funds held by Lender to Guarantor in accordance with the Guaranty of Completion.

     Section 2.15 Interest Advances. Notwithstanding the requirements contained in Section
2.10, Section 2.11 and Section 2.12, and provided that no Event of Default shall have occurred,
Lender shall make an Advance on each Payment Date during the Construction Term from the Interest
Reserve Line Item, if and to the extent funds remain available under such line item, to pay
interest then due under the Note. Notwithstanding the foregoing, if and to the extent that funds
are available in the Additional Interest Reserve Deposit, Lender shall first apply funds available
in the Additional Interest Reserve Deposit to the payment of interest due, prior to making an
Advance for such purpose. Nothing contained in this Section 2.15 shall limit or derogate
from Borrower’s absolute and unconditional obligation to pay interest due under the Note.

ARTICLE III.

CONDITIONS PRECEDENT

     Section 3.1 Conditions Precedent to Closing. The obligation of Lender to make the
Loan hereunder is subject to the fulfillment by Borrower or waiver by Lender of the conditions
precedent set forth in Section 3.1 of the Building Loan Agreement no later than the Closing
Date.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES

     Section 4.1 Borrower Representations. The representations and warranties of
Borrower set forth in Section 4.1 of the Building Loan Agreement are incorporated herein by
reference as if fully set forth herein and remade by Borrower.

     Section 4.2 Survival of Representations. Borrower agrees that all of the
representations and warranties of Borrower set forth in Section 4.1 hereof and elsewhere in
this Agreement and in the other Loan Documents shall survive for so long as any amount remains
owing to Lender under this Agreement or any of the other Loan Documents by Borrower. All
representations, warranties, covenants and agreements made in this Agreement or in the other Loan
Documents by Borrower shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.

ARTICLE V.

BORROWER COVENANTS

     Section 5.1 Affirmative Covenants. The affirmative covenants of Borrower set forth in Section 5.1 of the Building Loan
Agreement are incorporated herein by reference as if fully set forth herein and remade by Borrower.

27

 

     Section 5.2 Negative Covenants. The negative covenants of Borrower set forth in
Section 5.2 of the Building Loan Agreement are incorporated herein by reference as if fully
set forth herein and remade by Borrower.

ARTICLE VI.

INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS

     Section 6.1 Insurance. Borrower, at its sole cost and expense, shall obtain and
maintain, or cause to be maintained, insurance policies necessary to satisfy the requirements of
Section 6.1 of the Building Loan Agreement.

     Section 6.2 Casualty and Condemnation. Section 6.2 of the Building Loan
Agreement is incorporated herein by reference as if fully set forth herein.

     Section 6.3 Application of Net Proceeds. Section 6.3 of the Building Loan
Agreement is incorporated herein by reference as if fully set forth herein.

ARTICLE VII.

RESERVE FUNDS

     Section 7.1 Reserve Funds. Borrower shall establish such accounts and make such
deposits as are required by Article VII of the Building Loan Agreement. The provisions of
Article VII of the Building Loan Agreement are incorporated herein by reference as if fully
set forth herein.

     Section 7.2 Other Loan Documents. Borrower’s obligations under this Article VII shall
be suspended for so long as sufficient amounts are on deposit and reserved as required by the
Building Loan Agreement.

     Section 7.3 Reserve Funds, Generally. Borrower grants to Lender a first-priority
perfected security interest in each of the Reserve Funds and any and all monies now or hereafter
deposited in each Reserve Fund as additional security for payment of the Debt. Until expended or applied in accordance
herewith, the Reserve Funds shall constitute additional security for the Debt. Upon the occurrence
of an Event of Default, Lender may, in addition to any and all other rights and remedies available
to Lender, apply any sums then present in any or all of the Reserve Funds to the payment of the
Debt in any order in its sole discretion. The Reserve Funds shall not constitute trust funds and
may be commingled with other monies held by Lender. All interest on a Reserve Fund shall not be
added to or become a part thereof and shall be the sole property of and shall be paid to Lender.
Borrower shall be responsible for payment of any federal, state or local income or other tax
applicable to the interest earned on the Reserve Funds credited or paid to Borrower. Borrower
shall not, without obtaining the prior written consent of Lender, further pledge, assign or grant
any security interest in any Reserve Fund or the monies deposited therein or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements,
except those naming Lender as the secured party, to be filed with respect thereto. Lender shall
not be liable for any loss sustained on the investment of any funds constituting the Reserve Funds.
Borrower shall indemnify Lender and hold Lender harmless

