BUILDING LOAN AGREEMENT

Construction Loan Agreement

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ACADIA REALTY TRUST | ACADIA ATLANTIC AVENUE LLC | BEAR STEARNS COMMERCIAL MORTGAGE, INC

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Title: BUILDING LOAN AGREEMENT
Governing Law: New York Date: 2/29/2008
Industry: Real Estate Operations Law Firm: Kelley Drye Sector: Services

Exhibit 10.74

BUILDING LOAN AGREEMENT

Dated as of December 26, 2007

Between

ACADIA ATLANTIC AVENUE LLC ,
as Borrower

and

BEAR STEARNS COMMERCIAL MORTGAGE, INC. ,
as Lender

MERS MIN: 8000101-0000007166-1

TABLE OF CONTENTS


ARTICLE I. DEFINITIONS; PRINCIPLES OF CONSTRUCTION			1
	Section 1.1	Definitions	1
	Section 1.2	Principles of Construction	34

ARTICLE II. GENERAL TERMS			34
	Section 2.1	Loan Commitment; Disbursement to Borrower	34
	Section 2.2	Interest Rate	38
	Section 2.3	Loan Payment	39
	Section 2.4	Prepayments	40
	Section 2.5	Defeasance	41
	Section 2.6	Release of Property	44
	Section 2.7	Clearing Account/Cash Management	44
	Section 2.8	Intentionally Omitted	47
	Section 2.9	Payments Not Conditional	47
	Section 2.10	Initial Advance	47
	Section 2.11	Construction Advances	51
	Section 2.12	Final Advance	55
	Section 2.13	No Reliance	57
	Section 2.14	Method of Disbursement of Loan Proceeds	57
	Section 2.15	Plan Review Process	59

ARTICLE III. CONDITIONS PRECEDENT			60
	Section 3.1	Conditions Precedent to Closing	60

ARTICLE IV. REPRESENTATIONS AND WARRANTIES			64
	Section 4.1	Borrower Representations	64
	Section 4.2	Survival of Representations	76

ARTICLE V. BORROWER COVENANTS			76
	Section 5.1	Affirmative Covenants	76
	Section 5.2	Negative Covenants	92

ARTICLE VI. INSURANCE; CASUALTY; CONDEMNATION; REQUIRED REPAIRS			102
	Section 6.1	Insurance	102
	Section 6.2	Casualty and Condemnation	108
	Section 6.3	Application of Net Proceeds	114

ARTICLE VII. RESERVE FUNDS			114
	Section 7.1	Tax and Insurance Escrow Fund	114
	Section 7.2	Interest Reserve	116
	Section 7.3	Replacements and Replacement Reserve	116
	Section 7.4	Punch List and Deferred Maintenance Reserve	120
	Section 7.5	Intentionally Omitted	121
	Section 7.6	Excess Cash Flow	122

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	Section 7.7	Operating Reserve	122
	Section 7.8	Reserve Funds, Generally	122
	Section 7.9	Letter of Credit Rights	123

ARTICLE VIII. DEFAULTS			123
	Section 8.1	Event of Default	123
	Section 8.2	Remedies	127
	Section 8.3	Remedies Cumulative; Waivers	128

ARTICLE IX. SPECIAL PROVISIONS			128
	Section 9.1	Sale of Notes and Securitization	128
	Section 9.2	Securitization Indemnification	131
	Section 9.3	Exculpation	134
	Section 9.4	Intentionally Omitted	136
	Section 9.5	Servicer	136

ARTICLE X. MISCELLANEOUS			136
	Section 10.1	Survival	136
	Section 10.2	Lender’s Discretion	136
	Section 10.3	Governing Law	136
	Section 10.4	Modification, Waiver in Writing	138
	Section 10.5	Delay Not a Waiver	138
	Section 10.6	Notices	138
	Section 10.7	Trial by Jury	139
	Section 10.8	Headings	139
	Section 10.9	Severability	139
	Section 10.10	Preferences	139
	Section 10.11	Waiver of Notice	140
	Section 10.12	Remedies of Borrower	140
	Section 10.13	Expenses; Indemnity	140
	Section 10.14	Schedules and Exhibits Incorporated	141
	Section 10.15	Offsets, Counterclaims and Defenses	141
	Section 10.16	No Joint Venture or Partnership; No Third Party Beneficiaries	142
	Section 10.17	Publicity	142
	Section 10.18	Waiver of Marshalling of Assets	142
	Section 10.19	Waiver of Counterclaim	142
	Section 10.20	Conflict; Construction of Documents; Reliance	142
	Section 10.21	Brokers and Financial Advisors	143
	Section 10.22	Prior Agreements	143
	Section 10.23	Joint and Several Liability	143
	Section 10.24	Certain Additional Rights of Lender (VCOC)	143
	Section 10.25	MERS	144

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SCHEDULES


Schedule I		— Organizational Chart of Borrower

Schedule II		— Development Budget

Schedule III		— Plans and Specifications

Schedule IV		— Construction Schedule

Schedule V		— Rent Roll

EXHIBITS


Exhibit A		Legal Description of the Land

Exhibit B		Intentionally Omitted

Exhibit C		Form of Datedown Endorsement

Exhibit D		Section 22 Affidavit

Exhibit E		Affirmation of Payment (AIA Form G706)

Exhibit F		Architect’s Certificate

Exhibit G		General Contractor’s Certificate

Exhibit H		Form of Performance Letter

Exhibit I		Anticipated Cost Report Form

Exhibit J		Form of Lien Waivers

Exhibit K		Form of Insolvency Opinion -To Be Delivered Upon Completion

Exhibit L		Form of Borrower’s Requisition

Exhibit M		Application and Certificate for Payment (AIA Form G702)

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BUILDING LOAN AGREEMENT

THIS BUILDING LOAN AGREEMENT , dated as of December 26, 2007 (as amended, restated, replaced, supplemented or otherwise modified from time to time, this “ Agreement ” or sometimes, this “ Building Loan Agreement ”), is made by and between BEAR STEARNS COMMERCIAL MORTGAGE, INC. , a New York corporation, having an address at 383 Madison Avenue, New York, New York 10179 (“ Lender ”) and ACADIA ATLANTIC AVENUE LLC , a Delaware limited liability company, having its principal place of business at c/o Acadia Realty Trust, 1311 Mamaroneck Avenue — Suite 260, White Plains, New York 10605, as Borrower (“ Borrower ”).

WITNESSETH :

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

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

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

ARTICLE I.

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

Section 1.1 Definitions .

For all purposes of this Agreement, except as otherwise expressly required or unless the context clearly indicates a contrary intent:

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

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

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

“ Additional Mezzanine Borrower ” shall have the meaning set forth in Section 5.2.13(g) hereof.

