TRANSCRIPT OF PROCEEDINGS LEASE/LEASEBACK … · hodgson russ llp _____ -i- 012178.00069 business...

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TRANSCRIPT OF PROCEEDINGS

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LEASE/LEASEBACK TRANSACTION

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY HILL & MARKES REALTY, LLC

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CLOSING DATE: JULY 7, 2010

______________________________________________________________________________

APPROVING OPINION:

HODGSON RUSS LLP

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LEASE/LEASEBACK TRANSACTION MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY

HILL & MARKES REALTY, LLC

TABLE OF CONTENTS

[CLICK ON NAME OF DOCUMENT TO OPEN DESIRED CLOSING ITEM]

CLOSING ITEM TAB Closing Memorandum ............................................................................................................................................. 1 Interim Lease ............................................................................................................................................... 2 Underlying Lease ......................................................................................................................................... 3 Memorandum of Underlying Lease, together with a combined real estate transfer tax

return and credit line mortgage certificate (TP-584) ................................................................................... 4 License to Agency, together with a combined real estate transfer tax return and credit line

mortgage certificate (TP-584) ......................................................................................................................... 5 Bill of Sale to Agency ............................................................................................................................................ 6 Lease Agreement ..................................................................................................................................................... 7 Memorandum of the Lease Agreement, together with a combined real estate transfer tax

return and a credit line mortgage certificate (TP-584) ................................................................................. 8 Payment in Lieu of Tax Agreement ...................................................................................................................... 9 Mortgage ............................................................................................................................................................... 10 Assignment of Rents ............................................................................................................................................. 11 Project Benefits Agreement ................................................................................................................................ 12 Certificates (and policies, if available) of casualty, liability, workers’ compensation and

other insurance required pursuant to the Lease Agreement ....................................................................... 13 Closing Receipt ..................................................................................................................................................... 14 General Certificate of the Agency regarding incumbency and signatures of officers,

execution of the Basic Documents and the other documents to be executed by the Agency in connection therewith (the “Agency Documents”), no litigation and continued existence, with the following items included as exhibits: Exhibit A - Chapter 666 of the Laws of 1970;

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Exhibit B - Certificate of Establishment and Certificates of Appointment of the current members of the Agency, certified by the New York State Department of State, Miscellaneous Records Unit;

Exhibit C - By-Laws of the Agency; Exhibit D - Public Hearing Resolution; Exhibit E - Proof of the mailing of notice of the Public Hearing to the chief

executive officers of the affected tax jurisdictions; Exhibit F - Proof of the posting of notice of the Public Hearing; Exhibit G - Proof of publication of notice of the Public Hearing; Exhibit H - Report of the Public Hearing; Exhibit I - SEQR Resolution; and Exhibit J - Approving Resolution ............................................................................................... 15

Certificate Regarding No Conflicts of Interest ..................................................................................................... 16 Mortgage Recording Tax Affidavit ..................................................................................................................... 17 Sales Tax Exemption Letter ................................................................................................................................. 18 Real Property Tax Exemption Form ................................................................................................................... 19 Proof of (A) Mailing and (B) filing of Real Property Tax Exemption Form to the Chief executive officer of the tax assessor of the affected tax jurisdiction ............................................................... 20 Thirty-Day Sales Tax Report ............................................................................................................................... 21 Proof of Mailing of Thirty-Day Sales Tax Report to the New York State Department of

Taxation and Finance ..................................................................................................................................... 22 Special Counsel Disclosure Certificate ....................................................................................................... 23 General Certificate of the Company regarding incumbency and signatures of officers,

execution of the Lease Agreement and other Basic Documents to which the Company is a party (the “Company Documents”), no litigation and continued existence, with the following items included as exhibits: Exhibit A - Articles of Organization, certified by the New York State

Department of State, Corporations Unit; Exhibit B - Operating Agreement of the Company; Exhibit C - Certificate of Good Standing relating to the Company, certified

by the New York Department of State, Corporations Unit;

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Exhibit D - Resolution of the Members of the Company approving and

authorizing the execution and delivery by the Company of the Company Documents; and

Exhibit E - Pending Litigation ............................................................................................... 24

Affidavit of the Company ........................................................................................................................... 25 Loan Agreement .......................................................................................................................................... 26 Opinion of Law Offices of Paul L. Wollman, counsel to the Agency, addressed to the

Agency and the Company .................................................................................................................... 27 Opinion of MacKenzie & Tallent, counsel to the Company, addressed to the Agency and

the Company ......................................................................................................................................... 28 Opinion of Hodgson Russ LLP, Special counsel, addressed to the Agency and the

Company .............................................................................................................................................. 29

CLOSING MEMORANDUM

LEASE/LEASEBACK TRANSACTIONMONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY


Date of Closing: July 7, 2010

Place of Closing: Hodgson Russ LLP677 Broadway, Suite 301Albany, New York 12207

I. DESCRIPTION OF THE TRANSACTION:

In September, 2008, Hill & Markes Realty, LLC (the “Company”), a limited liability companyduly organized and validly existing under the laws of the State of New York, presented an application (the“Application”) to Montgomery County Industrial Development Agency (the “Agency”), a public benefitcorporation duly established under Chapter 1030 of 1969 Laws of New York, constituting Title 1 ofArticle 18-A of the General Municipal Law, Chapter 24 of the Consolidated Laws of New York, asamended (the “Enabling Act”) and Chapter 666 of the 1970 Laws of New York, as amended, constitutingSection 895-d of said General Municipal Law of the State of New York (said Chapter and the EnablingAct being hereinafter collectively referred to as the “Act”), which Application requested that the Agencyconsider undertaking a project (the “Project”) for the benefit of the Company, said Project to include thefollowing: (A) (1) the acquisition of an interest in a 45.3+!- acre parcel of land (tax map parcelidentification number 54-2-2.1) and located on Highway 5S in the City of Amsterdam, Town of Florida,Montgomery County, New York (the “Land”), (2) the construction of two facilities on the Land: (a) anapproximately 100,000 square foot warehouse, and (b) an approximately 15,000 square foot officebuilding (both facilities being collectively referred to as the “Facility”), (3) the acquisition and installationof certain machinery and equipment therein and thereon (the “Equipment”) (the Land, the Facility and theEquipment hereinafter collectively referred to as the “Project Facility”), all of the foregoing to constitutenew warehousing and office facilities to support the growth of the Company’s supply business and relatedactivities; (B) the granting of certain “financial assistance” (within the meaning of Section 854(14) of theAct) with respect to the foregoing, including potential exemptions from certain sales and use taxes, realproperty taxes, real estate transfer taxes and mortgage recording taxes (the “Financial Assistance”); and(C) the lease (with an obligation to purchase) or sale of the Project Facility to the Company or such otherperson as may be designated by the Company and agreed upon by the Agency.

Pursuant to the authorization contained in a resolution adopted by the members of the Agency onApril 9, 2009 (the “Public Hearing Resolution”), the Chief Executive Officer of the Agency (A) causednotice of a public hearing of the Agency pursuant to Section 859-a of the Act (the “Public Hearing”) tohear all persons interested in the Project and the Financial Assistance being contemplated by the Agencywith respect to the Project, to be mailed on April 20, 2009 to the chief executive officers of the county

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and of each city, town, village and school district in which the Project is to be located, (B) caused noticeof the Public Hearing to be posted on April 20, 2009 on a public bulletin board located at the Old CountyCourthouse, Fonda, New York, (C) caused notice of the Public Hearing to be published on April 22, 2009in The Recorder, a newspaper of general circulation available to the residents of the Town of Florida,New York, (D) conducted the Public Hearing on May 21, 2009 at 9:30 a.m., local time at the Town ofFlorida Town Hall, located at 214 Fort Hunter Road, in the Town of Florida, Montgomery County, NewYork, and (E) prepared a report of the Public Hearing (the “Public Hearing Report”) fairly summarizingthe views presented at such Public Hearing and caused copies of said Public Hearing Report to be madeavailable to the members of the Agency.

Pursuant to Article 8 of the Environmental Conservation Law, Chapter 43-B of the ConsolidatedLaws of New York, as amended (the “SEQR Act”) and the regulations (the “Regulations”) adoptedpursuant thereto by the Department of Environmental Conservation of the State of New York, being6NYCRR Part 617, as amended (collectively with the SEQR Act, “SEQRA”), by resolution adopted bythe members of the Agency on May 20, 2010 (the “SEQR Resolution”), the Agency (A) ratified thedetermination by the Town of Florida Planning Board (the “Planning Board”) to act as “lead agency” withrespect to the Project, (B) acknowledged receipt of a copy of a negative declaration issued by thePlanning Board on March 30, 2009 (the “Negative Declaration”), and (C) indicated that the Agency hadno information to suggest that the Planning Board was incorrect in authorizing the issuance of theNegative Declaration.