28

 

from and against any and all actions,
suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys fees and expenses) arising from or in any way connected
with the Reserve Funds or the performance of the obligations for which the Reserve Funds were
established. Borrower shall assign to Lender all rights and claims Borrower may have against all
persons or entities supplying labor, materials or other services which are to be paid from or
secured by the Reserve Funds; provided, however, that Lender may not pursue any such right or claim
unless an Event of Default has occurred and remains uncured.

ARTICLE VIII.

DEFAULTS

     Section 8.1 Event of Default. (a) Each of the following events shall constitute an
event of default hereunder (an “Event of Default”):

     (i) if any portion of the Debt is not paid within five (5) days of the date
when due (except that Borrower shall not be afforded such 5-day cure period for the
portion of the Debt due and payable on the Maturity Date);

     (ii) if any of the Taxes (other than Taxes being contested pursuant to
Section 5.1.2 of this Agreement) are not paid when the same are due and
payable or Other Charges are not paid within five (5) days after Borrower receives
notice of same;

     (iii) if the Policies are not kept in full force and effect, or if certified
copies of the Policies are not delivered to Lender upon request;

     (iv) if Borrower Transfers or otherwise encumbers any portion of the Property
without Lender’s prior written consent in violation of the provisions of this
Agreement or the Mortgage;

     (v) if any material representation or warranty made by Borrower or Guarantor
herein or in any other Loan Document, or in any report, certificate, financial
statement or other instrument, agreement or document furnished to Lender shall have
been false or misleading in any material respect as of the date the representation
or warranty was made;

     (vi) if Borrower, Mezzanine Borrower, Guarantor or any other guarantor under
any guaranty issued in connection with the Loan shall make an assignment for the
benefit of creditors;

     (vii) if a receiver, liquidator or trustee shall be appointed for Borrower,
Mezzanine Borrower, Guarantor or any other guarantor under any guarantee issued in
connection with the Loan or if Borrower, Mezzanine Borrower, Guarantor or such other
guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any
similar federal or state law, shall be filed by or against,

29

 

consented to, or
acquiesced in by, Borrower, Mezzanine Borrower, Guarantor or such other guarantor,
or if any proceeding for the dissolution or liquidation of Borrower, Mezzanine
Borrower, Guarantor or such other guarantor shall be instituted; provided, however,
if such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower, Mezzanine Borrower, Guarantor or such other guarantor,
upon the same not being discharged, stayed or dismissed within ninety (90) days;

     (viii) if Borrower attempts to assign its rights under this Agreement or any of
the other Loan Documents or any interest herein or therein in contravention of the
Loan Documents;

     (ix) if Borrower breaches any covenant contained in Section 4.1.30;

     (x) with respect to any term, covenant or provision set forth herein which
specifically contains a notice requirement or grace period, if Borrower shall be in
default under such term, covenant or condition after the giving of such notice or
the expiration of such grace period;

     (xi) if any of the assumptions contained in the Insolvency Opinion delivered to
Lender in connection with the Loan, or in any Additional Insolvency Opinion
delivered subsequent to the closing of the Loan, is or shall become untrue in any
material respect;

     (xii) if Borrower fails to pay the Administration Fee, or any portion or
installment thereof, within five (5) days of the date when due;

     (xiii) If Borrower fails to deposit with Lender the cash deposit or Letter of
Credit required in accordance with Section 2.12.2 hereof;

     (xiv) if Borrower fails to materially comply with the Construction Schedule;

     (xv) if the Completion of the Improvements has not occurred on or prior to the
Required Completion Date, subject to Force Majeure or if Lender or the Construction
Consultant determines that Completion of the Improvements cannot occur on or prior
to the Required Completion Date;

     (xvi) if any voucher or invoice is fraudulently submitted by Borrower or in
connection with any Advance for services performed or for materials used in or
furnished for the Property;

     (xvii) if there is any cessation at any time in construction of the Project
Improvements for more than twenty (20) consecutive Business Days, other than as a
result of Force Majeure;

30

 