“ Additional Mezzanine Loan ” shall have the meaning set forth in Section 5.2.13 hereof.

“ Additional Mezzanine Loan Documents ” shall have the meaning set forth in Section 5.2.13(f) hereof.

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

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

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

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

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

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

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

“ Aggregate Debt Service Coverage Ratio ” shall have the meaning set forth in Section 5.2.13 hereof.

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

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

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

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

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

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

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

“ Architect’s Contract ” shall mean that certain Professional Services Authorization between Borrower and Borrower’s Architect dated as of March 16 2007, as the same may be amended from time to time in compliance with the terms hereof.

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

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

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

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

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

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

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

“ Borrower’s Architect ” shall mean Butz Wilbern, Ltd..

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

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

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

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

“ Building Loan Amount ” shall mean Eleven Million, Two Hundred Twenty-Nine Thousand, Two Hundred Sixty and 33/100 Dollars ($11,229,260.33).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Cash Trap Event ” shall mean the occurrence of any of the following: (a) an Event of Default; (b) any Bankruptcy Action of Borrower or Mezzanine Borrower; (c) any Bankruptcy Action of Manager; or (d) on or after the last day of the Construction Term, a DSCR Trigger.

“ Cash Trap Event Cure ” shall mean:

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

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

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

(B) if Borrower replaces the Manager with a Qualified Manager pursuant to a Replacement Management Agreement approved by Lender;

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

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

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

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

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

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

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

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

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

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

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

“ Completion of the Improvements ” shall mean the substantial completion (i.e., completion of the Project Improvements other than Punch List Items) of the construction and renovation of the Project Improvements substantially in accordance with all Plans and Specifications, all Legal Requirements, all Permitted Encumbrances and this Agreement, and that all utilities necessary to service the Project Improvements have been connected and are in

operation, such completion to be evidenced to the reasonable satisfaction of Lender and the Construction Consultant; together with the delivery to Lender of:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

	(a)		the numerator is the Net Operating Income (excluding interest on credit accounts and using annualized operating expenses for any recurring expenses not paid monthly (e.g., Taxes and Insurance Premiums)) for such period as set forth in the statements required hereunder, adjusted for a vacancy rate equal to the greater of the actual vacancy rate, the market vacancy rate and an assumed vacancy rate equal to five percent (5%), without deduction for (i) actual management fees incurred in connection with the operation of the Property less (A) management fees equal to the greater of (1) assumed management fees of six percent (6%) of Gross Income from Operations or (2) the actual management fees incurred, and (B) Replacement Reserve Fund contributions equal to $16,500.00 per annum; and

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

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

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

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

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

“ Defeasance Deposit ” shall mean an amount equal to the remaining principal amount of the Note, the Defeasance Payment Amount, any costs and expenses incurred or to be incurred in the purchase of U.S. Obligations necessary to meet the Scheduled Defeasance Payments and any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of the Note or otherwise required to accomplish the agreements of Section 2.5 hereof (including, without limitation, any fees and expenses of accountants, attorneys and the Rating Agencies incurred in connection therewith).

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

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

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

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

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

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

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

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

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

“ DSCR Trigger Event ” shall mean, that as of any Debt Service Coverage Ratio Determination Date, the Debt Service Coverage Ratio as determined by Lender based on the trailing six (6) month period (annualized) immediately preceding the date of such determination is less than 1.00 to 1.0.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Fitch ” shall mean Fitch, Inc.

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

“ Force Majeure ” shall mean, with respect to the obligations of any Person, actual delay beyond the reasonable control of such Person, which is due to any of the following (a) natural disaster, fire or other casualty, earthquake, flood, explosion, abnormally inclement weather for the season in question (as reported by an appropriate authority) or any other act of God, (b) declared or undeclared war, acts of domestic or international terrorism, riot, mob violence, insurrection or sabotage, (c) the inability to procure labor, equipment, facilities, energy, materials or supplies, the failure of transportation, any other labor disturbance, strikes, lockouts or actions of labor unions, in each such case, so long as such cause is not within the reasonable control of such Person, (d) condemnation, temporary restraining orders or injunctions, changes after the date hereof in the requirements or interpretations of relevant laws, in each such case, so long as such cause is not within the reasonable control of such Person, or (e) any other cause not within the reasonable control of such Person; provided that, with respect to any of the circumstances described in the foregoing clauses (a) through (e) inclusive: (i) for the purposes of this Agreement, any period of Force Majeure shall apply only to such person’s performance of

the obligations necessarily affected by such circumstance and shall continue only so long as such person is continuously and diligently using all reasonable efforts to minimize the effect and duration thereof; and (ii) notwithstanding the foregoing, Force Majeure shall not include (A) the unavailability or insufficiency of funds as a result of the insolvency of such Person or any of its Affiliates, (B) any breach of contract or default by Borrower’s Architect, the General Contractor or any Major Contractor under their respective contracts and agreements concerning the Project Improvements.

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

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

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

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

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

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

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

“ Guarantor ” shall mean, collectively, Acadia Strategic Opportunity Fund II, LLC, a Delaware limited liability company, and Post Management, L.L.C., a Delaware limited liability company.

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

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

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

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

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

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

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

“ Indemnifying Person ” shall mean Borrower and Guarantor.

“ Independent Director ” shall mean a director of a corporation or a limited liability company that is a Special Purpose Entity and “ Independent Manager ” shall mean a manager of a limited liability company that is a Special Purpose Entity, in either case, who is not at the time of initial appointment, or at any time while serving as an Independent Director or Independent Manager, as applicable, and has not been at any time during the preceding five (5) years: (a) a stockholder, director (with the exception of serving as the Independent Director or Independent Manager of a Special Purpose Entity), officer, employee, partner, member, attorney or counsel of Guarantor, Borrower, or any Affiliate of any of them (unless such natural person is an Independent Director or Independent Manager provided by a nationally recognized company

that provides professional independent managers and which also provides other corporate services in the ordinary course of business, in which case such Person may receive reasonable fees for servicing as Independent Director or Independent Manager of a Special Purpose Entity); (b) a creditor, customer, supplier or other Person who derives any of its purchases or revenues from its activities with Guarantor, Borrower or any Affiliate of any of them; (c) a Person controlling or under common control with any such stockholder, director, officer, employee, partner, member, creditor, customer, supplier or other Person; or (d) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, creditor, customer, supplier or other person. As used in this definition, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.

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

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

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

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

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

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

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

“ Intellectual Property ” shall have the meaning set forth in Section 4.1.43 hereof.

