CONSTRUCTION LOAN AND SECURITY AGREEMENT

This Construction Loan and Security Agreement is made as of February 6th , 2009, by and between Tradeport Development III, LLC, a Connecticut limited liability company, with a usual place of business at 204 West Newberry Road, Bloomfield, Connecticut (the “Borrower”), Griffin Land & Nurseries, Inc., a Delaware corporation with a usual place of business at 204 West Newberry Road, Bloomfield, Connecticut (the “Guarantor”) and Berkshire Bank, a Massachusetts banking corporation, with a usual place of business at 31 Court Street, Westfield, Massachusetts.

1.00 DEFINITIONS AND RULES OF INTERPRETATION.

1.01 DEFINITIONS

The following terms shall have the meanings set forth in this Section 1.01 or elsewhere in the provisions of this Agreement or other Loan Documents referred to below:

“Advance” shall mean, any disbursement of the proceeds of the Construction Loan made or to be made by the Lender pursuant to this Agreement.

“Agreement” shall mean, this Agreement, including the Schedules and Exhibits hereto, all of which are incorporated herein by reference.

“Appraisal” shall mean, an appraisal of the value of the Project, determined on an orderly as stabilized basis, performed by a qualified independent appraiser approved by the Lender.

“Architect’s Contract” shall mean, the contract, dated January 19, 2009 between the Borrower and   Cutler Associates, Inc. (the “Borrower’s Architect”), to provide for the design of the Improvements and the supervision of the construction thereof.

 “Assignment of Leases” shall mean, the Assignment of Leases and Rents, dated or to be dated on or prior to the Closing Date, made by the Borrower in favor of the Lender, pursuant to which the Borrower assigns its right, title and interest as landlord in and to the Leases and the rents, issues and profits of the Project, such Assignment of Leases and Rents to be in form and substance satisfactory to the Lender.

“Assignment of Project Documents” shall mean, the Assignment of Project Documents, dated or to be dated on or prior to the Closing Date, made by the Borrower in favor of the Lender, pursuant to which the Borrower assigns and grants a security interest in the Borrower's right, title and interest in and to the Architect's Contract, the Construction Contract, the Plans and Specifications and the Project Approvals, such Assignment of Project Documents to be in form and substance satisfactory to the Lender.

 “Borrower” shall have the meaning as defined in the preamble hereto.

“Borrower’s Requisition”.  See Section 3.01.

“Building Consultant” shall mean Cutler Associates, Inc., having an address of 43 Harvard Street, Worcester, MA  01615 .

“Building Contractor shall mean Cutler Associates, Inc., having an address of 43 Harvard Street, Worcester, MA  01615 .

“Business Day” shall mean, any day on which the Lender is open for the transaction of banking business in Springfield, Massachusetts.

 “CERCLA”.    See Section 9.15(a).

 “Closing Date” shall mean, the first date on which the conditions set forth in Section 12.00 have been satisfied and any Advances are to be made.

 “Code” shall mean, the Internal Revenue Code of 1986.

“Collateral” shall mean, all of (a) the property, rights and interests of the Borrower that are or are intended to be subject to the security interests, assignments, and mortgage liens created by the Security Documents, including, without limitation, that which is defined in Section 14.00 hereof.

 “Commitment” shall mean, the Commitment Letter for the Construction Loan issued by the Lender to the Borrower, dated January  22, 2009.

 “Completion Date”  shall mean, twelve (12) months from the Closing Date.

 “Construction Contract” shall mean, the contract, dated January 8, 2009 between the Borrower and the Contractor, providing for the construction of the Improvements on the Land, as amended from time to time, with prior approval of the Lender.

 “Construction Inspector”  shall mean,  Swinerton Management and Consulting or, at the Lender's option, either an officer or employee of the Lender or consulting architects, engineers or inspectors appointed by the Lender from time to time.

 “Construction Loan”  shall mean, the construction loan which is the subject of this Agreement.

 “Construction Loan Amount” shall mean the lesser of (i)  seventy percent (70%) of total Project Costs approved by the Lender and the Construction Inspector to construct the Improvements; or (ii)  seventy percent (70%) of the appraised value of the land on an as-built basis , such sums are not to exceed Twelve Million and 00/100 Dollars ($12,000,000.00).

“Construction Loan Checking Account”.  See Section 3.03.

 “Construction Note”  shall mean, the Promissory Note  in the principal face amount of the Construction Loan Amount dated or to be dated on or prior to the Closing Date, made by the Borrower to the order of the Lender, such Promissory Note to be in form and substance satisfactory to the Lender.

“Construction Schedule”  shall mean, the schedule, broken down by trade, job and subcontractor, of the estimated dates of commencement and completion of construction of the Improvements, prepared by the Contractor, approved by the Lender and attached hereto as Exhibit “A” .­

“Contingency Reserve” shall mean, the amount(s) allocated as contingency reserve(s) in the Project Budget, to be advanced only in accor­dance with the provisions of Section 2.06 hereof.

“Contractor” shall collectively mean the Site Work Contractor and the Building Contractor.

“Contractor’s Subordination Agreement”.  See Section 11.05.

"Debt" means, as applied to any Person, as of any date of determination (without duplication):

provided , however , that in determining the Debt of any Person, (i) all liabilities for which such Person is jointly and severally liable with one or more other Persons (including, without limitation, all liabilities of any partnership or joint venture of which such Person is a general partner or co-venturer) shall be included at the full amount thereof without regard to any right such Person may have against any such other Persons for contribution or indemnity, and (ii) no effect shall be given to deposits, trust arrangements or similar arrangements which, in accordance with GAAP, extinguish Debt for which such Person remains legally liable.