By further resolution adopted by the members of the Agency on June 30, 2010 (the “ApprovingResolution”), the Agency determined to grant the Financial Assistance and to enter into a lease agreementdated as of July 1, 2010 (the “Lease Agreement”) between the Agency and the Company and certain otherdocuments related thereto and to the Project (collectively with the Lease Agreement, the “BasicDocuments”). Pursuant to the terms of the Lease Agreement, (A) the Company will agree (1) to cause theProject to be undertaken and completed, and (2) as agent of the Agency, to undertake and complete theProject and (B) the Agency has leased the Project Facility to the Company for a lease term ending on theearlier to occur of (1) December 31, 2022 or (2) the date on which the Lease Agreement is terminatedpursuant to the optional termination provisions thereof. The Lease Agreement grants to the Companycertain options to acquire the Project Facility from the Agency.

Simultaneously with the execution and delivery of the Lease Agreement (the “Closing”), (A) theCompany will execute and deliver to the Agency (1) a certain lease to agency dated as of July 1, 2010(the “Lease to Agency”) by and between the Company, as landlord, and the Agency, as tenant, pursuantto which the Company will lease to the Agency a portion of the Land and all improvements now orhereafter located on said portion of the Land (collectively, the “Leased Premises”) for a lease term endingon December 31, 2022; (2) a certain license agreement dated as of July 1, 2010 (the “License to Agency”)by and between the Company, as licensor, and the Agency, as licensee, pursuant to which the Companywill grant to the Agency (a) a license to enter upon the balance of the Land (the “Licensed Premises”) forthe purpose of undertaking and completing the Project and (b), in the event of an occurrence of an Eventof Default by the Company, an additional license to enter upon the Licensed Premises for the purpose ofpursuing its remedies under the Lease Agreement; and (3) a bill of sale dated as of July 1, 2010 (the “Billof Sale to Agency”), which conveys to the Agency all right, title and interest of the Company in theEquipment, (B) the Company and the Agency will execute and deliver a payment in lieu of tax agreementdated as of July 1, 2010 (the “Payment in Lieu of Tax Agreement”) by and between the Agency and theCompany, pursuant to which the Company will agree to pay certain payments in lieu of taxes with respectto the Project Facility, (C) the Agency will file with the assessor and mail to the chief executive officer ofeach “affected tax jurisdiction” (within the meaning of such quoted term in Section 854(16) of the Act) acopy of a New York State Board of Real Property Services Form 412-a (the form required to be filed bythe Agency in order for the Agency to obtain a real property tax exemption with respect to the Project

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Facility under Section 412-a of the Real Property Tax Law) (the “Real Property Tax Exemption Form”)relating to the Project Facility and the Payment in Lieu of Tax Agreement, (D) the Agency will executeand deliver to the Company a sales tax exemption letter (the “Sales Tax Exemption Letter”) to ensure thegranting of the sales tax exemption which forms a part of the Financial Assistance and (E) the Agencywill file with the New York State Department of Taxation and Finance the form entitled “IDAAppointment of Project Operator or Agent for Sales Tax Purposes” (the form required to be filed pursuantto Section 874(9) of the Act) (the “Thirty-Day Sales Tax Report”).

In order to finance a portion of the costs of the Project, the Company will obtain a loan in theprincipal sum of up to $8,363,843 (the “Loan”) from RBS Citizens, N.A. (the “Lender”), which Loan willbe secured by a mortgage and security agreement dated as of June 30, 2010 (the “Mortgage”) from theAgency and the Company to the Lender.

Among the actions taken by the Agency with respect to the Project prior to the Closing Date werethe following:

September, 2008 The Company filed an application (the “Application”) relating tothe Project with the Agency.

April 9, 2009 The Agency adopted the Public Hearing Resolution.

April 20, 2010 Notice of the Public Hearing was mailed to the chief executive officers of theaffected tax jurisdictions.

April 22, 2010 Notice of Public Hearing was published.

May 20, 2010 The Agency adopted the SEQR Resolution.

May 21, 2010 The Agency conducted the Public Hearing.

June 30, 2010 The Agency adopted the Approving Resolution.

II. PARTIES REPRESENTED AT THE CLOSING:

AGENCY: (A)William Hisert, ChairmanCarol Shinemen, SecretaryKenneth Rose, Chief Executive OfficerMontgomery County Industrial Development Agency

AGENCY COUNSEL: (AC)Paul L. Wollman, Esq.Law Offices of Paul L. Wollman

SPECIAL AGENCY COUNSEL: (HR)A. Joseph Scott, III, EsqChristopher M. Martell, Esq.Hodgson Russ LLP

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COMPANY:Neal Packer, COOI-lilt & Markes Realty, LLC

COMPANY’S COUNSEL: (CC)Mario J. Papa, Esq.Eleanor M. Zimmerman, Esq.Hodgson Russ LLP

Charles Tallent, Esq.MacKenzie & Tallent

LENDER: (L)RBS Citizens, N.A.TBD

LENDER’S COU1’SEL: (LC)John L. Allen, Esq.Whiteman Osterman & Hanna LLP

TITLE COMPANY: (T)HODGSON RUSS LLP

III. ACTION TO BE TAKEN AT THE CLOSING:

The following documents, or copies thereof, are to be delivered (except as indicated) to theAgency, Agency’s Counsel, Special Counsel, the Company and the Company’s Counsel as follows:

Production ExecutionRespons. Respons.

A. Basic Documents:

1. Interim Lease. HR C,A

2. Underlying Lease. HR C,A

3. Memorandum of Underlying Lease, together with a HR C,Acombined real estate transfer tax return and credit linemortgage certificate (TP-584).

4. License to Agency, together with a combined real estate HR C,Atransfer tax return and credit line mortgage certificate (TP5 84).

5. BillofSaletoAgency. HR C

6. Lease Agreement. HR C,A

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7. Memorandum of the Lease Agreement, together with a HR C,Acombined real estate transfer tax return and a credit linemortgage certificate (TP-584).

8. Payment in Lieu of Tax Agreement. HR C,A

9. Mortgage. LC C,A

10. Assignment of Rents. LC C,A

11. Project Benefits Agreement. HR C,A

12. Certificates (and policies, if available) of casualty, liability, CCworkers’ compensation and other insurance requiredpursuant to the Lease Agreement.

13. Closing Receipt. HR C,A

B. Items to be delivered by the Agency:

General Certificate of the Agency regarding incumbency HR Aand signatures of officers, execution of the BasicDocuments and the other documents to be executed by theAgency in connection therewith (the “AgencyDocuments”), no litigation and continued existence, withthe following items included as exhibits:

Exhibit A - Chapter 666 of the Laws of 1970; HR

Exhibit B - Certificate of Establishment and Certificates HRof Appointment of the current members ofthe Agency, certified by the New York StateDepartment of State, MiscellaneousRecords Unit;

Exhibit C - By-Laws of the Agency; HR

Exhibit D - Public Hearing Resolution; HR A

Exhibit E - Proof of the mailing of notice of the Public A AHearing to the chief executive officers ofthe affected tax jurisdictions;

Exhibit F - Proof of the posting of notice of the Public A AHearing;

Exhibit G - Proof of publication of notice of the Public HR AHearing;

Exhibit H - Report of the Public Hearing; A

Exhibit I - SEQR Resolution; and HR A

Exhibit J - Approving Resolution. HR A

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2. Certificate Regarding No Conflicts of Interest. HR A

3. Mortgage Recording Tax Affidavit. FIR A

4. Sales Tax Exemption Letter. HR A

5. Real Property Tax Exemption Form. HR A

6. Proof of (A) Mailing and (B) filing of Real Property Tax HR ACExemption Form to the Chief executive officer of the taxassessor of the affected tax jurisdiction.

7. Thirty-Day Sales Tax Report. HR,CC A

8. Proof of Mailing of Thirty-Day Sales Tax Report to the HR,CC ANew York State Department of Taxation and Finance.

9. Special Counsel Disclosure Certificate. HR HR

C. Items to be delivered by the Company:

1. General Certificate of the Company regarding incumbency HR,CC C,CCand signatures of officers, execution of the LeaseAgreement and other Basic Documents to which theCompany is a party (the “Company Documents”), nolitigation and continued existence, with the following itemsincluded as exhibits:

Exhibit A - Articles of Organization, certified by the CCNew York State Department of State,Corporations Unit;

Exhibit B - Operating Agreement of the Company; CC

Exhibit C - Certificate of Good Standing relating to the CCCompany, certified by the New York StateDepartment of State, Corporations Unit;

Exhibit D - Resolution of the Members of the Company CCapproving and authorizing the executionand delivery by the Company of theCompany Documents; and

Exhibit E - Pending Litigation. CC

2. Affidavit of the Company. HR C

D. Opinions of Counsel:

I. Opinion of Law Offices of Paul L. Woilman, counsel to the HR ACAgency, addressed to the Agency and the Company.

2. Opinion of MacKenzie & Tallent, counsel to the Company, HR CCaddressed to the Agency and the Company.

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3. Opinion of Hodgson Russ LLP, Special counsel, addressed FIR HRto the Agency and the Company.