     (xviii) if Borrower expressly confesses in writing to Lender its inability to
continue or complete construction of the Project Improvements in accordance with
this Agreement;

     (xix) if Lender, the Construction Consultant or their representatives are not
permitted at all reasonable times upon not less than three (3) Business Days notice
to enter upon the Property, inspect the Improvements and the construction thereof
and all materials, fixtures and articles used or to be used in the construction and
to examine all the Plans and Specifications, or if Borrower shall fail to furnish to
Lender or its authorized representative, when requested upon not less than five (5)
Business Days notice, copies of the Plans and Specifications;

     (xx) if a material adverse change in Borrower’s financial condition shall occur
which would, in Lender’s reasonable determination, materially and adversely affect
Borrower’s ability to perform its obligations under this Agreement or any other
document evidencing or securing the Loan beyond any applicable notice and grace
periods expressly set forth in the Loan Documents;

     (xxi) if the conditions precedent to the Final Advance have not been satisfied
on or prior to the Required Completion Date;

     (xxii) If the Guarantor fails to maintain the Required Liquidity and the
Required Net Worth covenants specified in the Guaranty of Completion or if the
Guarantor shall default under the Guaranty of Completion or the Guaranty of Recourse
Carveouts;

     (xxiii) if a material default has occurred and continues beyond any applicable
cure period under the Management Agreement (or any Replacement Management Agreement)
and if such default permits the Manager thereunder to terminate or cancel the
Management Agreement (or any Replacement Management Agreement);

     (xxiv) if Borrower shall continue to be in Default under any of the terms,
covenants or conditions of Section 9.1 hereof, or fails to cooperate with
Lender in connection with a Securitization pursuant to the provisions of Section
9.1 hereof, in either case for three (3) Business Days after notice to Borrower
from Lender;

     (xxv) if an Event of Default (as defined in the Building Loan Agreement) shall
have occurred;

     (xxvi) if there shall be default by Borrower or Guarantor under any of the
other Loan Documents, beyond applicable cure periods, if any, contained in such
documents, whether as to Borrower, Guarantor or the Property, or if any other such
event shall occur or condition shall exist, if the effect of such other default,
event or condition is to accelerate the maturity of all or any portion of the Debt
or to permit Lender to accelerate the maturity of all or any portion of the Debt;

31

 

     (xxvii) if (A) a breach or default by Borrower under any condition or
obligation contained in the Ground Lease shall occur, (B) there occurs any event or
condition that gives the Ground Lessor under the Ground Lease a right to terminate
or cancel the Ground Lease, (C) the Ground Lease shall be surrendered or the Ground
Lease shall be terminated or cancelled for any reason or under any circumstances
whatsoever, or (D) any of the terms, covenants or conditions of the Ground Lease
shall in any manner be modified, changed, supplemented, altered, or amended without
the prior written consent of Lender;

     (xxviii) if (A) a breach or default by Borrower or Storage Facility Tenant
under any condition or obligation contained in the Storage Facility Master Lease
shall occur, (B) there occurs any event or condition that gives the Borrower or the
Storage Facility Tenant under the Storage Facility Master Lease a right to terminate
or cancel the Storage Facility Master Lease, (C) the Storage Facility Master Lease
shall be surrendered or the Storage Facility Master Lease shall be terminated or
cancelled for any reason or under any circumstances whatsoever, except as
specifically permitted herein, or (D) any of the terms, covenants or conditions of
the Storage Facility Master Lease shall in any manner be modified, changed,
supplemented, altered, or amended without the prior written consent of Lender;

     (xxix) if Guarantor or Storage Facility Tenant shall dissolve or cease to exist
during the term of the Loan, except in compliance with the provisions of Section
5.2.15 or Section 5.1,44(e) hereof, respectively;

     (xxx) if the Initial Advance Conditions are not satisfied by the Required
Initial Advance Date; or

     (xxxi) if Borrower shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement not specified in subsections (i) to
(xxx) above, for twenty (20) days after notice to Borrower from Lender, in the case
of any Default which can be cured by the payment of a sum of money, or for thirty
(30) days after notice from Lender in the case of any other Default; provided,
however, that if such non-monetary Default is susceptible of cure but cannot reasonably be cured within such thirty (30) day period and provided
further that Borrower shall have commenced to cure such Default within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to cure the
same, such thirty (30) day period shall be extended for such time as is reasonably
necessary for Borrower in the exercise of due diligence to cure such Default, such
additional period not to exceed sixty (60) days.