“Debt Service Coverage Calculation Period” means twelve (12) calendar months commencing on December 1 ^st and ending on  November 30th, and it shall be conducted annually thereafter.”

“Debt Service Coverage Ratio” means on each calculation date for the applicable Debt Service Coverage Ratio Calculation Period, by calculating the ratio of (x) the Net Operating Income from the Mortgaged Premises for the immediately preceding Debt Service Coverage Ratio Calculation Period, to (y) the sum of the monthly payments of principal and interest which were due and payable under the Note for the immediately preceding Debt Service Coverage Ratio Calculation Period.

“Default” shall mean, a condition or event which would, with the giving of notice or lapse of time or both, constitute an Event of Default.

“Default Rate”  shall mean, the default rate of interest set forth in the Construction Note.

“Direct Costs” shall mean, the costs of the , the Personal Property and all labor, materials, fixtures, machinery and equipment required to construction, equipment and complete the Improvements in accordance with the Plans and Specifications.

“Disbursement Schedule”  shall mean, the schedule of the amounts of Advances anticipated to be requisitioned by the Borrower each month during the term of the construction of the Improvements (including an itemization of Direct Costs and Indirect Costs to be included in each such requisition), approved by the Lender and attached hereto as Exhibit “B” .

“Distribution”  shall mean, the declaration or payment of any distribu­tion of cash or cash flow to the  members of the Borrower, or other distribution on or in respect to any membership interests of the Borrower.

“Drawdown Date”  shall mean, the date on which any Advance is made or is to be made.

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

“Employee Benefit Plan”  shall mean, any employee benefit plan within the meaning of Section 3(3) of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate, other than a Multi- employer Plan.

Environmental Laws.  See Section 9.15.(a).

“ERISA” shall mean, the Employee Retirement Income Security Act of 1974, as amended and in effect from time to time.

“ERISA Affiliate” shall mean, any Person which is treated as a single employer with the Borrower under Section 414 of the Code.

“Event of Default”.    See Section 15.01

 “Financing Statements” shall mean, Uniform Commercial Code Form 1 Financing Statement(s) from the Borrower in favor of the Lender giving notice of a security interest in the Collateral, such financing statements to be in form and substance satisfactory to the Lender.

“Fund the Expansion” means a commitment by Lender to finance the expansion of the Project at the Mortgaged Premises following the issuance of a final Certificate of Occupancy.

“Funding Date of Construction Loan” shall mean, the date when the proceeds of the Construction Loan are actually advanced in accordance with this Agreement.

“Funding Request Documents” .  See Section 3.01.

“Generally Accepted Accounting Principles” shall mean, principles that are  consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors, as in effect from time to time; provided that a certified public accountant would, insofar as the use of such accounting principles is pertinent, be in a position to deliver an unqualified opinion (other than a qualification regarding changes in generally accepted accounting principles) as to financial statements in which such principles have been properly applied. ­

“Governmental Authority” shall mean, the United States of America, the State of Connecticut, any political subdivision thereof, the City/Town of Windsor, and any agency, authority, department, commission, board, bureau, or instrumentality of any of them.

“Gross Revenues” means for each Loan Month, all rents, revenues and other payments received by, or for the benefit of Borrower in cash or current funds or other consideration from any source whatsoever in connection with its ownership, operation and management of the Mortgaged Premises, including all payments received by Borrower from all tenants or other occupants of the Mortgaged Premises; provided, however, secured deposits paid to Borrower by tenants under leases at the Mortgaged Premises and insurance proceeds following a casualty or damage by fire or other cause at the Mortgaged Premises, shall not be included in Gross Revenues.

“Guarantor” shall mean, Griffin Land & Nurseries, Inc.

“Guaranty” shall mean, the Unconditional Guaranty of Payment and Per­formance, dated or to be dated on or prior to the Closing Date, made by the Guarantor in favor of the Lender, pursuant to which the Guarantor guarantees to the Lender the payment and perfor­mance of the Obligations (such Guaranty to be in form and sub­stance satisfactory to the Lender) limited to the period of time from the Closing to the receipt of the Certificate of Occupancy and performance of the completion of the Project.

“Hazardous Materials”.    See, Section 9.15(b).

“Head Office” shall mean 31 Court Street, Westfield, Massachusetts.

“Impositions”  means with respect to Borrower relating to the Mortgaged Premises, all taxes of every kind and nature, sewer rents, charges for water, for setting or repairing meters and for all other utilities serving the Mortgaged Premises, and assessments, levies, inspection and license fees and all other charges imposed or assessed against the Mortgaged Premises or any portion thereof, including the income derived from the Mortgaged Premises and any stamp or other taxes which might be required to be paid with respect to the Loan Documents, any of which might, if unpaid, result in a lien on the Mortgaged Premises or any portion thereof, regardless of whom assessed.

“Improvements” shall mean, a Class “A” build-to-suit industrial warehouse containing 304,200 square feet for the Primary Tenant to be constructed on the Land in accordance with the Plans and Specifications.

“Incipient Default” means any event or condition which, with the giving of notice or the lapse of time, or both, would become an Event of Default.