IV. ACTION TO BE TAKEN CONCURRENTLY WITHOR AFTER THE CLOSING:

1. The Underlying Lease (or a memorandum thereof), the License to Agency, the LeaseAgreement (or a memorandum thereof), the Mortgage, and the Assignment of Rents are to be recorded bythe Title Company or the Company in the office of the County Clerk of Montgomery County, New York.

2. The Real Property Tax Exemption Form, with a copy of the Payment in Lieu of TaxAgreement attached thereto is to be mailed to the assessor and the chief executive officers of eachaffected tax jurisdiction.

3. The Thirty-Day Sales Tax Report is to be mailed to the New York State Department ofTaxation and Finance.

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CLOSING ITEM NO.: A-I

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY,AS LANDLORD

AND

HILL & MARKES REALTY, LLC,AS TENANT

INTERIM LEASE AGREEMENT

DATED AS OF JUNE 1, 2010

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[NTERIM LEASE AGREEMENT

THIS INTERIM LEASE AGREEMENT dated as of June 1, 2010 (the “Interim Lease Agreement”)by and among HILL & MARKES REALTY, LLC, a limited liability company organized and existing underthe laws of the State of New York, having an office for the transaction of business located at 120 EdsonStreet, Amsterdam, New York (the “Company”), and MONTGOMERY COUNTY INDUSTRIALDEVELOPMENT AGENCY, a public benefit corporation organized and existing under the laws of theState of New York, having an office for the transaction of business located at Old County Courthouse, ParkStreet, Fonda, New York (the “Agency”);

WITNESS E T H:

WHEREAS, the Agency is authorized and empowered by the provisions of Chapter 1030 of Lawsof 1969 of New York, constituting Title I of Article 18-A of the General Municipal Law, Chapter 24 of theConsolidated Laws of New York, as amended (the “Enabling Act”) and Chapter 666 of the 1970 Laws ofNew York, as amended, constituting Section 895-d of said General Municipal Law (said Chapter and theEnabling Act being hereinafter collectively referred to as the “Act”) to promote, develop, encourage andassist in the acquiring, constructing, renovating, improving, maintaining, equipping and furnishing ofcommercial facilities, among others, for the purpose of promoting, attracting and developing economicallysound commerce and industry to advance the job opportunities, health, general prosperity and economicwelfare of the people of the State of New York, to improve their prosperity and standard of living, and toprevent unemployment and economic deterioration; and

WHEREAS, to accomplish its stated purposes, the Agency is further authorized and empoweredunder the Act to acquire, construct, reconstruct and equip one or more “projects” (as defined in the Act), orto cause said projects to be acquired, constructed, reconstructed and equipped, and to convey said projectsor to lease said projects (with an obligation to purchase); and

WHEREAS, in September, 2008, the Company presented an application (the “Application”) tothe Agency, which Application requested that the Agency consider undertaking a project (the “Project”)for the benefit of the Company, said Project to include the following: (A) (1) the acquisition of aninterest in a 45.3+7- acre parcel of land (tax map parcel identification number 54-2-2.1) and located onHighway 5S in the City of Amsterdam, Town of Florida, Montgomery County, New York (the “Land”),(2) the construction of two facilities on the Land: (a) an approximately 100,000 square foot warehouse,and (b) an approximately 15,000 square foot office building (both facilities being collectively referred toas the “Facility”), (3) the acquisition and installation of certain machinery and equipment therein andthereon (the “Equipment”) (the Land, the Facility and the Equipment hereinafter collectively referred toas the “Project Facility”), all of the foregoing to constitute new warehousing and office facilities tosupport the growth of the Company’s supply business and related activities; (B) the granting of certain“financial assistance” (within the meaning of Section 854(14) of the Act) with respect to the foregoing,including potential exemptions from certain sales and use taxes, real property taxes, real property transfertaxes and mortgage recording taxes (collectively, the “Financial Assistance”); and (C) the lease (with anobligation to purchase) or sale of the Project Facility to the Company or such other person as may bedesignated by the Company and agreed upon by the Agency; and

WHEREAS, the Agency intends to sell the Land to the Company according to the terms of a realestate purchase contract (the “Contract”) and transfer the Land under the terms of a warranty deed (the“Deed” and together with the Contract, collectively referred to as the “Purchase Contract”); and

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WHEREAS, to preserve certain real property tax abatements that the Company is set to receivefrom the Agency, the Agency must have a continuous interest in the Land; and

WHEREAS, to ensure that the Agency maintains a continuous interest in the Land, the Agency andthe Company must enter into this interim lease agreement (the “Interim Lease Agreement”), which willprovide the Company with a leasehold interest in the Land; and

WHEREAS, the Company will use it’s leasehold interest in the Land to begin the lease/leasebackprocess, which will make certain that the Agency maintains an interest in the Land and is able to offer theCompany the agreed upon real property tax abatements; and

WHEREAS, the lease of the Land to the Company pursuant to this Interim Lease Agreement is fora proper purpose, to wit, to advance the job opportunities, health, general prosperity and economic welfareof the inhabitants of the State, pursuant to the provisions of the Act; and

WHEREAS, all things necessary to constitute this Interim Lease Agreement a valid and bindingagreement by and between the parties hereto in accordance with the terms hereof have been done andperformed, and the creation, execution and delivery of this Interim Lease Agreement have in all respectsbeen duly authorized by the Company and the Agency;

NOW, THEREFORE, in consideration of the respective covenants and agreements hereinaftercontained, the parties hereto formally covenant, agree and bind themselves as follows, to wit:

SECTION 1. DEMISE OF LAND; TERM. The Agency hereby demises and leases to the Company, andthe Company hereby hires and takes from the Agency, the Land for a term commencing on the date ofexecution and delivery hereof, and ending on the 31st day of December, 2010, unless sooner terminated ashereinafter provided.

SECTION 2. RENT. The Company shall pay the rent of ONE DOLLAR ($1.00) to the Agency at itsaddress set forth in Section 8 hereof, or at such other place and to such other persons as the Agency shallfrom time to time by written notice designate, the entire rent for the term of this Interim Lease Agreementbeing payable in advance on the date of execution of this Interim Lease Agreement. The Agency herebyacknowledges receipt of said rent from the Company.

SECTION 3. NON MERGER. During the term of this Interim Lease Agreement, there shall be nomerger of this Interim Lease Agreement nor of the leasehold estate created by this Interim LeaseAgreement with the fee estate in the Land or any part thereof by reason of the fact that the same person,firm, corporation or other entity may acquire or own or hold, directly or indirectly, (1) this Interim LeaseAgreement or the leasehold estate created by this Interim Lease Agreement or any interest in this InterimLease Agreement or in any such leasehold estate and (2) the fee estate in the Land or any part thereof orany interest in such fee estate, and no such merger shall occur unless and until all corporations, firms andother entities, including any mortgagee having any interest in (x) this [nterim Lease Agreement or theleasehold estate created by this Interim Lease Agreement and (y) the fee estate in the Land or any partthereof or any interest in such fee estate, shall join in a written instrument effecting such merger and shallduly record the same.

SECTION 4. MAINTENANCE. During the term of this Interim Lease Agreement, the Company shall, atthe Company’s sole cost and expense, maintain the Land and any improvements made thereto in goodcondition and repair, ordinary wear and tear excepted.

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SECTION 5. LIMITATION OF LIABILITY; INDEMNIFICATION BY COMPANY (A) Notwithstandingany other provision of this Interim Lease Agreement, it is understood and agreed by the Company that, inthe performance of the agreements with the Agency herein contained, any obligation that the Agency mayincur for the payment of money shall not constitute, create or give rise to a pecuniary liability of the Agencyor a charge against its general credit or taxing power (if any), and shall not create a debt of the State of NewYork nor Montgomery County, New York, and neither the State of New York nor Montgomery County,New York shall be liable on any obligation so incurred, but any such obligation so incurred shall be aspecial obligation of the Agency and shall be payable solely out of the rentals, revenues and receipts derivedby the Agency from or in connection with the Land. Furthermore, it is understood and agreed by theCompany that all covenants, stipulations, promises, agreements and obligations of the Agency contained inthis Interim Lease Agreement shall be deemed to be covenants, stipulations, promises, agreements andobligations of the Agency, and not of any officer, member, employee, servant or agent of the Agency in hisindividual capacity, and no recourse shall be had for any claim based hereunder against any officer,member, employee, servant or agent of the Agency nor any individual executing this Interim LeaseAgreement on behalf of the Agency.