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

“ Interest Rate ” shall mean seven and one hundred forty-four one-thousandths percent (7.144%), provided, however, in the event that on or before January 1, 2011, the Property shall have achieved a Debt Service Coverage Ratio as determined by Lender of 1.15 to 1.0 using a debt service constant of 7.50%, and Borrower delivers to Lender a MAI appraisal performed, at Borrower’s sole cost and expense, by an appraiser approved by Lender and dated, or updated, to a date within 30 days of such date made in compliance with FIRREA and reasonably satisfactory to Lender in all respects; the appraisal value shall be subject to review and confirmation and updating as to valuation by Lender’s internal appraisal staff, whose decision shall be final absent manifest error showing that loan-to-value ratio for the Property is no greater than 75% assuming a fully advanced Loan, Lender shall, upon Borrower’s written

request, reduce the Interest Rate to a per annum rate equal to five and seven hundred ninety-four one-thousandths percent (5.794%), commencing on the first Payment Date after Borrower’s request. Any reduction in the Interest Rate as set forth above shall be effective commencing on the first Payment Date after Borrower’s request for such reduction and satisfaction of the conditions set forth above and no reduction in the Interest Rate shall be retroactive. In the event that Borrower fails to satisfy the conditions for a reduction of the Interest Rate within the time periods set forth above, time being of the essence, Borrower shall have no further right to obtain a reduction in the Interest Rate. Notwithstanding anything to the contrary contained herein, Lender shall have the right, in its sole discretion, at any time after the expiration of the Construction Term and prior to a Securitization of the Loan, to increase the Interest Rate by up to two-tenths of one percent (0.20%).

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

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

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

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

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

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

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

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

“Letter of Credit” shall mean an irrevocable, unconditional, transferable, clean sight draft letter of credit, as the same may be replaced, split, substituted, modified, amended,

supplemented, assigned or otherwise restated from time to time, (either an evergreen letter of credit or a letter of credit which does not expire until at least two (2) Business Days after the Maturity Date or such earlier date as such Letter of Credit is no longer required pursuant to the terms of this Agreement) in favor of Lender and entitling Lender to draw thereon based solely on a statement purportedly executed by an officer of Lender stating that it has the right to draw thereon, and issued by a domestic Approved Bank or the U.S. agency or branch of a foreign Approved Bank, or if there are no domestic Approved Banks or U.S. agencies or branches of a foreign Approved Bank then issuing letters of credit, then such letter of credit may be issued by a domestic bank, the long term unsecured debt rating of which is the highest such rating then given by the Rating Agency or Rating Agencies, as applicable, to a domestic commercial bank.

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

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

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

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

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

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

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

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

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

“ Major Contractor ” shall mean any contractor hired by Borrower, including, without limitation, the General Contractor (including subsidiaries and affiliates), supplying services, labor and/or materials in connection with the Project which is for an aggregate contract price equal to or greater than $500,000, whether pursuant to one contract or agreement or

multiple contracts or agreements, after taking into account all change orders, or which relates to major project elements such as steel, concrete, HVAC systems, windows, doors and other similar items.

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

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

“ Management Agreement ” shall mean the Management Agreement dated as of October 23, 2007 by and between Borrower and Manager pursuant to which Manager is to provide management and other services with respect to the Property, or, if the context requires, the Replacement Management Agreement.

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

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

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

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

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

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

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

“ Monthly Debt Service Payment Amount ” shall mean (a) an amount equal to interest only on the outstanding principal balance of the Building Loan, calculated in accordance with Section 2.2 hereof, for each Payment Date commencing with the Payment Date occurring in February, 2008 through and including the Payment Date occurring in January, 2015, and (b) a constant monthly payment of $75,797.67 commencing with the Payment Date occurring in February, 2015 and on each Payment Date thereafter, provided, however, that in the event that the Interest Rate is modified in accordance with the provisions of the definition of “Interest Rate,” the Monthly Debt Service Payment Amount shall be adjusted by Lender based upon the modified Interest Rate and a thirty (30) year amortization schedule, Lender’s determination of the Monthly Debt Service Payment Amount being binding absent manifest error.

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

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

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

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

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

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

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

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

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

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

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

property taxes and assessments, advertising expenses, management fees, payroll and related taxes, computer processing charges, operational equipment or other lease payments as approved by Lender, and other similar costs, but excluding depreciation, Debt Service, Capital Expenditures and contributions to the Reserve Funds.

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

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

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

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

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

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

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

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

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

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

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

“ Permitted Mezzanine Lender ” shall have the meaning set forth in Section 5.2.13 hereof.

“ Permitted Release Date ” shall mean the earlier of (i) the Defeasance Expiration Date or (ii) the date that is the third (3 ^rd ) anniversary of the Completion of the Improvements.

“ Permitted Transfer ” means any of the following:

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

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

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

(d) transfers permitted pursuant to Section 5.2.10(d) of this Agreement;

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

(f) a Transfer by Slayton Properties Atlantic, LLC of 100% of its membership interest in Borrower to Acadia 3319 Atlantic Avenue LLC or an Affiliate of Acadia Strategic Opportunity Fund II, LLC Controlled by Acadia Realty Trust.

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

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

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

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

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

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

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

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

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

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

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

“ Proceeds ” shall mean Insurance Proceeds or Condemnation Proceeds.

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

“ Project Improvements ” shall mean the demolition of all existing improvements located on the Land and the development and construction thereon by Borrower of a modern self-storage facility containing approximately 110,000 square feet of floor area, substantially as depicted on the Plans and Specifications, as the same will be developed, renovated and constructed in accordance with the Plans and Specifications and all Legal Requirements.

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

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

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

“ Project Loan Amount ” shall mean Four Million, Nine Hundred Twenty Thousand, Seven Hundred Thirty-Nine and 67/100 Dollars ($4,920,739.67).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Rate Lock Agreement ” shall mean that certain Extended Rate Lock Agreement-Application Stage dated April 23, 2007 between Borrower and Lender, as amended by that certain First Amendment to Extended Rate Lock Agreement-Application Stage dated as of the date hereof.

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

“ Related Entities ” shall have the meaning set forth in Section 5.2.10(e) .