“Indebtedness” shall mean, all obligations, contingent and otherwise, that in accordance with generally accepted accounting principles should be classified upon the Borrower’s balance sheet as liabil­ities, or to which reference should be made by footnotes thereto, including in any event and whether or not so classified: (a) all debt and similar monetary obligations, whether direct or indi­rect; (b) all liabilities secured by any mortgage, pledge, security interest, lien, charge, or other encumbrance existing on property owned or acquired subject thereto, whether or not the liability secured thereby shall have been assumed; and (c) all guarantees, endorsements and other contingent obligations whether direct or indirect in respect of indebtedness of others, includ­ing any obligation to supply funds to or in any manner to invest in, directly or indirectly, the Borrower, to purchase indebtedness, or to assure the owner of indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling Borrower to make payment of the indebtedness held by such owner or otherwise, and the obligations to reimburse the issuer in respect of any letters of credit.

“Indemnity Agreement”  shall mean, the Indemnity Agreement Regarding Hazardous Materials, dated or to be dated on or prior to the Closing Date, made by the Borrower and the Guarantor in favor of the Lender, pursuant to which the Borrower and the Guarantor agree to indemnify the Lender with respect to Hazardous Materials and Environmental Laws, such Indemnity Agreement to be in form and substance satisfactory to the Lender.

“Indirect Costs”  shall mean, Title insurance premiums, survey charges, engineering fees, architectural fees, real estate taxes, ap­praisal costs, loan fees and interest payable to the Lender under the Construction Loan, premiums for insurance, marketing, advertising and leasing costs, brokerage commissions, legal fees, accounting fees, overhead and administrative costs, and all other expenses which are expenditures relating to the Project and are not Direct Costs.

"Interest Charges" for any period shall mean all interest (including the imputed interest factor in respect of Capitalized Leases) and all amortization of debt discount and expense on any particular Indebtedness for which such calculations are being made. Computations of Interest Charges on a proforma basis for indebtedness having a variable interest rate shall be calculated at the rate in effect on the day of any determination.

"Interest Expense" means for any period, the sum of the following amounts for the Borrower: (a) the aggregate amount of all interest accrued (whether or not actually paid) during such period in respect of Debt (including, without limitation, imputed interest on Capital Leases), plus (b) amortization of debt discount and expense.

“Investments” shall mean, all expenditures made and all liabilities incurred (contingently  or otherwise) for the acquisition of stock or Indebtedness of, or for loans, advances, capital contributions or transfers of property to, or in respect of any guaranties (or other commitments as described under Indebtedness), or obliga­tions of, any Person. In determining the aggregate amount of Investments outstanding at any particular time:  (a) the amount of any Investment represented by a guaranty shall be taken at not less than the principal amount of the obligations guaranteed and still outstanding; (b) there shall be included as an Investment all interest accrued with respect to Indebtedness constituting an Investment unless and until such interest is paid; (c) there shall be deducted in respect of each such Investment any amount received as a return of capital (but only by repurchase, redemp­tion, retirement, repayment, liquidating dividend or liquidating distribution); (d) there shall not be deducted in respect of any

Investment any amounts received as earnings on such Investment, whether as dividends, interest or otherwise, except that accrued interest included as provided in the foregoing clause (b) may be deducted when paid; and (e) there shall not be deducted from the aggregate amount of Investments any decrease in the value there­of.

“Land” shall mean, the real property located at 100 International Drive, Windsor, Connecticut, and described in Exhibit “C” to this Agreement.

“Lease(s)” shall mean, leases, licenses and agreements, whether written or oral, relating to the use or occupation of space in the Improve­ments or on the Land by Persons other than the Borrower, and as of the date hereof, it shall mean that certain Lease between the Borrower and the Primary Tenant dated January 9, 2009 concerning the Mortgaged Premises.

“Lender”  shall mean, Berkshire Bank, its successors and assigns.

“LIBOR” (London Interbank Offered Rate) means the rate for deposits in U.S. Dollars for a period of the Designated Maturity, which appears on Telerate Page 3750 as of 11:00 AM. London time, on the day that is two London banking days prior to the Reset Date.  If such rate does not appear on Telerate Page 3750, the rate for that adjustment date will be the arithmetic mean of the rates quoted by major banks in London, selected by the Lender for the Designated Maturity, as of 11:00 A.M., London time, on the day that is two London banking days prior to the Reset Date.

"LIBOR Interest Rate" means, for the purpose of this Agreement, the 30-day LIBOR Rate as announced in the Telerate from time-to-time, plus two hundred seventy-five (275) basis points; provided, however, for the purposes of this Agreement the 30-day LIBOR Rate, plus two hundred seventy-five (275) basis points, shall have a floor of (and shall never be lower then) 4% during the Interest Only Period (as defined in the Note).

"LIBOR Loan" means any Loan when and to the extent that the interest rate therefore is determined by reference to the LIBOR Interest Rate.

“Loan Documents” shall mean, this Agreement, the Construction Note, the Indemnity Agreement and the Security Documents, and all other agreements, documents and instruments now or hereafter evidencing, securing or otherwise relating to the Construction Loan.

"London Banking Day" shall mean any Banking   Day on which commercial banks are open for international business (including dealing in U.S. dollar ($) deposits) in London, England and Boston, Massachusetts.

“Maturity Date” shall mean, the earlier of (i) the date of the termination of the Lender’s obligation to make Advances pursuant to Section 15.02 hereof of (ii) ten (10)  years from the Closing Date, whichever occurs first.

“Mortgage”  shall mean, the  Open-End Construction Mortgage, dated or to be dated on or prior to the Closing Date, made by the Borrower in favor of the Lender, pursuant to which the Borrower grants a first mortgage lien and first security interest in and to the Project, such Mortgage to be in form and substance satis­factory to the Lender.

“Mortgaged Premises” shall mean the Land, Improvements and other property secured by the Mortgage.