(B) The Company hereby releases the Agency and its members, officers, agents and employeesfrom, and agree that the Agency and its members, officers, agents and employees shall not be liable for andthe Company agrees to indemnify, defend and hold the Agency and its members, officers, agents andemployees harmless from and against any and all claims, causes of action, judgments, liabilities, damages,losses, costs and expenses arising as a result of the Company’s leasing the Land, including, but not limitedto, (I) liability for loss or damage to property or bodily injury to or death of any and all persons that may beoccasioned, directly or indirectly, by any cause whatsoever pertaining to the Land or arising by reason of orin connection with the occupation or the use thereof or the presence of any person or property on, in orabout the Land, (2) liability arising from or expense incurred by the Agency’s acquiring, owning orconveying the Land, including, without limiting the generality of the foregoing, all liabilities or claimsarising as a result of the Agency’s obligations under this Interim Lease Agreement or the enforcement of ordefense of validity of any provision of this Interim Lease Agreement, and (3) all causes of action andattorneys’ fees and other expenses incurred in connection with any suits or actions which may arise as aresult of any of the foregoing; provided that any such claims, causes of action, judgments, liabilities,damages, losses, costs or expenses of the Agency are not incurred or do not result from the intentionalwrongdoing of the Agency or any of its members, officers, agents or employees. The foregoing indemnitiesshall apply notwithstanding the fault or negligence in part of the Agency or any of its officers, members,agents or employees and notwithstanding the breach of any statutory obligation or any rule or comparativeor apportioned liability.

SECTION 6. OPTION TO TERMINATE AGREEMENT. At any time during the term of this InterimLease Agreement, the Agency or the Company, as the case may be, shall have the right to terminate and endthis Interim Lease Agreement by mailing to the Agency or the Company, as the case may be, two (2)business days prior written notice to that effect, and upon the date specified in such notice (or two (2)business days following the date of mailing of such notice, whichever is later), this Interim LeaseAgreement and the term hereof shall cease, determine and end.

SECTION 7. DEFAULT. (A) Any one or more of the following events shall constitute an “Event ofDefault” under this Interim Lease Agreement:

(I) failure of the Company to pay the rent pursuant to this Interim Lease Agreement on the dateof execution of this Interim Lease Agreement; and

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(2) failure of the Agency or the Company to observe and perform any covenant, condition oragreement on its part to be performed and continuance of such failure for a period of thirty(30) days after notice to the Agency specifying the nature of such default; provided that ifby reason of the nature of such default the same cannot be remedied within thirty (30) days,failure of the Agency to proceed promptly to cure the same and thereafter prosecute thecuring of such default with due diligence.

(B) If the Company is unable in whole or in part to carry out any of its obligations hereunder(other than its obligation to pay the rent hereunder) by reason of “force majeure’ (including but not limitedto acts of God, strikes, lockouts or other labor disturbances, acts of the public enemy, orders of any kind ofthe government of the United States of America or the State of New York or any of their departments,agencies, political subdivisions, public authorities or officers or any civil or military authority, insurrections,riots, epidemics, landslides, lightning, earthquakes, fires, hurricanes, storms, floods, washouts, droughts,arrests, restraint of government and people, civil disturbances, explosions, partial or entire failure ofutilities, accident or breakage to machinery, transmission pipes or canals, shortages of labor, material,supplies or transportation, or any other similar or different cause not reasonably within the control of theAgency, it being understood that the settlement of existing or impending strikes, lockouts or other labordisturbances shall be entirely within the discretion of the Agency), then such failure shall not constitute anEvent of Default during the continuance of such inability.

SECTION 8. NOTICES. Any notice, demand or request required or agreed to be given hereunder by eitherparty shall be sufficiently given or served if in writing, signed by the party giving it and mailed by registeredor certified mail, return receipt requested, postage prepaid, addressed to the party to whom it is intended atthe address for such party set forth below:

IF TO THE COMPANY:

Hill & Markes Realty, LLC120 Ed son StreetAmsterdam, New York 12010Attention: Neal Packer, COO

WITH COPIES TO:

Hodgson Russ LLP55 East Main Street, Suite 100Johnstown, New York 12095Attention: Mario J. Papa, Esq.

MacKenzie & Tallent42 Church StreetCanajoharie, New York 13317Attention: Charles Tallent, Esq.

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IF TO THE AGENCY:

Montgomery County Industrial Development AgencyOld County Courthouse, Park StreetFonda, New York 12068Attention: Chairman

WITH A COPY TO:

Law Offices of Paul L. Woliman41 Market StreetAmsterdam, New York 12010Attention: Paul L. Woliman, Esq.

provided, that either party may, by notice given hereunder to other party, designate any further or differentaddress to which subsequent notices, certificates or other communications to them shall be sent.

SECTION 9. AGENCY ACTS. Where the Agency is required to do or accomplish any act or thinghereunder, the Agency may cause the same to be done or accomplished with the same force and effect as ifdone or accomplished by the Agency.

SECTION 10. AMENDMENTS. Except as provided in Section 6 with respect to options to terminate, thisInterim Lease Agreement may not be effectively amended, changed, modified, altered or terminated exceptby an instrument in writing and signed by both parties.

SECTION 11. BINDING EFFECT. This Interim Lease Agreement shall inure to the benefit of, and shallbe binding upon the Agency and the Company and their respective successors and assigns; provided, that,except as provided elsewhere herein, the interest of the Agency in this Interim Lease Agreement may not beassigned, sublet or otherwise transferred without the prior written consent of the Company.

SECTION 12. SEVERABILITY. If any article, section, subdivision, paragraph, sentence, clause, phrase,provision or portion of this Interim Lease Agreement shall for any reason be held or adjudged to be invalidor illegal or unenforceable by any court of competent jurisdiction, such article, section, subdivision,paragraph, sentence, clause, phrase, provision or portion so adjudged invalid, illegal or unenforceable shallbe deemed separate, distinct and independent and the remainder of this Interim Lease Agreement shall beand remain in full force and effect and shall not be invalidated or rendered illegal or unenforceable orotherwise affected by such holding or adjudication.

SECTION 13. COUNTERPARTS. This Interim Lease Agreement may be simultaneously executed inseveral counterparts, each of which shall be an original and all of which shall constitute but one and thesame instrument.

SECTION 14. CAPTIONS. The captions or headings in this Interim Lease Agreement are for convenienceof reference only and in no way define, limit or describe the scope or intent of any subdivisions, sections,articles or other provisions of this Interim Lease Agreement.

SECTION 5. PRIOR AGREEMENTS SUPERSEDED. This Interim Lease Agreement shall completelyand fully supersede all other prior understands or agreements, both written and oral, between the Agencyand the Company relating to the Land.

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SECTION 16. APPLICABLE LAW. This Interim Lease Agreement shall be governed by and construed inaccordance with the laws of the State of New York.

SECTION 17. INSURANCE REQUIRED. During the term of this Interim Lease Agreement, the Companyshall maintain insurance with respect to the Land against such risks and for such amounts as are customarilyinsured against by businesses of like size and type, paying, as the same become due and payable, allpremiums with respect thereto, including, but not necessarily limited to: insurance protecting the Agencyagainst loss or losses from liabilities imposed by law or assumed in any written contract (including, withoutlimitation, the contractual liability assumed by the Company under this Interim Lease Agreement) andarising from personal injury or death or damage to the property of others caused by any accident oroccurrence, with limits of not less than $1,000,000 per person per accident or occurrence on account ofpersonal injury, including death resulting therefrom, and $500,000 per accident or occurrence on account ofdamage to the property of others, and a separate umbrella liability policy protecting the Agency with a limitof not less than $20,000,000.

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IN WITNESS WHEREOF, the Company and the Agency have caused this Interim LeaseAgreement to be executed in their respective names by duly authorized officers thereof, and the partieshereto have caused this Interim Lease Agreement to be dated as of the date and year first above written.


By:___________________________Authorized Member

MONTGOMERY COUNTY INDUSTRIALDEVELOPMENT AGENCY

By:á)2y5J(iee)Chairperson

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IN WITNESS WHEREOF, the Company and the Agency have caused this Interim LeaseAgreement to be executed in their respective names by duly authorized officers thereof, and the partieshereto have caused this Interim Lease Agreement to be dated as of the date and year first above written.