          (b) Upon the occurrence of an Event of Default (other than an Event of Default described in
clauses (vi), (vii) or (viii) above) and at any time thereafter, in addition to any other rights or
remedies available to it pursuant to this Agreement and the other Loan Documents or at law or in
equity, Lender may take such action, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and the Property, including, without limitation,
declaring the Debt to be immediately due and payable, and Lender

32

 

may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against Borrower and any or all of the
Property, including, without limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in clauses (vi), (vii) or (viii) above, the Debt and Other
Obligations of Borrower hereunder and under the other Loan Documents shall immediately and
automatically become due and payable, without notice or demand, and Borrower hereby expressly
waives any such notice or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.

     Section 8.2 Remedies.

          (a) Upon the occurrence of an Event of Default, all or any one or more of the rights, powers,
privileges and other remedies available to Lender against Borrower under this Agreement or any of
the other Loan Documents executed and delivered by, or applicable to, Borrower or at law or in
equity may be exercised by Lender at any time and from time to time, whether or not all or any of
the Debt shall be declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding or other action for the enforcement of its rights and remedies under any of
the Loan Documents with respect to all or any part of the Property. Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently, singularly,
successively, together or otherwise, at such time and in such order as Lender may determine in its
sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or as set forth herein
or in the other Loan Documents. Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing (i) Lender is not subject to any “one action” or
“election of remedies” law or rule, and (ii) all liens and other rights, remedies or privileges
provided to Lender shall remain in full force and effect until Lender has exhausted all of its
remedies against the Property and the Mortgage has been foreclosed, sold and/or otherwise realized
upon in satisfaction of the Debt or the Debt has been paid in full.

          (b) With respect to Borrower and the Property, nothing contained herein or in any other Loan
Document shall be construed as requiring Lender to resort to the Property for the satisfaction of
any of the Debt in any preference or priority, and Lender may seek satisfaction out of the Property, or any part thereof, in its absolute discretion in respect of the Debt. In
addition, Lender shall have the right from time to time to partially foreclose the Mortgage in any
manner and for any amounts secured by the Mortgage then due and payable as determined by Lender in
its sole discretion including, without limitation, the following circumstances: (i) in the event
Borrower defaults beyond any applicable grace period in the payment of one or more scheduled
payments of principal and interest, Lender may foreclose the Mortgage to recover such delinquent
payments or (ii) in the event Lender elects to accelerate less than the entire outstanding
principal balance of the Loan, Lender may foreclose the Mortgage to recover so much of the
principal balance of the Loan as Lender may accelerate and such other sums secured by the Mortgage
as Lender may elect. Notwithstanding one or more partial foreclosures, the Property shall remain
subject to the Mortgage to secure payment of sums secured by the Mortgage and not previously
recovered.

          (c) Lender shall have the right from time to time to sever the Note and the other Loan
Documents into one or more separate notes, mortgages and other security documents

33

 

(the “Severed
Loan Documents”) in such denominations as Lender shall determine in its sole discretion for
purposes of evidencing and enforcing its rights and remedies provided hereunder. Borrower shall
execute and deliver to Lender from time to time, promptly after the request of Lender, a severance
agreement and such other documents as Lender shall request in order to effect the severance
described in the preceding sentence, all in form and substance reasonably satisfactory to Lender.
Borrower hereby absolutely and irrevocably appoints Lender as its true and lawful attorney, coupled
with an interest, in its name and stead to make and execute all documents necessary or desirable to
effect the aforesaid severance, Borrower ratifying all that its said attorney shall do by virtue
thereof; provided, however, Lender shall not make or execute any such documents under such power
until three (3) Business Days after notice has been given to Borrower by Lender of Lender’s intent
to exercise its rights under such power. Borrower shall be obligated to pay any costs or expenses
incurred in connection with the preparation, execution, recording or filing of the Severed Loan
Documents and the Severed Loan Documents shall not contain any representations, warranties or
covenants not contained in the Loan Documents and any such representations and warranties contained
in the Severed Loan Documents will be given by Borrower only as of the Closing Date.