“Net Cash Flow” for each Loan Month shall mean, Net Operating Income, reduced by all monthly payments of principal and interest under the Construction Note.

 “Net Operating Income”  for each Loan Month shall be calculated by Lender based upon Lender’s review of Borrower’s financial statements provided to Lender, together with such other financial information as Lender may request, and shall mean the Gross Revenues for the Loan Month less all Operating Expenses for the Loan Month.  For the purposes of testing Debt Service Coverage Ratio for the initial test, annual Net Operating Income shall mean all in-place Gross Revenues evidenced by a current rent roll (annualized) less budgeted Operating

Expenses (budget subject to review and approval by Lender) for the upcoming twelve (12) month period, adjusted for interest and non-cash expenses.

 “Obligations”  shall mean, all indebtedness, obligations and liabilities of the Borrower to the Lender existing on the date of this Agreement or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, including, without limitation, those arising or incurred under this Agreement or any of the other Loan Documents, including without limitation any SWAP Agreement(s) or in respect of any of the Advances or the Construction Note or other instruments at any time evidencing any thereof.

“Outstanding” shall mean, that with respect to the Advances or the Construction Loan, the aggregate unpaid principal thereof, together with any unpaid and accrued interest thereon as of any date of determination.

“Permitted Liens”  shall mean, liens, security interests and other encumbrances, permitted by Section 11.05, as well as those encumbering the land and Improvements mortgaged to the Lender as described in Exhibit “D” .

“Person” shall mean, any individual, corporation, partnership, trust, unincorporated association, business, or other legal entity, and any government or any governmental agency or political subdivi­sion thereof.

“Personal Property”  shall mean, all materials, furnishings, fixtures, furniture, machinery, equipment and all items of tangible per­sonal property now or hereafter owned or acquired by the Borrow­er, wherever located, and either (i) to be located on or incor­porated into the Land or the Improvements, (ii) used in connec­tion with the construction of the Improvements or (iii) to be used in connection with the operation or maintenance of the Land or the Improvements or both.

“Plans and Specifications”  shall mean, the plans and specifications for the Improvements prepared by the Borrower's Architect and more particularly identified on Exhibit “E” attached hereto.

“Primary Tenant” means The Tire Rack, Inc.

“Project”  shall mean, the Land, Improvements and Personal Property.

“Project Approvals”  shall mean, all approvals, consents, waivers, orders, agreements, acknowledgments, authorizations, permits and licenses required under applicable Requirements or under the terms of any restriction, covenant or easement affecting the Project, or otherwise necessary or desirable, for the ownership and acquisition of the Land and the Improvements, the construc­tion and equipping of the Improvements, and the use, occupancy and operation of the Project following completion of construction of the Improvements, whether obtained from a Governmental Au­thority or any other Person.

“Project Budget”  shall mean, the budget for total estimated Project Costs, submitted by the Borrower, approved by the Lender and the Construction Inspector, and attached hereto as Exhibit “F” (as amended from time to time with the prior approval of the Lender), which includes: (a) a line item cost breakdown for Direct Costs by trades, jobs and subcontractors; (b) a line item cost break­ down for Indirect Costs; (c) a construction schedule setting forth the anticipated dates of completion of incremental portions of the various subcategories of work in the construction and equipping of the Project; and (d) a schedule of the sources of funds to pay Project Costs, indicating by item the portion of Project Costs to be funded through the Construction Loan and Required Equity Funds.

“Project Costs”  shall mean, the sum of all Direct Costs and Indirect Costs that have been or will be incurred by the Borrower in connection with the acquisition of the Land, the construction, equipping and completion of the Improvements, the marketing and leasing of leasable space in the Improvements, and the operation and carry­ing of the Project through the Maturity Date.

“Real Estate”  shall mean, all real property at any time owned, leased (as lessee or sublessee) or operated by the Borrower.

“Record”  shall mean, the grid attached to the Construction Note, or the continuation of such grid, or any other similar record, including computer records, maintained by the Lender with respect to the Construction Loan.

“Release”.  See Section 9.16(c) (iii).

“Requirements” shall mean, any law, ordinance, code, order, rule or regulation of any Governmental Authority relating in any way to the acquisition and ownership of the Project, the construction of the Improvements, or the use, occupancy and operation of the Project following the completion of construction of the Improve­ments, including those relating to subdivision control, zoning, building, use and occupancy, fire prevention, health, safety, sanitation, handicapped access, historic preservation and pro­tection, tidelands, wetlands, flood control, access and earth removal, and all Environmental Laws.

“Required Equity Funds” shall mean, with respect to the Construction Loan, Eight Million Nine Hundred Fifteen Thousand Eight Hundred Ninety One ($8,915,891.00) which amount shall be infused by Borrower prior to any Advance hereunder.

“Retainage”.  See Section 2.03.

“Security Documents” shall mean, the Mortgage,  the Assignment of Project Documents, the Assignment of Leases, the Financing Statements and the Guaranty, and any other agreement, document or instrument now or hereafter securing the Obligations.

“Site Work Contractor” shall mean the Simscroft Echo Farms Incorporated.

“Survey”  shall mean, an instrument survey of the Land and the Improve­ments  prepared in accordance with the Lender's survey require­ments, such survey to be satisfactory to the Lender in form and substance.

“Surveyor Certificate”  shall mean, with respect to any Survey, a cer­tificate executed by the surveyor who prepares such Survey dated as of a recent date and containing such information relating to the Project as the Lender or the Title Insurance Company may require, such certificate to be satisfactory to the Lender in form and substance.