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

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

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

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

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

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

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

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

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

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

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

“ Required Initial Advance Date ” shall mean March 21, 2008, provided that Lender shall have the right to extend the Required Initial Advance Date in Lender’s sole discretion.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(viii) if such entity is a corporation, has and shall have at least two (2) Independent Director, and shall not cause or permit the board of directors of such entity to take any Material Action either with respect to itself or, if the corporation is a Principal, with respect to Borrower or any action requiring the unanimous affirmative vote of one hundred percent (100%) of the members of its board of directors unless two Independent Directors shall have participated in such vote and shall have voted in favor of such action;

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

(x) if such entity is a single-member limited liability company, (A) is and shall be a Delaware limited liability company, (B) has and shall have at least two (2) Independent Directors serving as a manager of such company, (C) shall not take any Material Action and shall not cause or permit the members or managers of such entity to take any Material Action, either with respect to itself or, if the company is a Principal,

with respect to Borrower, in each case unless one Independent Director then serving as a manager of the company shall have participated and consented in writing to such action, and (D) has and shall have either (1) a member which owns no economic interest in the company, has signed the company’s limited liability company agreement and has no obligation to make capital contributions to the company, or (2) two natural persons or one entity that is not a member of the company, that has signed its limited liability company agreement and that, under the terms of such limited liability company agreement becomes a member of the company immediately prior to the withdrawal or dissolution of the last remaining member of the company;

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

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

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

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

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

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

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

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

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

(xx) has paid and shall pay its own liabilities and expenses, including the salaries of its own employees, out of its own funds and assets, and has maintained and shall maintain a sufficient number of employees in light of its contemplated business operations;

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

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

(xxiii) shall have no Indebtedness other than (i) the Loan, (ii) liabilities incurred in the ordinary course of business relating to the ownership and operation of the Property and the routine administration of Borrower, in amounts not to exceed $323,000, which liabilities are not more than sixty (60) days past the date incurred, are not evidenced by a

note and are paid when due, and which amounts are normal and reasonable under the circumstances, and (iii) such other liabilities that are permitted pursuant to this Agreement;

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

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

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

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

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

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

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

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

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

(xxxiii) other than capital contributions and distributions permitted under the terms of its organizational documents, has not entered into or been a party to, and shall not

enter into or be a party to, any transaction with any of its partners, members, shareholders or Affiliates except in the ordinary course of its business and on terms which are commercially reasonable terms comparable to those of an arm’s-length transaction with an unrelated third party;

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

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

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

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

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

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

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

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

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

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

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

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

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

“ Stabilized Net Cash Flow ” shall mean underwritten Gross Income from Operations calculated using an vacancy rate equal to the greater of five percent (5%), the actual vacancy rate for the Property and the market vacancy rate (“ Effective Gross Income ”), less (i) Operating Expenses including a management fee of not less than six percent (6%) of Effective Gross Income and (ii) an adjustment for Replacement Reserves of $16,500.00 per annum.

“ Stabilized Value ” shall mean the value of the Property, determined following the Completion of the Improvements. The Stabilized Value shall be determined based upon an MAI appraisal performed, at Borrower’s sole cost and expense, by an appraiser approved by Lender and dated, or updated, to a date within 30 days or the date of the Completion of the Improvement occurs made in compliance with FIRREA and reasonably satisfactory to Lender in all respects; the appraisal value shall be subject to review and confirmation and updating as to valuation by Lender’s internal appraisal staff, whose decision shall be final absent manifest error.

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

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

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

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

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

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

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

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

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

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

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

“ Tenant ” shall mean the tenant under any Lease.

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

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

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

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

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

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

“ Transfer ” shall have the meaning set forth in Section 5.2.10(b) hereof.

“ Transferee ” shall have the meaning set forth in Section 5.2.10(e) .

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

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

“ Unsatisfied Initial Advance Conditions ” shall have the meaning set forth in Section 2.1.20 .

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

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

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

Section 1.2 Principles of Construction . All references to sections and schedules are to sections and schedules in or to this Agreement unless otherwise specified. All uses of the word “including” shall mean “including, without limitation” unless the context shall indicate otherwise. Any reference in this Agreement or in any other Loan Document to any Loan Document shall be deemed to include references to such documents as the same may hereafter be amended, modified, supplemented, extended, replaced and/or restated from time to time (and, in the case of any note or other instrument, to any instrument issued in substitution therefor). Unless otherwise specified, the words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all meanings attributed to defined terms herein shall be equally applicable to both the singular and plural forms of the terms so defined.

ARTICLE II.

GENERAL TERMS

Section 2.1 Loan Commitment; Disbursement to Borrower .

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

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

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

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

2.1.5 Advances . Lender shall not be required to Advance funds hereunder for any category or line item of Building Loan Costs in excess of the amount specified for such line item or category in the Building Loan Budget, subject to Sections 2.1.6 , 2.1.7 and 5.1.33 (or other reallocations approved by Lender in its sole discretion). No Advances shall be made to pay for Affiliate Fees.

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

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

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

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

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

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

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

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

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

(g) The aggregate cost of Stored Materials stored at the Property is approved by the Construction Consultant and, if required by Lender, the Construction Consultant shall certify that it has inspected such Stored Materials and they are in good condition and suitable for use in connection with the Project Improvements; and

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

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

2.1.10 Loan-In-Balance . As used herein, a “ Shortfall ” shall mean, as to any Line Item in the Development Budget as of any date, the amount determined by Lender, in Lender’s sole but reasonable judgment, by which (A) the cost of completing or satisfying such Line Item, exceeds (B) the remaining undisbursed portion of the Loan allocated to such Line Item in the Development Budget plus any sums deposited with Lender pursuant to this Section 2.1.10 to pay for such Line Item and not previously disbursed plus any Reserve Funds to the extent such Reserve Funds are available hereunder for the payment of such Line Item. From time to time and at any time during the Construction Period, Lender shall have the right, but not the obligation, to notify Borrower that it has determined a Shortfall exists as to any one or more Line Items. If Lender at any time shall so notify Borrower, Borrower shall, at its option within

five (5) days of Lender’s notification as aforesaid, either: (i) deposit with Lender an amount equal to such Shortfall, which Lender disburse to Borrower to the satisfaction of the costs of such Line Item prior to advancing any further Loan proceeds on account of such costs; (ii) post an irrevocable standby Letter of Credit in the amount of such Shortfall, in favor of Lender; (iii) to the extent permitted under Sections 2.1.7 and 5.1.33 , and following the satisfaction of the Initial Advance Conditions allocate the Contingency Reserve, with respect to the Line Item(s) in question, to the Shortfall, and provided, further that the amount of the remaining Contingency Reserve for such Line Item(s) (following the allocation to the Shortfall) is sufficient for such Line Item(s), as determined by Lender in its sole discretion; and (iv) to the extent permitted under Section 5.1.33 , and then only following the satisfaction of the Initial Advance Conditions, reallocate cost savings from the Development Budget in respect of the Loan (or other reallocations which are approved by Lender, in its sole discretion) in accordance with the terms of this Agreement, but only to the extent such cost savings can be allocated to the related Line Items. Borrower hereby agrees that Lender shall have a lien on and security interest in, for the benefit of Lender, any sums deposited pursuant to clause (i) above and that Borrower shall have no right to withdraw any such sums except for the payment of the aforesaid costs as approved by Lender. Lender shall have no obligation to make any further Advances of proceeds of the Loan as to any Line Item until the sums required to be deposited pursuant to clause (i) above as to such Line Item have been exhausted, or until Borrower has posted an irrevocable standby Letter of Credit pursuant to clause (iii ) above, as the case may be, and, in any such case, the Loan is back “in balance”. Any such sums not used as provided in said clause (i) shall be released to Borrower when and to the extent that Lender reasonably determines that the amount thereof is more than the excess, if any, of the remaining Project-Related Costs over the undisbursed balance of the Loan, provided, however, that should an Event of Default occur, Lender, in its sole discretion, may apply such amounts either to the remaining Project-Related Costs or to the immediate reduction of outstanding principal and/or interest under the Note.