By:_____________________________(Vice) Chairperson

HILL & MARKES REAL Y, LLC

By/t/AuthorizeciMember

-7-012)78100069 Business 755693 Iv!

STATE OF NEW YORK ))SS.:

COUNTY OF MONTGOMERY )

On the 30th day of June, in the year 2010, before me, the undersigned, personally appearedWILLIAM HISERT, personally known to me or proved to me on the basis of satisfactory evidence to bethe individual whose name is subscribed to the within instrument and acknowledged to me that heexecuted the same in his capacity, and that by his signature on the instrument, the individual, or theperson upon behalf of which the individual acted, executed the instrument.

CLLrNotary Public

PAULTOLLAN

UYJ2OO

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STATE OF NEW YORK ))ss:

COUNTY OF FULTON )

On of July, in the year 2010, before me, the undersigned, personally appeared NEALPACKER, personally known to me or proved to me on the basis of satisfactory evidence to be theindividual whose name is subscribed to the within instrument and acknowledged to me that he executedthe same in his capacity, and that by his signature on the instrument, the individual, or the person uponbehalf of which the individual acted, executed the instrument.

Notary Public

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EXHIBIT A

DESCRIPTION OF THE LAND

- SEE ATTACHED -

A-i012178/00069 Business 7556931v1

SCHEDULE A

ALL THAT TRACT OR PARCEL OF LAND situate in the Town of Florida, County ofMontgomery and State of New York, being more particularly described as follows:

Being Lot I as shown on the map entitled “Map Showing Proposed Subdivision Lands now orformerly of Carl E. Gottier L. 663, P. 277 & Lands now or formerly of Montgomery County IndustrialDevelopment Agency L. 1655, P.75” prepared by ABD Engineers & Surveyors, dated 3/23/09, moreparticularly bounded and described as follows:

Beginning at a point located on the southerly boundary of NYS Route 5S at its intersection withthe division line between Lot I on the east and Lot 2 on the west and proceeding in a clockwise directionthe following seven (7) courses and distances:

I.) South 67°-03’-52” East, a distance of 40.53 feet to a point;

2.) South 68°-41’-07” East, a distance of 376.96 feet to a point;

3.) South 63°-I 1,-i 8” East, a distance of 198.52 feet to a point;


5.) South 58°-4l ‘-37” East, a distance of 78.05 feet to a point;

6.) Along a curve to the left, having a radius of 1466.00 feet, an arc distance of 297.20 feet toa point, said curve containing a chord S 64° 29’ 43”E a distance of 296.69 feet;

7.) South 70°-l8’-15” East, a distance of 163.75 feet to a point located on the westerlybounds of land now or formerly of Itla Agosta on the east and lands herein described on the west; thencealong said division line the following course and distance:

1.) South 06°39’ 15” West, a distance of 200.00 feet to a point on the southerly boundary oflands now or formerly Itla Agosta on the north and the lands herein described on the south; thence alongsaid division line the following course and distance:

1.) South 71° 13’ 00” East, a distance of 675.85 feet to a point on the westerly boundary oflands now or formerly Alpine Haus Ski Shop, Inc. on the east and the lands herein described on thewest; thence along said division line the following course and distance:

1.) South 57° 38’ 30” West, a distance of 796.64 feet to a point on the northerly boundary ofthe NYS Thruway on the south and the lands herein described on the north; thence along said divisionline the following three (3) courses and distances:

I.) North 85°-50’-44” West, a distance of 553.58 feet to a point;

2.) North 82°-SI ‘-17” West, a distance of 763.31 feet to a point;

3.) North 86°-42’28” West, a distance of 3 10.17 feet to a point on the northerly boundary ofthe land now or formerly of Gilbert & Raymond Soodol on the south and the lands herein described onthe north; thence along said division line the following course and distance:

A-2012178/00069 Business 7556931v1

1.) North 38°-19’29” West, a distance of 201.63 feet to a point at its intersection with thedivision line with Lot 2 on the west and the lands herein described on the east; thence along saiddivision line the following course and distance:

I.) North 23-34’-09” East a distance of 1247.87 to the POINT OF BEGINNING, being45.25 acres, more or less.

A-3012178/00069 Husiness 7556931v1

CLOSING ITEM NO.: A-2

HILL & MARKES REALTY, LLC,AS LANDLORD

AND

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY,AS TENANT

LEASE TO AGENCY


RELATING TO A LEASEHOLD INTEREST HELD BY THELANDLORD IN A CERTAIN PARCEL OF LAND LOCATED AT ONSTATE ROUTE 5S IN THE TOWN OF FLORIDA, MONTGOMERYCOUNTY, NEW YORK.

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TABLE OF CONTENTS

(This Table of Contents is not part of the Lease to Agencyand is for convenience of reference only.)

PAGE

PARTIES 1RECITALS I

ARTICLE I

DEFINITIONS

Section 1.1. Definitions 4Section 1.2. Interpretation 4

ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.1. Representations and Warranties of the Agency 5Section 2.2. Representations and Warranties of the Company 5

ARTICLE III

LEASE PROVISIONS

Section3.1. Lease 6Section 3.2. Term 6Section 3.3. Rent 6Section 3.4. Use; Lease Agreement; Non-Merger 6Section 3.5. Additions, Alterations and Improvements 7Section 3.6. Assignment 7Section 3.7. Possession; Quiet Enjoyment 7Section 3.8. Liens 8Section 3.9. Taxes 8Section 3.10. Maintenance 8Section 3.11. Condemnation 8

(i)012178/00069 Business 7531118v2

ARTICLE IV

EVENTS OF DEFAULT AND REMEDIES

Section 4.1. Default 9Section 4.2. Remedies on Default 9Section 4.3. Remedies Cumulative 9Section 4.4. Agreement to Pay Attorneys’ Fees and Expenses 10Section 4.5. No Additional Waiver Implied By One Waiver 10

ARTICLE V

MISCELLANEOUS

Section 5.1 Surrender 11Section 5.2. Notices 11Section 5.3. Applicable Law 12Section 5.4. Binding Effect 12Section 5.5. Severability 12Section 5.6. Amendments, Changes and Modifications 12Section 5.7. Execution of Counterparts 12Section 5.8. Table of Contents and Section Headings Not Controlling 12Section 5.9. No Recourse; Special Obligation 12Section 5.10. Recording 13

TESTIMONIUM 14SIGNATURES 14ACKNOWLEDGMENTS 15

APPENDIX A- Schedule of Definitions AppA-1

EXHIBIT A - Description of the Leased Land A-I

(ii)012178/00069 nusiness 7531118v2

LEASE TO AGENCY

THIS LEASE TO AGENCY dated as of June 1, 2010 (the “Underlying Lease”) by and betweenHILL & MARKES REALTY, LLC, a limited liability company organized and existing under the laws ofthe State of New York (the “State”) having an office for the transaction of business located at 120 EdsonStreet, Amsterdam, New York (the “Company”), as landlord, and MONTGOMERY COUNTYINDUSTRIAL DEVELOPMENT AGENCY, a public benefit corporation organized and existing underthe laws of the State of New York having an office for the transaction of business located at Old CountyCourthouse, Park Street, Fonda, New York (the “Agency”), as tenant;

W I T N E S S E T H:

WHEREAS, Title 1 of Article 18-A of the General Municipal Law of the State of New York (the“Enabling Act”) was duly enacted into law as Chapter 1030 of the Laws of 1969 of the State of NewYork; and

WHEREAS, the Enabling Act authorizes and provides for the creation of industrial developmentagencies for the benefit of the several counties, cities, villages and towns in the State of New York (the“State”) and empowers such agencies, among other things, to acquire, construct, reconstruct, lease,improve, maintain, equip and dispose of land and any building or other improvement, and all real andpersonal properties, including, but not limited to, machinery and equipment deemed necessary inconnection therewith, whether or not now in existence or under construction, which shall be suitable formanufacturing, warehousing, research, commercial or industrial purposes, in order to advance the jobopportunities, health, general prosperity and economic welfare of the people of the State and to improvetheir standard of living; and

WHEREAS, the Enabling Act further authorizes each such agency, for the purpose of canyingout any of its corporate purposes, to lease or sell any or all of its facilities, whether then owned orthereafter acquired; and

WHEREAS, the Agency was created, pursuant to and in accordance with the provisions of theEnabling Act, by Chapter 666 of the Laws of 1970 of the State (collectively, with the Enabling Act, the“Act”) and is empowered under the Act to undertake the Project (as hereinafter defined) in order to soadvance the job opportunities, health, general prosperity and economic welfare of the people of the Stateand improve their standard of living; and