“Swap Agreement” means the ISDA Master Agreement (1992 multicurrency – cross border) dated as of  February 6, 2009 between Lender and Borrower, together with the Schedule thereto and the Confirmation thereunder, each dated as of  February 6, 2009.

“Telerate” means, when used in connection with any designated page and any floating rate option, the display page so designated on Bridge’s Telerate Service (or such other page as may replace that page on that service), or such other service as may be nominated as the information vendor, for the purpose of displaying rates or prices comparable to that floating rate option.

“Taking” shall mean, any condemnation for public use of, or damage by reason of, the action of any Governmental Authority, or any transfer by private sale in lieu thereof, either temporarily or permanently.

"Tangible Net Worth" means as of any date of determination, the net value of the Borrower's Stockholder's Equity, as defined according to GAAP less the book value as of such date of Intangible Assets.

“Termination Date”  shall mean, (i) the Maturity Date, or (ii)  the date of the termi­nation of the Lender's obligations to make Advances pursuant to Section 15.02 hereof, whichever date occurs first.

“Title Insurance Company” shall mean, First American Title Insurance Company.

“Title Policy” shall mean, an ALTA standard form title insurance policy issued by the Title Insurance Company (with such reinsurance or co-insurance as the Lender may require, any such reinsurance to be with direct access endorsements) in an amount not less than Twelve Million and 00/100 Dollars ($12,000,000.00) insuring the priority of the Mortgage and that the Borrower holds marketable fee simple title to the Project, subject only to such exceptions as the Lender may approve and which shall not contain exceptions for mechanics liens, persons in occupancy or matters which would be shown by a survey, shall not insure over any matter except to the extent that any such affirmative insurance is acceptable to the Lender in its sole discretion, and shall contain a pending disbursements clause or endorsement and such other endorsements and affirmative insurance as the Lender in its sole discretion may require.

1.02            RULES OF INTERPRETATION.

(a) A reference to any agreement, budget, document or schedule shall include such agreement, budget, document or schedule as revised, amended, modified or supplemented from time to time in accordance with its terms and the terms of this Agreement.

(b) The singular includes the plural and the plural includes the singular.

(c) A reference to any law includes any amendment or modification to such law.

(d) A reference to any Person includes its permitted successors and permitted assigns.

(e) Accounting terms not otherwise defined herein have the meaning assigned to them by generally accepted accounting principles applied on a consistent basis by the accounting entity to which they refer.

(f) The words "include", "includes" and "including" are not limiting.

(g) The words "approval" and "approved", as the context so determines, means an approval in writing given to the party seeking approval after full and fair disclosure to the party giving approval of all material facts necessary in order to determine whether approval should be granted.

(h) Reference to a particular Section refers to that section of this Agreement unless otherwise indicated.

(i) The words "herein", "hereof", "hereunder" and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement.

2.00    AGREEMENT TO MAKE ADVANCES; LIMITATIONS.

2.01     AGREEMENT TO MAKE ADVANCES .

Subject to the terms and conditions of this Agreement and following the infusion of the Required Equity Funds from the Borrower into the Project, the Lender agrees to lend to the Borrower and the Borrower  shall borrow from time to time between the Closing Date and the Termination Date upon submission by the Borrower of a Draw Request in accordance with Section 3.01, such amounts as are requested by the Borrower up to a maximum aggregate principal amount equal to the Construction Loan Amount to pay for Project Costs actually incurred by the Borrower and reflected in the Project Budget as being funded by the Construction Loan. Each Draw Request for an Advance hereunder shall constitute a representation and warranty by the Borrower that the conditions set forth in Section 12.00, in the case of the initial Advance, and Section 13.00, in the case of all other Advances, have been satisfied on the date of such Draw Request.

2.02     PROJECT BUDGET .

The Project Budget reflects, by category and line items, the purposes and the amounts for which funds to be Advanced by the Lender under this Agreement are to be used. The Lender shall not be required to disburse for any

category or line item more than the amount specified therefore in the Project Budget, unless reflected on a revised Project budget previously approved by Lender.

2.03    AMOUNT OF ADVANCES .

In no event shall the Lender be obligated to Advance more than the Construction Loan Amount, or, if less, total Project Costs actually incurred by the Borrower, less, in either case, the Required Equity Funds. In no event shall any Advance for Direct Costs of constructing the Improvements exceed an amount equal to (a) the total value of the labor, materials, fixtures, machinery and equipment completed, approved and incorporated into the Land or the Improvements prior to the date of the Draw Request for such Advance, less (b) retainage in an amount equal to five  percent (5%) of such total value ("Retainage"), less (c) the total amount of any Advances previously made by the Lender for such Direct Costs. Retainage shall not be required to be Ad­vanced by the Lender to the Borrower.    With respect to any other Direct Costs and all Indirect Costs, in no event shall any Advance exceed an amount equal to the amount of such Direct Costs and Indirect Costs approved by the Lender, incurred by the Borrower prior to the date of the Draw Request for such Advances, and theretofore paid or to be paid with the proceeds of such Advance, less the total amount of any Advances previously made by the Lender for such Direct Costs and Indirect Costs.

2.04 QUALITY OF WORK .

No Advance shall be due unless all work done at the date the Draw Request for such Advance is submitted is done in a good and workmanlike manner and without defects, as confirmed by the report of the Construction Inspec­tor.