     Section 8.3 Remedies Cumulative; Waivers. The rights, powers and remedies of Lender
under this Agreement shall be cumulative and not exclusive of any other right, power or remedy
which Lender may have against Borrower pursuant to this Agreement or the other Loan Documents, or
existing at law or in equity or otherwise. Lender’s rights, powers and remedies may be pursued
singularly, concurrently or otherwise, at such time and in such order as Lender may determine in
Lender’s sole discretion. No delay or omission to exercise any remedy, right or power accruing
upon an Event of Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time to time and as often
as may be deemed expedient. A waiver of one Default or Event of Default with respect to Borrower
shall not be construed to be a waiver of any subsequent Default or Event of Default by Borrower or
to impair any remedy, right or power consequent thereon.

ARTICLE IX.

SPECIAL PROVISIONS

     Article 9 of the Building Loan Agreement is incorporated herein by reference as if
fully set forth herein.

ARTICLE X.

MISCELLANEOUS

     Section 10.1 Survival. This Agreement and all covenants, agreements, representations
and warranties made herein and in the certificates delivered pursuant hereto shall survive the
making by Lender of the Loan and the execution and delivery to Lender of the Note, and shall
continue in full force and effect so long as all or any of the Debt is outstanding and unpaid
unless a longer period is expressly set forth herein or in the other Loan Documents. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be deemed to include
the

34

 

legal representatives, successors and assigns of such party. All covenants, promises and
agreements in this Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.

     Section 10.2 Lender’s Discretion. Whenever pursuant to this Agreement, Lender
exercises any right given to it to approve or disapprove, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Lender and shall be final and
conclusive.

     Section 10.3 Governing Law.

               (A) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY LENDER AND
ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED PURSUANT
HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS ARISING
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA,
EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN
AND SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT
BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS
AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY
LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.

ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT LENDER’S OPTION BE INSTITUTED IN

35

 

ANY FEDERAL OR STATE
COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED
ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
BORROWER DOES HEREBY DESIGNATE AND APPOINT:

National Registered Agents, Inc.

875 Avenue of the Americas, Suite 501

New York, New York 10001

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW
YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN
NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS),
AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

     Section 10.4 Modification, Waiver in Writing. No modification, amendment, extension,
discharge, termination or waiver of any provision of this Agreement, or of the Note, or of any
other Loan Document, nor consent to any departure by Borrower therefrom, shall in any event be
effective unless the same shall be in a writing signed by the party against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific instance, and for
the purpose, for which given. Except as otherwise expressly provided herein, no notice to, or
demand on Borrower, shall entitle Borrower to any other or future notice or demand in the same,
similar or other circumstances.

     Section 10.5 Delay Not a Waiver. Neither any failure nor any delay on the part of
Lender in insisting upon strict performance of any term, condition, covenant or agreement, or
exercising any right, power, remedy or privilege hereunder, or under the Note or under any other
Loan Document, or any other instrument given as security therefor, shall operate as or constitute a
waiver thereof, nor shall a single or partial exercise thereof preclude any other future exercise,
or the exercise of any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under this Agreement,

36

 

the
Note or any other Loan Document, Lender shall not be deemed to have waived any right either to
require prompt payment when due of all other amounts due under this Agreement, the Note or the
other Loan Documents, or to declare a default for failure to effect prompt payment of any such
other amount.

     Section 10.6 Notices. All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing and shall be
effective for all purposes if hand delivered or sent by (a) certified or registered United States
mail, postage prepaid, return receipt requested or (b) expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of attempted delivery, and by telecopier
(with answer back acknowledged), addressed as follows (or at such other address and Person as shall
be designated from time to time by any party hereto, as the case may be, in a written notice to the
other parties hereto in the manner provided for in this Section):

	 	 	 	 	 
	 

	 	If to Lender:
	 	Bear Stearns Commercial Mortgage, Inc.

383 Madison Avenue

New York, New York 10179

Attention: J. Christopher Hoeffel

Facsimile No.: (212) 272-7047
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Kelley Drye & Warren LLP

101 Park Avenue

New York, New York 10178

Attention: Paul A. Keenan, Esq.