WHEREAS, in September, 2008, the Company presented an application (the “Application”) tothe Agency, which Application requested that the Agency consider undertaking a project (the “Project”)for the benefit of the Company, said Project to include the following: (A) (1) the acquisition of an interestin a 45.3+!- acre parcel of land (tax map parcel identification number 54-2-2.1) and located on Highway5S in the City of Amsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) theconstruction of two facilities on the Land: (a) an approximately 100,000 square foot warehouse, and (b)an approximately 15,000 square foot office building (both facilities being collectively referred to as the“Facility”), (3) the acquisition and installation of certain machinery and equipment therein and thereon(the “Equipment”) (the Land, the Facility and the Equipment hereinafter collectively referred to as the“Project Facility”), all of the foregoing to constitute new warehousing and office facilities to support thegrowth of the Company’s supply business and related activities; (B) the granting of certain “financialassistance” (within the meaning of Section 854(14) of the Act) with respect to the foregoing, includingpotential exemptions from certain sales and use taxes, real property taxes, real property transfer taxes andmortgage recording taxes (collectively, the “Financial Assistance”); and (C) the lease (with an obligation

012178/00069 Business 7531118v2

to purchase) or sale of the Project Facility to the Company or such other person as may be designated bythe Company and agreed upon by the Agency; and

WHEREAS, Pursuant to the authorization contained in a resolution adopted by the members ofthe Agency on April 9, 2009 (the “Public Hearing Resolution”), the Chief Executive Officer of theAgency (A) caused notice of a public hearing of the Agency pursuant to Section 859-a of the Act (the“Public Hearing”) to hear all persons interested in the Project and the Financial Assistance beingcontemplated by the Agency with respect to the Project, to be mailed on April 20, 2009 to the chiefexecutive officers of the county and of each city, town, village and school district in which the Project isto be located, (B) caused notice of the Public Hearing to be posted on April 20, 2009 on a public bulletinboard located at the Old County Courthouse, Fonda, New York, (C) caused notice of the Public Hearingto be published on April 22, 2009 in The Recorder, a newspaper of general circulation available to theresidents of the Town of Florida, New York, (D) conducted the Public Hearing on May 21, 2009 at 9:30a.m., local time at the Town of Florida Town Hall, located at 214 Fort Hunter Road, in the Town ofFlorida, Montgomery County, New York, and (E) prepared a report of the Public Hearing (the “PublicHearing Report”) fairly summarizing the views presented at such Public Hearing and caused copies ofsaid Public Hearing Report to be made available to the members of the Agency; and

WHEREAS, pursuant to Article 8 of the Environmental Conservation Law, Chapter 43-B of theConsolidated Laws of New York, as amended (the “SEQR Act”) and the regulations (the “Regulations”)adopted pursuant thereto by the Department of Environmental Conservation of the State of New York,being 6NYCRR Part 617, as amended (collectively with the SEQR Act, “SEQRA”), by resolutionadopted by the members of the Agency on May 20, 2010 (the “SEQR Resolution”), the Agency(A) ratified the determination by the Town of Florida Planning Board (the “Planning Board”) to act as“lead agency” with respect to the Project, (B) acknowledged receipt of a copy of a negative declarationissued by the Planning Board on March 30, 2009 (the “Negative Declaration”), and (C) indicated that theAgency had no information to suggest that the Planning Board was incorrect in authorizing the issuanceof the Negative Declaration; and

WHEREAS, by further resolution adopted by the members of the Agency on June 30, 2010 (the“Approving Resolution”), the Agency determined to grant the Financial Assistance and to enter into alease agreement dated as of June 1, 2010 (the “Lease Agreement”) between the Agency and the Companyand certain other documents related thereto and to the Project (collectively with the Lease Agreement, the“Basic Documents”); and

WHEREAS, pursuant to the terms of the Lease Agreement, (A) the Company will agree (1) tocause the Project to be undertaken and completed, and (2) as agent of the Agency, to undertake andcomplete the Project and (B) the Agency has leased the Project Facility to the Company for a lease termending on the earlier to occur of (1) December 31, 2022 or (2) the date on which the Lease Agreement isterminated pursuant to the optional termination provisions thereof; and

WHEREAS, the Lease Agreement grants to the Company certain options to acquire the ProjectFacility from the Agency; and

WHEREAS, simultaneously with the execution and delivery of the Lease Agreement (the“Closing”), (A) the Company will execute and deliver to the Agency (1) a certain lease to agency dated asof June 1, 2010 (the “Lease to Agency”) by and between the Company, as landlord, and the Agency, astenant, pursuant to which the Company will lease to the Agency a portion of the Land and allimprovements now or hereafter located on said portion of the Land (collectively, the “Leased Premises”)for a lease term ending on December 31, 2022; (2) a certain license agreement dated as of June 1, 2010(the “License to Agency”) by and between the Company, as licensor, and the Agency, as licensee,

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pursuant to which the Company will grant to the Agency (a) a license to enter upon the balance of theLand (the “Licensed Premises”) for the purpose of undertaking and completing the Project and (b), in theevent of an occurrence of an Event of Default by the Company, an additional license to enter upon theLicensed Premises for the purpose of pursuing its remedies under the Lease Agreement; and (3) a bill ofsale dated as of June 1, 2010 (the “Bill of Sale to Agency”), which conveys to the Agency all right, titleand interest of the Company in the Equipment, (B) the Company and the Agency will execute and delivera payment in lieu of tax agreement dated as of June 1, 2010 (the “Payment in Lieu of Tax Agreement”) byand between the Agency and the Company, pursuant to which the Company will agree to pay certainpayments in lieu of taxes with respect to the Project Facility, (C) the Agency will file with the assessorand mail to the chief executive officer of each “affected tax jurisdiction” (within the meaning of suchquoted term in Section 854(16) of the Act) a copy of a New York State Board of Real Property ServicesForm 412-a (the form required to be filed by the Agency in order for the Agency to obtain a real propertytax exemption with respect to the Project Facility under Section 412-a of the Real Property Tax Law) (the“Real Property Tax Exemption Form”) relating to the Project Facility and the Payment in Lieu of TaxAgreement, (D) the Agency will execute and deliver to the Company a sales tax exemption letter (the“Sales Tax Exemption Letter”) to ensure the granting of the sales tax exemption which forms a part of theFinancial Assistance and (E) the Agency will file with the New York State Department of Taxation andFinance the form entitled “IDA Appointment of Project Operator or Agent for Sales Tax Purposes” (theform required to be filed pursuant to Section 874(9) of the Act) (the “Thirty-Day Sales Tax Report”); and

WHEREAS, the Company desires to convey the leasehold interest created pursuant to thisUnderlying Lease to the Agency on the terms and conditions set forth in this Underlying Lease; and

WHEREAS, pursuant to the Lease Agreement, the Company will, as agent of the Agency,undertake and complete the Project and the Agency will lease the Project Facility to the Company, and itis the intention of the parties hereto that the leasehold interest created pursuant to this Underlying Leaseand the Company’s leasehold interest in the Project Facility created by the Lease Agreement shall notmerge; and

WHEREAS, all things necessary to constitute this Underlying Lease a valid and bindingagreement by and between the parties hereto in accordance with the terms hereof have been done andperformed, and the creation, execution and delivery of this Underlying Lease have in all respects beenduly authorized by the Agency and the Company;

NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE PREMISES AND THEMUTUAL COVENANTS HEREINAFTER CONTAINED, THE PARTIES HERETO HEREBYFORMALLY COVENANT, AGREE AND BIND THEMSELVES AS FOLLOWS TO WIT:

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ARTICLE I

DEFINITIONS

SECTION 1.1. DEFINITIONS. All of the capitalized terms used in this Lease to Agency and thepreambles hereto not otherwise defined shall have the meanings assigned thereto in the Schedule ofDefinitions attached hereto as Appendix A and made a part hereof.

SECTION 1.2. INTERPRETATION. In this Underlying Lease, unless the context otherwise requires:

(A) The terms “hereby”, “hereof’, “herein”, “hereunder”, and any similar terms as used inthis Underlying Lease, refer to this Underlying Lease, and the term “heretofore” shall mean before, andthe term “hereafter” shall mean after, the date of this Underlying Lease.

(B) Words of masculine gender shall mean and include correlative words of feminine andneuter genders.

(C) Words importing the singular number shall mean and include the plural number, and viceversa.

(D) Any headings preceding the texts of the several Articles and Sections of this UnderlyingLease, and any table of contents or marginal notes appended to copies hereof, shall be solely forconvenience of reference and shall neither constitute a part of this Underlying Lease nor affect itsmeaning, construction or effect.