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

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

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

2.1.14 Final Project Report and Development Budget . Attached hereto as Schedule II is Borrower’s detailed and definitive budget of all Project-Related Costs to be incurred by Borrower during the Construction Term and that will be disbursed out of Loan

proceeds subject to availability and satisfaction of all applicable conditions to Advances hereunder and under the Project Loan Agreement, being so indicated, delineated by each category of Project-Related Costs (each a “ Line Item ” or “ Budget Line ”) and further broken down to segregate Building Loan Costs and Project Loan Costs, which budget has been approved by Lender and Construction Consultant (the “ Development Budget ”). The portion of the Development Budget that includes only Building Loan Costs is referred to herein as the “ Building Loan Budget ” and the portion of the Development Budget that includes only Project Loan Costs is referred to herein as the “ Project Loan Budget .”

2.1.15 Miscellaneous .

(a) The making of an Advance by Lender shall not constitute Lender’s approval or acceptance of the construction theretofore completed. Lender’s inspection and approval of the Plans and Specifications, the construction of the Project Improvements, or the workmanship and materials used therein, shall impose no liability of any kind on Lender, the 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 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 15 ^th calendar day of the month preceding each Payment Date during the Construction Term: (a) if and to the extent undrawn funds remain available for Advance under the Project Loan from the Interest Reserve Line Item of the Project Loan Budget, and provided that that no Event of Default or monetary Default then exists under any of the Loan Documents or would occur as a result of such Project Loan Advance, the Monthly Debt Service Amount then due and owing shall be advanced by Lender by a Project Loan Advance under Interest Reserve Line Item of the Project Loan Budget; and (b) if no amount remains available under the Interest Reserve Line Item but and to the extent Interest Reserve Funds are on deposit in the Interest Reserve Account, and no Event of Default or monetary Default then exists under any of the Loan Documents, the Monthly Debt Service Payment Amount then due and payable shall be paid by application of funds from the Interest Reserve Account. Borrower and Lender acknowledge and agree that Lender may automatically make a Project Loan Advance or apply Interest Reserve Funds on deposit in the Interest Reserve Account on each Payment Date occurring during the Construction Term, in either instance, in accordance with this Section 2.3.1 , without the need for Borrower to submit a Draw Request or otherwise request such an Advance or application.

2.3.2 Payments Generally . The first Interest Period hereunder shall commence on and include the Closing Date and shall end on and include December 31, 2007. Thereafter

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

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

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

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

Section 2.4 Prepayments .

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

2.4.2 Mandatory Prepayments . On the next occurring Payment Date following the date on which Lender actually receives any Net Proceeds, if Lender is not

obligated to make such Net Proceeds available to Borrower for the Restoration of the Property or otherwise remit such Net Proceeds to Borrower pursuant to Section 6.4 hereof, Borrower shall prepay or authorize Lender to apply Net Proceeds as a prepayment of all or a portion of the outstanding principal balance of the Loan together with accrued interest through the end of the related Interest Period and any other sums due hereunder in an amount equal to one hundred percent (100%) of such Net Proceeds; provided , however , if an Event of Default has occurred and is continuing, Lender may apply such Net Proceeds to the Debt (until paid in full) in any order or priority in its sole discretion. Other than following an Event of Default, no Yield Maintenance Premium shall be due in connection with any prepayment made pursuant to this Section 2.4.2 .

2.4.3 Prepayments After Default . If following an Event of Default, payment of all or any part of the Debt is tendered by Borrower or otherwise recovered by Lender, such tender or recovery shall be (a) made on the next occurring Payment Date together with the Monthly Debt Service Payment and (b) deemed a voluntary prepayment by Borrower in violation of the prohibition against prepayment set forth in Section 2.4.1 hereof and Borrower shall pay, in addition to the Debt, an amount equal to the Yield Maintenance Default Premium.

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

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

Section 2.5 Defeasance .

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

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

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

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

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

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

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

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

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

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

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

(xi) Borrower shall pay all costs and expenses of Lender incurred in connection with the Defeasance Event, including (A) any costs and expenses associated with a release of the Lien of the Mortgage as provided in Section 2.6 hereof, (B) reasonable attorneys’ fees and expenses incurred in connection with the Defeasance Event, (C) the costs and expenses of the Rating Agencies, (D) any revenue, documentary stamp or intangible taxes or any other tax or charge due in connection with the transfer of the Note, or otherwise required to accomplish the defeasance and (E) the costs and expenses of Servicer and any trustee, including reasonable attorneys’ fees.

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

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

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

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

2.6.1 Release of Property .

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

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

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

Section 2.7 Clearing Account/Cash Management . On or prior to the Closing Date, Borrower shall, at its sole cost and expense, cause each of the following to occur to the satisfaction of Lender (collectively, the “ Cash Management Conditions ”): (a) Borrower shall establish an Eligible Account (the “ Clearing Account ”) with an Eligible Institution selected by Borrower and approved by Lender (the “ Clearing Bank ”); (b) Borrower shall cause the Clearing Bank to execute and deliver the Clearing Account Agreement in accordance with Section

2.7.1(b) ; (c) Borrower shall establish an Eligible Account (the “ Cash Management Account ”) with an the Cash Management Bank designated by Lender pursuant to and in accordance with the Cash Management Agreement and Section 2.7.2 hereof; (d) Borrower shall deliver a Payment Direction Letter to the Tenant under any Lease then or thereafter in effect and provide Lender with reasonably satisfactory evidence that the Tenant under such Lease has confirmed that it shall comply with the terms thereof; (e) Borrower will take all actions necessary to establish and maintain in favor of Lender a perfected first priority security interest in the Clearing Account and Cash Management Account and all deposits at any time contained in either such account and the proceeds thereof, including, without limitation, executing and filing UCC-1 Financing Statements; (f) Borrower shall deliver to Lender an opinion of Borrower’s counsel with respect to the due execution, authority, enforceability of the Cash Management Agreement and Clearing Account Agreement and confirming that Lender has first priority perfected security interest in the Cash Management Account and Clearing Account and such other matters as Lender may reasonably require, all such opinions in form, scope and substance satisfactory to Lender and Lender’s counsel; and (g) Borrower shall reimburse Lender for any and all cost and expenses, including reasonable attorney’s fees and disbursements, resulting form the foregoing.