Facsimile No.: (212) 808-7897
	 
	 	 	 	 
	 

	 	If to Borrower:
	 	P/A-Acadia Pelham Manor, LLC

c/o Acadia Realty Trust

1311 Mamaroneck Avenue, Suite 260

White Plains, New York 10605

Attention: Robert Masters, Esq., General Counsel

Facsimile No.: (914) 288-2162
	 
	 	 	 	 
	 

	 	If to MERS:
	 	MERS Commercial

P.O. Box 2300

Flint, Michigan 48501-2300

A notice shall be deemed to have been given: in the case of hand delivery, at the time of
delivery; in the case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day; or in the case of expedited prepaid delivery and telecopy, upon the
first attempted delivery on a Business Day; or in the case of telecopy, upon sender’s receipt of a
machine-generated confirmation of successful transmission after advice by telephone to recipient
that a telecopy notice is forthcoming.

     Section 10.7 Trial by Jury.

          BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND
WAIVES ANY RIGHT TO

37

 

TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY
BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.

     Section 10.8 Headings. The Article and/or Section headings and the Table of Contents
in this Agreement are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

     Section 10.9 Severability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.

     Section 10.10 Preferences. Lender shall have the continuing and exclusive right to
apply or reverse and reapply any and all payments by Borrower to any portion of the obligations of
Borrower hereunder. To the extent Borrower makes a payment or payments to Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of
such payment or proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such payment or proceeds
had not been received by Lender.

     Section 10.11 Waiver of Notice. Borrower shall not be entitled to any notices of any
nature whatsoever from Lender except with respect to matters for which this Agreement or the other
Loan Documents specifically and expressly provide for the giving of notice by Lender to Borrower
and except with respect to matters for which Borrower is not, pursuant to applicable Legal
Requirements, permitted to waive the giving of notice. Borrower hereby expressly waives the right
to receive any notice from Lender with respect to any matter for which this Agreement or the other
Loan Documents do not specifically and expressly provide for the giving of notice by Lender to
Borrower.

     Section 10.12 Remedies of Borrower. In the event that a claim or adjudication is made
that Lender or its agents have acted unreasonably or unreasonably delayed acting in any case where
by law or under this Agreement or the other Loan Documents, Lender or such agent, as the case may
be, has an obligation to act reasonably or promptly, Borrower agrees that neither Lender nor its
agents shall be liable for any monetary damages, and Borrower’s sole remedies shall be limited to
commencing an action seeking injunctive relief or declaratory judgment. The parties hereto agree
that any action or proceeding to determine whether Lender has acted reasonably shall be determined
by an action seeking declaratory judgment.

38

 

     Section 10.13 Expenses; Indemnity. (1) Borrower covenants and agrees to pay or, if
Borrower fails to pay, to reimburse, Lender upon receipt of written notice from Lender for all
reasonable costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by
Lender in connection with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions contemplated hereby
and thereby and all the costs of furnishing all opinions by counsel for Borrower (including without
limitation any opinions requested by Lender as to any legal matters arising under this Agreement or
the other Loan Documents with respect to the Property); (ii) Borrower’s ongoing performance of and
compliance with Borrower’s respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and insurance requirements;
(iii) Lender’s ongoing performance and compliance with all agreements and conditions contained in
this Agreement and the other Loan Documents on its part to be performed or complied with after the
Closing Date; (iv) the negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Lender; (v) securing Borrower’s compliance with any
requests made pursuant to the provisions of this Agreement; (vi) the filing and recording fees and
expenses, title insurance and reasonable fees and expenses of counsel for providing to Lender all
required legal opinions, and other similar expenses incurred in creating and perfecting the Lien in
favor of Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing or
preserving any rights, in response to third party claims or the prosecuting or defending of any
action or proceeding or other litigation, in each case against, under or affecting Borrower, this
Agreement, the other Loan Documents, the Property, or any other security given for the Loan; and
(viii) enforcing any obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property (including any fees incurred by
Servicer in connection with the transfer of the Loan to a special servicer prior to a Default or
Event of Default) or in connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a “work-out” or of any insolvency or bankruptcy
proceedings; provided, however, that Borrower shall not be liable for the payment of any such costs
and expenses to the extent the same arise by reason of the gross negligence, illegal acts, fraud or
willful misconduct of Lender. Any cost and expenses due and payable to Lender may be paid from any
amounts in the Clearing Account or Cash Management Account, as applicable.