2.05 COST OVERRUNS AND SAVINGS .

If the Borrower becomes aware of any change in Project Costs which will increase or decrease a category or line item of Project Costs reflected on the Project Budget (as the Project Budget is revised from time to time and approved by the Lender), the Borrower shall immediately notify the Lender in writing and promptly submit to the Lender for its approval a revised Project Budget. If the revised Project Budget indicates an increase in a category or line item of Project Costs, no further Advances need be made by the Lender unless and until (a) the revised Project Budget so submitted by the Borrower is approved by the Lender, and (b) the Borrower has deposited with the Lender any additional Required Equity Funds required in accordance with this Agreement (if any). If the revised Project Budget indicates a decrease in a category or line item of Project Costs, no reductions in Project Costs will be made or savings reallocated by the Borrower unless and until (a) the revised Project Budget so submitted by the Borrower is approved by the Lender, and (b) in the case of decreases in a category or line item of Direct Costs, the Borrower has furnished the Lender and the Construction Inspector with evidence satis­factory to them that the labor performed and materials supplied in connection with such category or line item of Direct Costs have been satisfactorily completed in accordance with the Plans and Specifications and paid for in full.

2.06 CONTINGENCY RESERVE

The amount allocated as Con­tingency Reserve in the Project Budget is not intended to be disbursed and will only be disbursed upon the prior approval of the Lender, which approval will not be unreasonably withheld. The disbursement of a portion of Contingency Reserve shall in no way prejudice the Lender from withholding disburse­ment of any further portion of Contingency Reserve.

2.07 OVER ADVANCES

The making of loans, Advances or credits by the Lender in excess of the Construction Loan Amount is for the benefit of the Borrower hereunder and shall be at the Lender's sole discretion. Such loans, Advances, and credits shall con­stitute Advances and shall be repayable with interest as provided in the Construction Note. The making of any such loans, Advances or credits in excess of the Construction Loan Amount on any one occasion shall not obligate the Lender to make any such loans, Advances or credits on any other occasion nor permit such loans, Advances or credits to remain outstanding.

2.08   MANDATORY BORROWING

Subject to Section 10.14, notwithstanding anything to the contrary contained herein, and provided that the Lender has not commenced exercise of its cumulative rights and remedies following an Event of Default, the Borrower must borrow the Twelve Million and 00/100 Dollars ($12,000,000.00) on or before the last day of the Interest Only Period (defined in the Construction Note).  In the event that the Borrower completes construction for less than the Project Budget, it is still required to draw down the unused portion of the Loan which shall be held in an interest bearing cash collateral account with the Lender (the “Reserve Account”).  The Borrower, provided no Event of Default has occurred, may  use the Reserve Account following the first anniversary of the date hereof, to pay its monthly principal obligations to the Lender under the Construction Note.

2.09   FUNDS DEPOSITED WITH LENDER

All funds of Borrower which are deposited with Lender pursuant to this Agreement or any other Loan Documents shall be held in an interest bearing account and all funds which are deposited in the Reserve Account may be co-mingled with Lender’s general funds.  Notwithstanding any information or requirement to the contrary set forth earlier in this Agreement, any interest which accrues on said funds shall, at Lender’s sole option, be paid to Borrower or be held as part of the applicable funds being held by Lender for the same purpose for which the principal sum of said funds are being held by the Lender.  To secure all of Borrower’s Obligations to Lender under the Loan Documents, Borrower hereby grants to Lender a security interest in all funds now or hereafter deposited with the Lender in the Reserve Account or otherwise in Lender’s possession, custody or control  pursuant to the provisions of this Agreement.  So long as any Event of Default exists, Lender shall have such rights with respect to such funds and any interest accrued thereon as are provided by applicable law and may apply such funds toward the satisfaction of Borrower’s Obligations hereunder or under any other Loan Documents in Lender’s sole discretion.  Without limiting any of the foregoing provisions, at the exclusive request of Lender, Borrower shall execute and deliver from time-to-time such documents as may be necessary or appropriate, in Lender’s sole discretion to assure Lender that it has a first priority perfected security interest in and lien on, all funds deposited in the Reserve Account or otherwise with the Lender.

3.00 MAKING THE ADVANCES

3.01 DRAW REQUEST

At such time as the Borrower shall desire to obtain an Advance, the Borrower shall complete, execute and deliver to the Lender the Borrower's Requisition and the Funding Request Documents in the form of Exhibit “G” attached hereto (hereinafter referred to as "Bor­rower's Requisition"). Each Borrower's Requisition shall be accompanied by:

(a) If the Borrower's Requisition includes payments for Direct Costs, it shall be accompanied by a completed and itemized Direct Cost Statement in the form of Schedule I of Exhibit “G” attached hereto, executed by the Borrower, ­ together with invoices for all items of Direct Cost covered thereby; .

(b) If the Borrower's Requisition includes amounts to be paid to the Contractor under the Construction Contract, it shall be accompanied by: (i) a completed and fully itemized Application and Certificate for Payment (AIA Document G702 or similar form approved by the Lender) containing the certification of the Contractor and the Borrower's Architect as to the accuracy of same, and showing all subcontractors and materialmen by name and trade or job, the total amount of each subcontract or purchase order, the amount theretofore paid to each subcontractor or materialman as of the date of such application, and the amount to be paid from the proceeds of the Advance to each subcontractor and materialman; (ii) a certificate of the Contractor in the form of Exhibit “H” attached hereto; (iii) a certificate of the Borrower's Architect in the form of Exhibit “I”   attached hereto; and (iv) copies of requisitions and invoices from subcontractors and materialmen supporting all items of cost covered by such application;