(E) Any certificates, letters or opinions required to be given pursuant to this UnderlyingLease shall mean a signed document attesting to or acknowledging the circumstances, representations,opinions of law or other matters therein stated or set forth or setting forth matters to be determinedpursuant to this Underlying Lease.

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ARTICLE II


SECTION 2.1. REPRESENTATIONS AND WARRANTIES OF THE AGENCY. The Agency makesthe following representations and warranties as the basis for the undertakings on its part herein contained:

(A) The Agency has been duly established under the provisions of the Act and has the powerto enter into this Underlying Lease and to carry out its obligations hereunder.

(B) Neither the execution and delivery of this Underlying Lease nor the consummation of thetransactions contemplated hereby will conflict with or result in a breach by the Agency of any of theterms, conditions or provisions of the Act, the by-laws of the Agency or any order, judgment, agreementor instrument to which the Agency is a party or by which the Agency is bound, or will constitute a defaultby the Agency under any of the foregoing.

SECTION 2.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Companymakes the following representations and warranties as the basis for the undertakings on its part hereincontained:

(A) The Company is a business corporation duly organized and validly existing under thelaws of the State of New York, is qualified and authorized to do business in the State and all otherjurisdictions in which its operations or ownership of Properties so require, and has the power to enter intothis Underlying Lease and carry out its obligations hereunder and has been duly authorized to execute thisUnderlying Lease. This Underlying Lease and the transactions contemplated hereby have been dulyauthorized by all necessary action on the part of the members of the Company.

(B) Neither the execution and delivery of this Underlying Lease, the consummation of thetransactions contemplated hereby nor the fulfillment of or compliance with the provisions of thisUnderlying Lease will (1) conflict with or result in a breach of any of the terms, conditions or provisionsof the Certificate of Incorporation or By-laws of the Company or any order, judgment, agreement orinstrument to which the Company is a party or by which the Company is bound, or constitute a defaultunder any of the foregoing, or (2) result in the creation or imposition of any Lien of any nature upon anyProperty of the Company other than pursuant to the Basic Documents, or (3) require consent (which hasnot been heretofore received) under any restriction, agreement or instrument to which the Company is aparty or by which the Company or any of its Property may be bound or affected, or (4) to the best of theCompany’s knowledge, require consent (which has not been heretofore received) under, conflict with orviolate any existing law, rule, regulation, judgment, order, writ, injunction or decree of any government,governmental instrumentality or court (domestic or foreign) having jurisdiction over the Company or anyof the Property of the Company.

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ARTICLE Ill

LEASE PROVISIONS

SECTION 3.1. LEASE. (A) The Company hereby demises and leases to the Agency, and the Agencyhereby hires and takes leases from the Company, the Land, as said Land is more particularly described onExhibit A attached hereto and the improvements now and hereafter located thereon, including the Facility,(the Land, the Facility and said improvements being sometimes collectively referred to as the “Premises”)for the term set forth in Section 3.2 hereof. The Premises are intended to include (1) all buildings andimprovements located on the Land, (2) any strips or gores of land adjoining the Land, (3) any land lyingin the bed of any street or avenue abutting the Land, to the centerline thereof, and (4) a non-exclusiveright to use any easements or other rights in adjoining property inuring to the Company by reason of theCompany’s ownership of the Land.

(B) It is the intention of the Company and the Agency that the Agency shall hold leaseholdtitle to Premises. Accordingly, leasehold title to any improvements hereinafter constructed by theCompany on the Land shall vest in the Agency or its successors and assigns as and when the same areconstructed thereon.

SECTION 3.2. TERM. (A) The term of this Underlying Lease (the “Term”) shall commence as of thedated date hereof and shall expire on the earlier to occur (1) December 31, 2022 or (2) so long as neitherthe Lease Agreement nor the Company’s right of possession as lessee thereunder shall have beenterminated by the Agency pursuant to Article X thereof, the termination of the term of the LeaseAgreement.

(B) So long as neither the Lease Agreement nor the Company’s right of possession as lesseethereunder shall have been terminated by the Agency pursuant to Article X thereof, upon any terminationof this Underlying Lease, the Company shall prepare and the Agency will execute and deliver to theCompany such instruments as the Company shall deem appropriate to evidence the release and dischargeof this Underlying Lease.

SECTION 3.3. RENT. The rent payable by the Agency under this Underlying Lease shall be one dollar($1.00), and other good and valuable consideration, receipt of which is hereby acknowledged by theCompany.

SECTION 3.4. USE; LEASE AGREEMENT; NON-MERGER. (A) So long as neither the LeaseAgreement nor the Company’s right of possession as lessee thereunder have been terminated by theAgency pursuant to Article X thereof, the Agency shall (1) hold and use the Premises only for lease to theCompany under the Lease Agreement and (2) shall not sell or assign its rights hereunder nor the leaseholdestate hereby created, except as provided in the Lease Agreement.

(B) Contemporaneously with the execution and delivery of this Underlying Lease, theAgency is entering into the Lease Agreement, pursuant to which the Company as agent of the Agencyagrees to undertake and complete the Project and the Agency agrees, upon completion of the Project, tolease (with an obligation to purchase) the Project Facility to the Company. Pursuant to the LeaseAgreement, the Company, as tenant of the Project Facility under the Lease Agreement, is required toperform all of the Agency’s obligations under this Underlying Lease. Accordingly, and notwithstandinganything to the contrary contained in this Underlying Lease, the Company shall not be entitled to declarea default hereunder or exercise any rights or remedies hereunder if any asserted default by the Agency

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hereunder relates to a failure by the Company, as tenant of the Project Facility under the LeaseAgreement, to perform its corresponding obligations under the Lease Agreement.

(C) Notwithstanding the lease of the Project Facility by the Agency to the Company pursuantto the Lease Agreement, during the Term of this Underlying Lease, there shall be no merger of thisUnderlying Lease nor of the leasehold estate created by this Underlying Lease with the fee estate in thePremises or any part thereof by reason of the fact that the same person, firm, corporation or other entitymay acquire or own or hold, directly or indirectly, (I) this Underlying Lease or the leasehold estatecreated by this Underlying Lease or any interest in this Underlying Lease or in any such leasehold estateand (2) the fee estate in the Premises or any part thereof or any interest in such fee estate, and no suchmerger shall occur unless and until all corporations, firms and other entities, including any mortgageehaving any interest in (x) this Underlying Lease or the leasehold estate created by this Underlying Leaseand (y) the fee estate in the Premises or any part thereof or any interest in such fee estate, shall join in awritten instrument effecting such merger and shall duly record the same.

(D) Upon any termination of the Lease Agreement or the Company’s rights of possession aslessee thereunder pursuant to Article X thereof, the Agency may use the Premises for any lawful purpose,may sell or assign its rights hereunder or the leasehold estate hereby created to any Person or Personswithout the consent of the Company, and may enter upon the Premises for purpose of taking possessionthereof.

SECTION 3.5. ADDITIONS, ALTERATIONS AND IMPROVEMENTS. Subject to the provisions ofthe Lease Agreement, the Company shall have the right, from time to time, to make such changes,additions, improvements and alterations, demolition or new construction, structural or otherwise, to thePremises as the Company shall deem necessary or desirable. Title to improvements now located orhereafter constructed upon the Premises, and any modifications, additions, restrictions, repairs andreplacements, thereof, shall be in the Agency during the term of this Underlying Lease, except asotherwise provided in the Lease Agreement.

SECTION 3.6. ASSIGNMENT. (A) So long as neither the Lease Agreement nor the Company’s rightof possession as lessee thereunder shall have been terminated by the Agency pursuant to Article Xthereof, neither the Agency nor the Company shall assign or transfer this Underlying Lease, nor subleasethe whole or any part of the Property leased hereby, except that the Agency may lease the leaseholdinterest created hereunder to the Company pursuant to the Lease Agreement. The Agency may enter intothe Lease Agreement on the terms provided therein.

(B) Upon the occurrence and continuance of an Event of Default under the Lease Agreement,the Agency shall have the unrestricted right to assign and sublet, from time to time, all or any part of thisUnderlying Lease and the leasehold estate hereby created, to any one or more Persons. Upon suchassignment, the assignee shall thereupon be subrogated to all the rights of the former lessee under thisUnderlying Lease, whereupon (1) the former lessee shall have no further rights or obligations hereunderand (2) such assignee shall forthwith be obligated to assume and perform each and all of the formerlessee’s obligations and covenants hereunder.

SECTION 3.7. POSSESSION; QUIET ENJOYMENT. (A) Pursuant to the terms of the LeaseAgreement, except as otherwise provided therein after the occurrence of an Event of Default thereunder,the Company has the exclusive right to possess and make improvements to the Premises leased hereby.