          (a) Borrower shall indemnify, defend and hold harmless Lender from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation,
the reasonable fees and disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not Lender shall be
designated a party thereto), that may be imposed on, incurred by, or asserted against Lender in any
manner relating to or arising out of (i) any breach by Borrower of its obligations under, or any
material misrepresentation by Borrower contained in, this Agreement or the other Loan Documents, or
(ii) the use or intended use of the proceeds of the Loan (collectively, the “Indemnified
Liabilities”); provided, however, that Borrower shall not have any obligation to Lender hereunder
to the extent that such Indemnified Liabilities arise from the gross negligence, illegal acts,
fraud or willful misconduct of Lender. To the extent that

39

 

the undertaking to indemnify, defend and
hold harmless set forth in the preceding sentence may be unenforceable because it violates any law
or public policy, Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.

          (b) Borrower covenants and agrees to pay for or, if Borrower fails to pay, to reimburse Lender
for, any fees and expenses incurred by any Rating Agency in connection with any consent, approval,
waiver or confirmation obtained from such Rating Agency pursuant to the terms and conditions of
this Agreement or any other Loan Document and Lender shall be entitled
to require payment of such fees and expenses as a condition precedent to the obtaining of any
such consent, approval, waiver or confirmation.

     Section 10.14 Schedules and Exhibits Incorporated. The Schedules and Exhibits annexed
to the Building Loan Agreement are hereby incorporated herein as a part of this Agreement with the
same effect as if set forth in the body hereof.

     Section 10.15 Offsets, Counterclaims and Defenses. Any assignee of Lender’s interest
in and to this Agreement, the Note and the other Loan Documents shall take the same free and clear
of all offsets, counterclaims or defenses which are unrelated to such documents which Borrower may
otherwise have against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding brought by any such
assignee upon such documents and any such right to interpose or assert any such unrelated offset,
counterclaim or defense in any such action or proceeding is hereby expressly waived by Borrower.

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

          (a) Borrower and Lender intend that the relationships created hereunder and under the other
Loan Documents be solely that of borrower and lender. Nothing herein or therein is intended to
create a joint venture, partnership, tenancy-in-common, or joint tenancy relationship between
Borrower and Lender nor to grant Lender any interest in the Property other than that of mortgagee,
beneficiary or lender.

          (b) This Agreement and the other Loan Documents are solely for the benefit of Lender and
Borrower and nothing contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrower any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or therein. All conditions to
the obligations of Lender to make the Loan hereunder are imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to assume that Lender will refuse to make
the Loan in the absence of strict compliance with any or all thereof and no other Person shall
under any circumstances be deemed to be a beneficiary of such conditions, any or all of which may
be freely waived in whole or in part by Lender if, in Lender’s sole discretion, Lender deems it
advisable or desirable to do so.

     Section 10.17 Publicity. All news releases, publicity or advertising by Borrower or
its Affiliates through any media intended to reach the general public which refers to the Loan

40

 

Documents or the financing evidenced by the Loan Documents, to Lender, BSCMI, or any of their
Affiliates shall be subject to the prior written approval of Lender.

     Section 10.18 Waiver of Marshalling of Assets. To the fullest extent permitted by law, Borrower, for itself and its successors and
assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s partners and
others with interests in Borrower, and of the Property, and agrees not to assert any right under
any laws pertaining to the marshalling of assets, the sale in inverse order of alienation,
homestead exemption, the administration of estates of decedents, or any other matters whatsoever to
defeat, reduce or affect the right of Lender under the Loan Documents to a sale of the Property for
the collection of the Debt without any prior or different resort for collection or of the right of
Lender to the payment of the Debt out of the net proceeds of the Property in preference to every
other claimant whatsoever.

     Section 10.19 Waiver of Counterclaim. Borrower hereby waives the right to assert a
counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it
by Lender or its agents.