2.7.1 Clearing Account .

(a) Borrower shall establish and maintain the Clearing Account with the Clearing Bank on or prior to the Closing Date, and thereafter Borrower shall maintain the Clearing Account at all times during the remainder of the term of the Loan. The Clearing Account shall be entitled “Acadia Atlantic Avenue LLC, as Borrower and Bear Stearns Commercial Mortgage, Inc., as Lender, pursuant to Loan Agreement dated as of December 26, 2007 — Clearing Account”. Borrower hereby grants to Lender a first-priority security interest in the Clearing Account and all deposits at any time contained therein and the proceeds thereof. All monies now or hereafter deposited into the Clearing Account shall be deemed additional security for the Debt.

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

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

(d) Upon the occurrence of an Event of Default, Lender may, in addition to any and all other rights and remedies available to Lender, apply any sums then present in the Clearing Account to the payment of the Debt in any order in its sole discretion.

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

(f) Borrower shall not further pledge, assign or grant any security interest in the Clearing Account or the monies deposited therein or permit any lien or encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1 Financing Statements, except those naming Lender as the secured party, to be filed with respect thereto.

(g) Borrower shall indemnify Lender and hold Lender harmless from and against any and all actions, suits, claims, demands, liabilities, losses, damages, obligations and costs and expenses (including litigation costs and reasonable attorneys fees and expenses) arising from or in any way connected with the Clearing Account and/or the Clearing Account Agreement (unless arising from the gross negligence or willful misconduct of Lender) or the performance of the obligations for which the Clearing Account was established.

2.7.2 Cash Management Account .

(a) Pursuant to and in accordance with the Cash Management Agreement, Borrower shall establish and maintain a segregated Eligible Account (the “ Cash Management Account ”) to be held by an Eligible Institution selected by Lender (the “ Cash Management Bank ”) in trust and for the benefit of Lender, which Cash Management Account shall be under the sole dominion and control of Lender. The Cash Management Account shall be entitled “Acadia Atlantic Avenue LLC as Borrower and Bear Stearns Commercial Mortgage, Inc., as Lender, pursuant to Loan Agreement dated as of December 26, 2007 — Cash Management Account.” Borrower hereby grants to Lender a first priority security interest in the Cash Management Account and all deposits at any time contained therein and the proceeds thereof and will take all actions necessary to maintain in favor of Lender a perfected first priority security interest in the Cash Management Account, including, without limitation, executing and filing UCC-1 Financing Statements and continuations thereof. Borrower will not in any way alter or modify the Cash Management Account and will notify Lender of the account number thereof. Lender and Servicer shall have the sole right to make withdrawals from the Cash Management Account and all costs and expenses for establishing and maintaining the Cash Management Account shall be paid by Borrower.

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

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

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

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

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

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

Section 2.8 Intentionally Omitted .

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

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

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

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

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

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

2.10.5 Government Approvals . Borrower shall have delivered to Lender evidence satisfactory to Lender that all Governmental Approvals necessary for the demolition of the existing improvements as contemplated by the Plans and Specifications, have been obtained and are in full force and effect.

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

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

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

2.10.9 General Contractor’s Agreement . Borrower and an unaffiliated General Contractor have entered into a Standard Form of Agreement between Owner and Contractor (Where the basis for payment is a STIPULATED SUM), dated as of October 18, 2007, that obligates the General Contractor to cause the Completion of the Improvements to occur prior to the Required Completion Date at a fixed price, reasonably acceptable to Lender and the Construction Consultant in both form and substance (once approved, the “ General Contractor’s Agreement ”). The General Contractor’s Agreement, shall have been duly executed and delivered by the parties thereto, shall be in full force and effect and Lender shall have received a certified copy or a fully executed duplicate original thereof. The General Contractor shall have duly executed and delivered to Lender a consent to the assignment of the General Contractor’s Agreement, in form and substance reasonably satisfactory to Lender, and Lender shall have received a certified copy or a fully executed duplicate original thereof. If General Contractor consist of more than one Person, then each such Person shall deliver a consent to the assignment of the General Contractor’s Agreement, in form and substance satisfactory to Lender, and Lender shall have received a certified copy or a fully executed duplicate original thereof.

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

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

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

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

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

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

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

2.10.15 Deliveries . Lender shall have received:

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

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

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

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

(e) Ratios . Evidence satisfactory to Lender that following the Initial Advance, the Loan-to-Cost Ratio shall be no greater than 75%;

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

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

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

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

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

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

2.10.19 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.

2.10.20 Satisfaction of Initial Advance Conditions . Borrower acknowledge that certain Initial Advance Conditions, including, without limitation, [SUBJECT TO REVIEW BY LENDER] [(i) delivery to and approval by Lender of final Plans and Specifications, (ii) delivery to and approval by Lender of the final Development Budget, Building Loan Budget, and Project Loan Budget, (iii) delivery to Lender of all permits required for the demolition of the existing improvements on the Property, (iv) delivery to Lender of evidence that Borrower maintains the Policies required under this Agreement, and (v) delivery to Lender of Borrower’s Requisition and all required accompanying documents with respect to the Initial Advance in accordance with Section 2.14.1 of this Agreement (the “ Unsatisfied Initial Advance Conditions ”)]. Borrower covenants and agrees that, prior to the Required Initial Advance Date, time being of the essence, it shall cause all of the Initial Advance Conditions, including, without limitation, the Unsatisfied

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

Section 2.11 Construction Advances . The obligation of Lender to make the Advances of the Building Loan after the Initial Advance shall be subject to the following conditions precedent (collectively, the “ Construction Advance Conditions”) , all of which conditions precedent must be satisfied prior to Lender making any such Advance:

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

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

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

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

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

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

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

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

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

(e) Affirmation of Payment . General Contractor’s Affirmation of Payment (“ Affirmation of Payment ”) (AIA Form G706) in the form attached hereto as Exhibit E .

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

2.11.6 Construction Consultant Certificate . Each draw request relating to Hard Costs shall be accompanied by a certificate or report of the Construction Consultant to Lender based upon a site observation of the Property made by the Construction Consultant not more than

thirty (30) days prior to the date of such draw, in which the Construction Consultant shall in substance: (i) verify that the portion of the Project Improvements completed as of the date of such site observation has been completed substantially in accordance with the Plans and Specifications; and (ii) state its estimate of (1) the percentages of the construction of the Project Improvements completed as of the date of such site observation on the basis of work in place as part of the Project Improvements and the Building Loan Budget, (2) the Hard Costs actually incurred for work in place as part of the Improvements as of the date of such site observation, (3) the sum necessary to complete construction of the Project Improvements in accordance with the Plans and Specifications, and (4) the amount of time from the date of such inspection that will be required to achieve Completion of the Improvements.