(c) If the Borrower's Requisition includes payments for Indirect Costs, it shall be accompanied by a completed and itemized Indirect Cost Statement in the form of Schedule II of Exhibit “G” attached hereto, executed by the Borrower, together with invoices for all items of Indirect Costs covered thereby;

(d) written lien waivers from the Contractor and such laborers, subcontractors and materialmen for work done and materials supplied by them which were paid for pursuant to the next preceding Draw Request;

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

(f) copies of all change orders and construction change directives, accompanied by a change order summary prepared by and executed by the Borrower, copies of all subcontracts, and, to the extent requested by the Lender, of all inspection or test reports and other documents relating to the construction of the Improvements, not previously delivered to the Lender;

(g) copy of the Construction Inspection Report; and

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

3.02 NOTICE AND FREQUENCY OF ADVANCES

Each Draw Request shall be submitted to the Lender at least fourteen (14) Business Days prior to the date of the requested Advance, and no more fre­quently than once each month.­

3.03 DEPOSIT OF FUNDS ADVANCED

The Borrower shall open and maintain a non-interest bearing Construction Loan checking account with the Lender (the "Construction Loan Checking Account"). Except as otherwise provided for in Sections 3.04 and 3.05 hereof, the Lender shall deposit the proceeds of each Advance into the Construction Loan Checking Account.

3.04 ADVANCES TO CONTRACTOR

In its sole discretion, following an Event of Default, the Lender may make any or all Advances through the Title Insurance Company and any portion of the Construction Loan so disbursed by the Lender shall be deemed disbursed as of the date on which the Lender makes such disbursement.  At its option, in its sole discretion, the Lender may make any or all Advances for Direct Costs incurred under the Construction Contract directly to Contractor for deposit in an appropriately designated special bank account, and the execution of this Agreement by the Borrower shall, and hereby does, con­stitute an irrevocable authorization so to advance the proceeds of the Construction Loan. No further authorization from the Borrower shall be necessary to warrant such direct advances to the Contractor and all such advances shall satisfy pro tanto the obligations of the Lender hereunder and shall be secured by the Mortgage  and the other Security Documents as fully as if made directly to the Borrower.

3.05 ADVANCES TO TITLE INSURANCE COMPANY OR TO OTHERS

In its sole discretion, following an Event of Default, the Lender may make any or all Advances through the Title Insurance Company and any portion of the Construction Loan so disbursed by the Lender shall be deemed disbursed as of the date on which the Lender makes such disbursement.  At its option, the Lender may make Advances of portions of the proceeds of the Construction Loan to any Person to whom the Lender in good faith determines payment is due and any portion of the Construction Loan so disbursed by the Lender shall be deemed disbursed as of the date on which the Lender makes such disbursement.  The execution of this Agreement by the Borrower shall, and hereby does, constitute an irrevocable authorization so to advance the proceeds of the Construction Loan. No further authorization from the Borrower shall be necessary to warrant such direct Advances and all such Advances shall satisfy pro tanto the obligations of the Lender hereunder and shall be secured by the Mortgage and the other Security Documents as fully as if made directly to the Borrower.

3.06 ADVANCES DO NOT CONSTITUTE A WAIVER

No Advance made by the Lender shall constitute a waiver of any of the conditions to the Lender's obligation to make further Advances nor, in the event the Borrower fails to satisfy any such condition, shall any such Advance have the effect of precluding the Lender from thereafter declaring such failure to satisfy a condition to be an Event of Default.

4.00   THE CONSTRUCTION NOTE; INTEREST; MATURITY; SWAP AGREEMENT; PAYMENTS AND PREPAYMENT.

4.01    THE CONSTRUCTION NOTE

The obligation of the Borrower to pay the Construction Loan Amount or, if less, the aggregate unpaid principal amount of all Advances made by the Lender hereunder plus accrued interest thereon, shall be evidenced by the Construction Note, a copy of which is annexed hereto as Exhibit “J” .  In the event the Construction Note­ is lost, destroyed or mutilated at any time prior to payment in full of the indebtedness evidenced thereby, the Borrower shall execute a new note substantially in the form of the Note. The Construction Note shall not be necessary to establish the indebtedness of the Borrower to the Lender on account of Advances made under this Agreement.

4.02  [RESERVED]

4.03            SWAP AGREEMENT

Borrower shall enter into the Swap Agreement with Lender or its affiliates with respect to all of the Construction Note (any such agreement or arrangement shall be in form and substance reasonably satisfactory to Lender) in order to hedge or minimize risk with respect to the fluctuation of interest rates.  The Swap Agreement shall be for a stipulated term equal to the term of the Note shall, at all times, be in a notional amount equal to Twelve Million and 00/100 Dollars ($12,000,000.00).  If the Swap Agreement shall expire and leave any principal of the Construction Note uncovered thereby, or if for any other reason any principal portion of the Construction Note be uncovered by the Swap Agreement, such uncovered amount shall be immediately due and payable if the Borrower is unable to negotiate a new Swap Agreement for such uncovered amount with Lender within four (4) business days following notice from Lender to Borrower.  In the event Lender no longer offers Swap Agreements, Borrower may negotiate a new Swap Agreement with a different lender for such uncovered amount.  The Swap Agreement is subject to termination pursuant to certain provisions described therein, including without limitation, any payment of principal of the Construction Note prior to the due date of such payment.