     Section 10.20 Identical Obligations; Conflict; Construction of Documents; Reliance.
To the extent that Borrower has identical obligations under this Agreement and under any of the
other Loan Agreements, performance by Borrower of such obligations under this Agreement or any of
the other Loan Agreements shall be deemed performance by Borrower, as applicable, under all such
Loan Agreements and hereunder of such obligations. In the event of any conflict between the
provisions of this Agreement and any of the other Loan Documents, the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning against the party which
drafted same. Borrower acknowledges that, with respect to the Loan, Borrower shall rely solely on
its own judgment and advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent, subsidiary or Affiliate of
Lender. Lender shall not be subject to any limitation whatsoever in the exercise of any rights or
remedies available to it under any of the Loan Documents or any other agreements or instruments
which govern the Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower hereby irrevocably
waives the right to raise any defense or take any action on the basis of the foregoing with respect
to Lender’s exercise of any such rights or remedies. Borrower acknowledges that Lender engages in
the business of real estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its Affiliates.

     Section 10.21 Brokers and Financial Advisors. Borrower hereby represents that it has
dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. Borrower hereby agrees to
indemnify, defend and hold Lender harmless from and against any and all claims, liabilities, costs
and expenses of any kind (including Lender’s attorneys’ fees and expenses) in any way relating to
or arising from a claim by any Person that such Person acted on behalf of Borrower or Lender in
connection with the transactions contemplated herein. The provisions of this Section

41

 

10.21 shall survive
the expiration and termination of this Agreement and the payment of the Debt.

     Section 10.22 Prior Agreements. This Agreement and the other Loan Documents contain
the entire agreement of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties, whether oral or
written, including, without limitation, the Commitment Letter dated August 9, 2007 between Borrower
and Lender are superseded by the terms of this Agreement and the other Loan Documents.

     Section 10.23 Joint and Several Liability. If Borrower consists of more than one (1)
Person the obligations and liabilities of each Person shall be joint and several.

     Section 10.24 Certain Additional Rights of Lender (VCOC). Notwithstanding anything to
the contrary contained in this Agreement, Lender shall have:

          (a) the right to routinely consult with and advise Borrower’s management regarding the
significant business activities and business and financial developments of Borrower;
provided, however, that such consultations shall not include discussions of
environmental compliance programs or disposal of hazardous substances. Consultation meetings
should occur on a regular basis (no less frequently than quarterly) with Lender having the right to
call special meetings at any reasonable times and upon reasonable advance notice;

          (b) the right, in accordance with the terms of this Agreement, to examine the books and
records of Borrower at any reasonable times upon reasonable notice;

          (c) the right, in accordance with the terms of this Agreement, including, without limitation,
Section 5.1.11 hereof, to receive monthly, quarterly and year end financial reports,
including balance sheets, statements of income, shareholder’s equity and cash flow, a management
report and schedules of outstanding indebtedness; and

          (d) the right, without restricting any other rights of Lender under this Agreement (including
any similar right), to approve any acquisition by Borrower of any other significant property (other
than personal property required for the day to day operation of the Property and/or construction of
the Project Improvements).

          The rights described above in this Section 10.24 may be exercised by any entity which
owns and controls, directly or indirectly, substantially all of the interests in Lender.

     Section 10.25 MERS. Mortgage Electronic Registration Systems, Inc., a Delaware corporation
(“MERS”), serves as mortgagee of record and secured party solely as nominee, in an administrative
capacity, for Lender and only holds legal title to the interests granted, assigned, and transferred in the
Mortgage and the Assignments of Leases. MERS shall at all times comply with the instructions of
Lender. If necessary to comply with law or custom, MERS (for the benefit of Lender) may be
directed by Lender to exercise any or all of those interests, including without limitation, the
right to foreclose and sell the Property, and take any action required of Lender, including without
limitation, a release, discharge or reconveyance of the Mortgage. Subject to the foregoing, all
references in the Loan Documents to “Mortgagee” shall include

42

 

Lender and its successors and
assigns. The relationship of Mortgagor and Lender under the Mortgage and the other Loan Documents
is, and shall at all times remain, solely that of borrower and lender (the role of MERS thereunder
being solely that of nominee as set forth above and not that of a lender); and Mortgagee neither
undertakes nor assumes any responsibility or duty to Borrower or to any other Person with respect
to the Property.

[SIGNATURE PAGE TO PROJECT LOAN AGREEMENT]

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

	 	 	 	 	 
	 	BORROWER

P/A-ACADIA PELHAM MANOR, LLC,

a Delaware limited liability company

 	 
	 	By:  	,
 	 
	 	 	Name:  	Robert Masters 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	LENDER

BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York corporation

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	Authorized Signatory 	 
	 

43

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]