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

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

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

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

2.11.11 Ratios . Following such Advance (and any Project Loan Advance being made on such date), the Loan-to-Cost Ratio shall be no greater than 75%.

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

2.11.13 Required Equity Funds . Borrower shall furnish Lender with evidence in form and content satisfactory to Lender that, as of the date of each Advance, Borrower has invested Cash equity in an amount equal to or greater than (a) $5,356,660.00 or (b) 25% of the Total Project Costs or (c) the difference between the Development Budget and the maximum Loan amount of $16,150,000.00 for approved Project-Related Costs (the “ Required Equity Funds ”). Notwithstanding the foregoing, if the Borrower realizes cost savings from the development of the Project, either in the form of Hard Costs or Soft Costs, Advances may be advanced to Borrower provided that (i) the Borrower would not have less than $5,356,660.00 of cash equity in the Project through such Advance, (ii) the Debt Service Coverage Ratio shall be equal to or greater than 1.70 to 1.0 assuming a fully advanced Loan using a debt service constant of 7.50%, (iii) the Debt Service Coverage Ratio shall be equal to or greater than 1.20 to 1.0 assuming a fully advanced Loan using a debt service constant of 10.65%, and (iv) the loan-to-value ratio for the Property is no greater than 75% assuming a fully advanced Loan. If Borrower is in non-compliance solely with respect to condition (i) above, at Borrower’s option, either (A) any excess cost savings (funds in excess of the amount so that the Required Equity Funds shall continue to be satisfied) shall be deposited as follows: (1) 100% into the Replacement Reserve Account, or (2) at Lender’s discretion, into any other Reserves required by Lender pursuant to this Agreement, or (B) Borrower shall release Lender from its obligation to fund the remaining amounts of the Loan and Borrower and any guarantor under the Rate Lock Agreement pays for the breakage costs, if any, on the unfunded portion of the Loan payable pursuant to the Rate Lock Agreement. If Borrower is in compliance with respect to condition (i) above but is not in compliance with conditions (ii) , (iii) and (iv) above, any excess cost savings shall, at Borrower’s option, (A) be held back by Lender as additional collateral for the Loan until satisfaction of each of the requirements are satisfied, or (B) be deposited as follows: (1) 100% into the Replacement Reserve Account, or (2) at Lender’s discretion, into any other Reserves required by Lender pursuant to this Agreement, or (C) Borrower shall release Lender from its obligation to fund the remaining amounts of the Loan and Borrower and any guarantor under the Rate Lock Agreement pays for the breakage costs, if any, on the unfunded portion of the Loan payable pursuant to the Rate Lock Agreement.

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

2.11.15 Government Approvals . Lender shall not be required to make Construction Advances for any phase of the construction of the Project Improvements unless and until Borrower shall have delivered to Lender evidence satisfactory to Lender that all Governmental Approvals necessary for the construction of the phase of the Project Improvements to be constructed by Borrower as contemplated by the Plans and Specifications have been obtained and are in full force and effect, including, without limitation, the final approval of the Plans and Specifications by the City of New York for the Project Improvements and a building permit(s) covering the entire scope of work contemplated by the Project Improvements in accordance with the approved Plans and Specification “lawfully issued” to

Borrower within the meaning of Section 11-31(a) of the Zoning Resolution of the City of New York (the “ Zoning Resolution ).

Section 2.12 Final Advance .

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

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

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

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

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

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

(f) Certificates . Completed AIA Form G704 (Certificate of Substantial Completion) and completed AIA Form G707 (Consent of Surety to Final Payments) shall have been executed and delivered by Borrower’s Architect and General Contractor.

(g) Deposits to Reserves . If Lender determines that any Punch List Work or Deferred Maintenance Condition exists, the Punch List and Deferred Maintenance Deposit has been made, if Lender determines that the deposits are required to the Operating Reserve Account, the Operating Reserve Deposit has been made, and all other deposits to the Reserve Funds required by this Agreement have been made.

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

(i) Required Ratios at Completion . Lender shall have determined that, following the Final Advance (and taking into consideration the Final Project Loan Advance under the Project Loan): (i) the Loan-to-Cost Ratio shall be no more than 75%; (ii) the Stabilized Loan-to-Value Ratio shall be no more than 75%; (iii) the Stabilized Net Cash Flow for the entire

Property shall be not less than $2,064,000; (iv) the Debt Service Coverage Ratio based on Lender’s underwritten Net Operating Income and the greater of the actual debt service constant or 10.65% shall be 1.20 to 1.0 or greater; and (v) the Debt Service Coverage Ratio based on the Stabilized Net Cash Flow and the greater of the actual debt service constant or 7.50.% shall be 1.70 to 1.0 or greater (the “ Required Ratios at Completion ”), or Borrower shall have deposited with Lender Cash or a Letter of Credit to satisfy the Required Ratios at Completion in accordance with Section 2.12.2 .

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

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

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

(m) ICIP Eligibility . Evidence satisfactory to Lender that Borrower has obtained a Certificate of Eligibility under the Industrial and Commercial Incentive Program.

2.12.2 Amount of Final Advance . Except as expressly provided for below, the amount of the Final Advance shall be equal to the sum of: (a) any Retainage not previously released and advanced to Borrower; plus (b) the amount of any Punch List and Deferred Maintenance Reserve Deposit; plus (c) the positive difference, if any, between, (i) the Building Loan Amount and (ii) all amounts previously Advanced under the Building Loan (including the amounts described in clauses (a) and (b) of the sentence). The portion of the Final Advance described in clause (c) of the foregoing sentence is referred to herein as the “ Building Loan Earn Out Advance ” and the corresponding portion of the Final Project Loan Advance is referred to herein as the “ Project Loan Earn Out Advance ” and together with the Building Loan Earn Out Advance, the “ Earn Out Advances ”. Notwithstanding anything to the contrary provided for herein, the Earn Out Advances shall be reduced, pro rata, but not below $0.00, if and to the extent necessary for the Required Ratios at Completion to be achieved following the Final Advances. In addition, if the Required Ratios at Completion cannot be achieved even if the Earn Out Advances are reduced to $0.00, Lender shall have the right, but not the obligation, to apply any deposits held by Lender pursuant to the Rate Lock Agreement and any Interest Reserve Funds to the payment of the Building Loan and the Project Loan in such order and priority as Lender shall determine in its sole discretion. If the Required Ratios at Completion cannot be achieved even if the Earn Out Advances are reduced to $0.00 and the deposits, if any under the Rate Lock Agreement and the Interest Reserve Funds are applied to the payment of the Loan, Borrower shall deposit with Lender Cash or a Letter of Credit satisfactory to Lender in an amount equal to the amount which, if used to pay down the Loan, would result in Stabilized Loan-to-Value Ratio of 75%, and a Debt Service Coverage Ratio of 1.70 to 1.0, calculated based upon Lender’s determination on a pro-forma basis of Lender’s Stabilized Net Cash Flow for the

12 months immediately following and assuming a thirty (30) year amortization schedule based upon a debt service constant equal to the greater of the actual debt service constant and 7.50% and a Debt Service Coverage Ratio of 1.20 to 1.0, calculated based upon Lender’s determination on a pro-forma basis of Lender’s underwritten Net Operating Income for the 12 months immediately following and assuming a thirty (30) year amortization schedule based upon a debt service constant equal to the greater of the actual debt service constant and 10.65%.