4.04 THE RECORD

The Borrower irrevocably authorizes the Lender to make or cause to be made, at or about the time of the Drawdown Date of any Advance or at the time of receipt of any payment of the principal of the Construction Note, an appropriate notation on the Lender's Record reflecting the making of such Advance or (as the case may be) the receipt of such payment. The outstanding amount of the Construction Loan set forth on the Lender's Record shall be prima facie evidence of the principal amount thereof owing and unpaid to the Lender, but the failure to record, or any error in so recording, any such amount on the Lender's Record shall not limit or otherwise affect the obligations of the Borrower here­ under or under the Note to make payments of principal or interest on the Construction Note when due.

4.05 INTEREST ON ADVANCES

Each Advance shall bear interest for the period commencing on the Drawdown Date of such Advance until paid in full at the rate or rates set forth in the Construction Note. The Borrower promises to pay interest on each Advance in arrears in the manner and at the time set forth in the Construction Note.

4.06   CALCULATION AND PAYMENT OF INTEREST

Interest on each LIBOR Loan shall be calculated on the basis of a year of 360 days for the actual number of days elapsed for the applicable interest period.

Interest on the Loans shall be paid in immediately available funds at the Principal Office of the Lender.  Interest shall be calculated daily and payable monthly, in arrears, in accordance with the terms of the Construction Note.

4.07 PRINCIPAL PAYMENTS

Principal payments shall be made in accordance with the Construction Note.   All unpaid  principal and all unpaid and  accrued interest thereon shall be due and payable, in full on the Maturity Date.

4.08 MATURITY

 The Borrower promises to pay the Lender on the Maturity Date, and there shall become absolutely due and payable on the Maturity Date, all of the unpaid principal on the Construction Loan outstanding on such date together with any  and all accrued and unpaid interest thereon.

4.09   FUNDING LOSS INDEMNIFICATION

The Borrower shall also pay to the Lender, upon the request of the Lender, such amount or amounts as shall be sufficient (in the reasonable opinion of the Lender) to compensate it for any loss, cost, or expense (including the then present value of any lost interest earnings as a result of any re-deployment of prepaid funds) incurred as a result of any payment of a LIBOR Loan on a date other than a scheduled principal payment day or the last day of the interest period for such Loan including, but not limited to, acceleration of the Loans by the Lender pursuant to Section 15.00

.

Upon request, Lender will provide Borrower with reasonable documentation of the calculation of compensation requested and relating hereto.

4.10   PREPAYMENT PREMIUM

The Borrower may prepay the Construction Note in whole or in part with accrued interest from the date of such prepayment on the amount prepaid provided that it pays any termination or adjustment or other breakage fees or costs pursuant to the Swap Agreement as well as any other costs and expenses required under this Agreement including without limitation those described in section 4.09.

5.00            [RESERVED]

6.00            LOAN FEES; PAYMENTS AND COMPUTATIONS; CAPITAL ADEQUACY, ETC.

6.01            LOAN FEE

 The Borrower agrees to pay to the Lender on or before the Closing Date of the Construction Loan a loan commitment fee in the amount of $60,000.

6.02            FUNDS FOR PAYMENT

(a) All payments of principal, interest, fees and any other amounts due under the Construction Note or under any of the other Loan Document shall be made to the Lender at its Head Office or at such other location that the Lender may from time to time designate, in each case not later than 2:00 p.m. (Boston time) on the date when due in immediately available funds in lawful money of the United States.

(b) All payments by the Borrower under the Construction Note and under any of the other Loan Documents shall be made without setoff or counterclaim and free and clear of and without deduc­tion for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless the Borrower is compelled by law to make such deduction or withholding. If any such obligation to deduct or withhold is imposed upon the Borrower with respect to any amount payable by it under the Construction Note or under any of the other Loan Documents, the Borrower will pay to the Lender, on the date on which such amount is due and payable under the Construction Note or under such other Loan Document, such additional amount as shall be necessary to enable the Lender to receive the same amount which the Lender would have received on such due date had no such obligation been imposed upon the Borrower. The Borrower will deliver promptly to the Lender certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by the Borrower under the Construction Note or under such other Loan Document.

­            6.03 COMPUTATIONS

Except as otherwise provided in this Agreement, the Construction Note, whenever a payment thereunder or under any of the other Loan Documents becomes due on a day that is not a Business Day, the due date for such payment shall be extended to the next succeeding Business Day, and interest shall accrue during such extension. The outstanding amount of the Construction Loan as reflected on the Record from time to time shall be considered correct and binding on the Borrower unless within ten (10) Business Days after receipt of any notice by the Borrower of such outstanding amount, the Borrower shall notify the Lender to the contrary.

6.04 ILLEGALITY

 Notwithstanding any other provision in this Agreement, if the Lender determines that any applicable law, rule, or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank, or comparable agency charged with the interpretation or administration thereof, or compliance by the Lender (or its Lending Office) with any request or directive (whether or not having the force of law) of any such authority, central bank, or comparable agency shall make it unlawful or impossible for the Lender (or its Lending Office) to (1) maintain the Construction Loan, then upon notice to the Borrower by the Lender the Construction Loan shall terminate; or (2) maintain or fund LIBOR Loans, then upon notice to the Borrower by the Lender the outstanding principal amount of the LIBOR Loans, together with interest accrued thereon, and any other amounts payable to the Lender under this Agreement shall be repaid or converted to a prime Loan at the option of the Borrower (a) immediately upon demand of the Lender if such change or compliance with such request, in the judgment of the Lender, requires immediate repayment; or (b) at the expiration of the last Interest Period to expire before the effective date of any such change or request.

6.05 DISASTER

 Notwithstanding anything to the contrary herein, if the Lender determines (which determination shall be conclusive) that quotations of interest rates for the relevant deposits r