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

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

Section 2.14 Method of Disbursement of Loan Proceeds .

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

(a) Borrower’s Requisition shall be accompanied by a completed and itemized Application and Certificate for Payment (AIA Document No. G702) attached hereto as Exhibit M or similar form approved by Lender, containing the certification of the General Contractor or contractor or subcontractor to whom such payment is made, as applicable, and Borrower’s Architect as to the accuracy of same, together with invoices relating to all items of Hard Costs covered thereby and accompanied by a cost breakdown showing the cost of work on, and the cost of materials incorporated into, the Improvements to the date of the requisition. The cost breakdown shall also show the percentage of completion of each line item on the Building Loan Budget, and the accuracy of the cost breakdown shall be certified by Borrower and by Borrower’s Architect. All such applications for payment shall also show all contractors and subcontractors, including Major Contractors and Major Subcontractors, by name and trade, the total amount of each contract or subcontract, the amount theretofore paid to each subcontractor as of the date of such application, and the amount to be paid from the proceeds of the Advance to each contractor and subcontractor;

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

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

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

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

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

2.14.2 Procedure of Advances .

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

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

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

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

2.14.4 Direct Advances to Third Parties . Lender may make, at Lender’s option, any or all Advances directly or through the Title Company to (i) any Contractor, as applicable, for construction expenses which shall theretofore have been approved by Lender and for which Borrower shall have failed to make payment after receipt by Borrower of such applicable Advance, (ii) Borrower’s Architect to pay its fees to the extent funds are allocated thereto in the Building Loan Budget if Borrower shall have failed to do so, (iii) the Construction Consultant to pay its fees, (iv) Lender’s counsel to pay its fees, (v) to pay (x) any installment of interest due under the Note, (y) any expenses incurred by Lender which are reimbursable by Borrower under the Loan Documents (including, without limiting the generality of the foregoing, reasonable attorneys’ fees and expenses and other fees and expenses incurred by Lender), provided that

Borrower shall theretofore have received notice from Lender that such expenses have been incurred and Borrower shall have failed to reimburse Lender for said expenses beyond any grace periods provided for said reimbursement under the Note, this Agreement or any of the other Loan Documents, or (z) following the occurrence and continuation of an Event of Default, any other sums due to Lender under the Note, this Agreement or any of the other Loan Documents, all to the extent that the same are not paid by the respective due dates thereof, and (vi) any other Person to whom Lender in good faith determines payment is due and any portion of the Loan so disbursed by Lender shall be deemed disbursed as of the date on which the Person to whom payment is made receives the same. The execution of this Agreement by Borrower shall, and hereby does, constitute an irrevocable authorization so to advance the proceeds of the Loan directly to any such Person or through the Title Company to such Persons in accordance with this Section 2.14.4 as amounts become due and payable to them hereunder and any portion of the Loan so disbursed by Lender shall be deemed disbursed as of the date on which the Person to whom payment is made receives the same. No further authorization from Borrower shall be necessary to warrant such direct Advances to such relevant Person, and all such Advances shall satisfy pro tanto the obligations of Lender hereunder and shall be secured by the Mortgage and the other Loan Documents as fully as if made directly to Borrower.

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

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

2.14.7 Trust Fund Provisions . All proceeds advanced hereunder shall be subject to the trust fund provisions of Section 13 of the Lien Law. The affidavit attached hereto as Exhibit D is made pursuant to and in compliance with Section 22 of the Lien Law, and, if so indicated in said affidavit, Building Loan proceeds will be used, in part, for reimbursement for payments made by the Borrower prior to the Initial Advance hereunder but subsequent to the commencement of the construction and equipping of the Improvements for items constituting Costs of the Improvement.

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

Section 2.15 Plan Review Process .

(a) Borrower hereby acknowledges and agrees that neither Lender nor the Construction Consultant’s approval of any Plans and Specifications (or any revisions thereto), nor its inspection of the performance of the construction, nor its right to inspect such work, shall

impose upon Lender and/or Construction Consultant any obligation or liability whatsoever with respect thereto, including, without limitation, any obligation or liability that might arise as a result of such work not being performed in accordance with applicable laws and/or requirements of public authorities or with the Plans and Specifications (and revisions thereto) approved by Lender and Construction Consultant or otherwise. The review or approval by Lender and Construction Consultant of any Plans and Specifications or any revisions thereto is solely for Lender’s benefit, and is without any representation or warranty whatsoever with respect to the adequacy, correctness or efficiency thereof or otherwise. The granting by Lender and/or Construction Consultant of its approval of any Plans and Specifications or any revisions thereto, shall not in any manner constitute or be deemed to constitute a judgment or acknowledgment by Lender as to their legality or compliance with laws and/or requirements of public authorities.

ARTICLE III.

CONDITIONS PRECEDENT

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

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

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

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

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

(b) Title Insurance . Lender shall have received the Title Insurance Policy issued by a title company acceptable to Lender (the “ Title Company ”) and dated as of the Closing Date, with reinsurance and direct access agreements acceptable to Lender. Such Title Insurance Policy shall (i) provide coverage in amounts satisfactory to Lender, (ii) insure Lender

that the Mortgage creates a valid lien on the Property of the requisite priority, free and clear of all exceptions from coverage other than Permitted Encumbrances and standard exceptions and exclusions from coverage (as modified by the terms of any endorsements), (iii) contain such endorsements and affirmative coverages as Lender may reasonably request, and (iv) name Lender as the insured. The Title Insurance Policy shall be assignable. Lender also shall have received evidence that all premiums in respect of such Title Insurance Policy have been paid.

(c) Survey . Lender shall have received a title survey for the Property, certified to the Title Company and Lender and their successors and assigns, in form and content satisfactory to Lender and prepared by a professional and properly licensed land surveyor satisfactory to Lender in accordance with the Accuracy Standards for ALTA/ACSM Land Title Surveys as adopted by American Land Title Association, American Congress on Surveying & Mapping and National Society of Professional Surveyors in 1999 or in such other form as Lender shall approve (the “ Survey ”). The Survey shall reflect the same legal description contained in the Title Insurance Policy referred to in clause (b) above and shall include, among other things, a metes and bounds description of the real property comprising part of the P

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