(B) The Agency, upon paying the rent and observing and keeping all covenants, warranties,agreements and conditions of this Underlying Lease on the Agency’s part to be kept, shall quietly have,hold and enjoy the Premises during the Term of this Underlying Lease.

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SECTION 3.8. LIENS. So long as neither the Lease Agreement nor the Company’s right of possessionas lessee thereunder shall have been terminated by the Agency pursuant to Article X thereof, the Agencyshall not, directly, or indirectly, create or permit to be created, any mortgage, lien, encumbrance or othercharge upon, or pledge of, the Premises or the Agency’s interest therein (except for PermittedEncumbrances) without the Company’s prior written consent.

SECTION 3.9. TAXES. (A) It is recognized that, under the provisions of the Act, the Agency isrequired to pay no taxes or assessments upon any property acquired by it or under its jurisdiction orcontrol or supervision. Pursuant to the Lease Agreement, the Company has agreed to pay all taxes leviedagainst the Premises.

(B) Pursuant to the Lease Agreement and the Payment in Lieu of Tax Agreement, the Agencyhas agreed to apply for the tax exemptions respecting the Premises to which the Agency may be entitledpursuant to the Act, upon the condition that the Company make certain payments in lieu of taxesrespecting the Premises, as more fully set forth in the Lease Agreement and the Payment in Lieu of TaxAgreement. The Agency agrees to use its best efforts to apply for any tax exemptions to which theAgency may be entitled with respect to the Premises.

(C) In the event that (1) title to the Agency’s interest in the Premises shall be conveyed to theCompany, (2) on the date on which the Company obtains title to the Agency’s interest in the Premises,the Premises shall be assessed as exempt upon the assessment roll of any one or more of any taxingentities, and (3) the fact of obtaining title to the Agency’s interest in the Premises shall not immediatelyobligate the Company to make pro rata tax payments pursuant to legislation similar to Chapter 635 of the1978 Laws of the State (codified as subsection 3 of Section 302 of the Real Property Tax Law andSection 520 of the Real Property Tax Law), the Company shall be obligated to make payments in lieu oftaxes to the respective receivers of taxes in amounts equal to those amounts which would be due from theCompany as real property taxes with respect to the Premises if the Premises were owned by the Companyand not the Agency until the first tax year in which the Company shall appear on the tax rolls of thevarious taxing entities having jurisdiction over the Premises as the legal owner of record of the Agency’sinterest in the Premises.

SECTION 3.10. MAINTENANCE. Pursuant to the Lease Agreement, during the term of thisUnderlying Lease, the Company has agreed, at the Company’s sole cost and expense, to keep andmaintain or cause to be kept and maintained the Premises and all improvements now or hereafter locatedthereon in good order and condition and make or cause to be made all repairs thereto, interior andexterior, structural and non-structural, ordinary and extraordinary, and foreseen and unforeseen. TheAgency will have no responsibility with respect to the foregoing.

SECTION 3.11. CONDEMNATION. Subject to the provisions of the Lease Agreement, in the eventof a total, substantial or partial taking by eminent domain or for any public or quasi public use under anystatute (or voluntary transfer or conveyance to the condemning agency under threat of condemnation), theAgency shall be entitled to its costs and expenses incurred with respect to the Premises (including anyunpaid amounts due pursuant to the Basic Documents and the costs of participating in such condemnationproceeding or transfer), and thereafter the Agency shall not participate further in any condemnationaward.

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ARTICLE IV


SECTION 4.1. DEFAULT. (A) Any one or more of the following events shall constitute an “Event ofDefault” under this Underlying Lease:

(1) The failure of the Agency (or the Company on behalf of the Agency) to pay therent due pursuant to this Underlying Lease within fifteen (15) days after notice to the Agencyspecifying the nature of such default; or

(2) The failure of the Agency (or the Company on behalf of the Agency) to observeand perform any covenant, condition or agreement on its part to be performed (other than asreferred to in paragraph (1) above) and continuance of such failure for a period of thirty (30) daysafter notice to the Agency specifying the nature of such default; provided that if by reason of thenature of such default the same cannot be remedied within thirty (30) days, failure of the Agency(or the Company on behalf of the Agency), to proceed promptly to cure the same and thereafterprosecute the curing of such default with due diligence.

(B) Notwithstanding the provisions of Section 4.1(A) hereof, if by reason of force majeure(as hereinafter defined) either party hereto shall be unable, in whole or in part, to carry out its obligationsunder this Underlying Lease and if such party shall give notice and full particulars of such force majeurein writing to the other party within a reasonable time after the occurrence of the event or cause reliedupon, the obligations under this Underlying Lease of the party giving such notice so far as they areaffected by such force majeure, shall be suspended during the continuance of the inability, which shallinclude a reasonable time for the removal of the effect thereof. The suspension of such obligations forsuch period pursuant to this subsection (B) shall not be deemed an event of default under this Section.The term “force majeure” as used herein shall include, without limitation, acts of God, strikes, lockouts orother industrial disturbances, acts of public, enemies, orders of any kind of government authority or anycivil or military authority, hurricanes, storms, floods, washouts, droughts, arrests, restraint of governmentand people, civil disturbances, explosions, breakage or accident to machinery, transmission pipes orcanals, partial or entire failure of utilities. It is agreed that the settlement of strikes, lockouts and otherindustrial disturbances shall be entirely within the discretion of the party having difficulty and the partyhaving difficulty shall not be required to settle any strike, lockout or other industrial disturbances byacceding to the demands of the opposing party or parties.

SECTION 4.2. REMEDIES ON DEFAULT. Whenever any Event of Default hereunder by one partyhereto shall have occurred and be continuing for more than fifteen (15) days after written notice of defaultby the other party, the other party may enforce the provisions of this Underlying Lease and may enforceand protect its right by a suit or suits in equity or at law for (1) the specific performance of any covenantor agreement contained herein or (2) any other appropriate legal or equitable remedy.

SECTION 4.3. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to theAgency is intended to be exclusive of any other available remedy, but each and every such remedy shallbe cumulative and in addition to every other remedy given under this Underlying Lease or now orhereafter existing at law or in equity. No delay or omission to exercise any right or power accruing uponany default shall impair any such right or power or shall be construed to be a waiver thereof, but any suchright and power may be exercised from time to time and as often as may be deemed expedient. Ii orderto entitle the Agency to exercise any remedy reserved to it in this Article IV, it shall not be necessary togive any notice, other than such notice as may be herein expressly required.

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SECTION 4.4. AGREEMENT TO PAY ATTORNEYS’ FEES AND EXPENSES. In the event eitherparty should default under any of the provisions of this Underlying Lease and the other party shouldemploy attorneys or incur other expenses for the collection of amounts payable hereunder or theenforcement of performance or observance of any obligations or agreements on the part of the defaultingparty herein contained, the defaulting party shall, on demand therefor, pay to the other party thereasonable fees of such attorneys and such other expenses so incurred, whether an action is commencedor not.

SECTION 4.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event anyagreement contained herein should be breached by either party and thereafter such breach be waived bythe other party, such waiver shall be limited to the particular breach so waived and shall not be deemed towaive any other breach hereunder.

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ARTICLE V

MISCELLANEOUS

SECTION 5.1. SURRENDER. (A) The Agency shall, on the last day of the Term of this UnderlyingLease or on the last day of any earlier termination of the Term of this Underlying Lease, surrender anddeliver the Premises and all buildings, improvements, alterations, equipment and fixtures located thereonto the possession and use of the Company without delay and in good order, condition and repair, exceptfor reasonable wear and tear.

(B) On the last day of the Term of this Underlying Lease or on the last day of any earliertermination of the Term of this Underlying Lease, title to all buildings, improvements, alterations,equipment located on the Premises shall automatically, and without the need of any further or additionalinstrument, vest in the Company. Notwithstanding the foregoing, upon the reasonable request of theCompany, the Agency shall execute and deliver to the Company an instrument in a form of Exhibit C tothe Lease Agreement to be recorded to confirm this vesting of title.

SECTION 5.2. NOTICES. (A) All notices, certificates and other communications hereunder shall be inwriting and shall be sufficiently given and shall be deemed given when (I) sent to the applicable addressstated below by registered or certified mail, return receipt requested, or by such other means as shallprovide the sender with documentary evidence of such delivery, or (2) delivery is refused by theaddressee, as evidenced by an affidavit of the Person who attempted to effect such delivery.

(B) The addresses to which notices, certificates and other communications hereunder shall bedelivered are as follows:

IF TO THE COMPANY:

Hill & Markes Realty, LLC120 Edson StreetAmsterdam, New York 12010Attention: Neal Packer, COO

WITH COPIES TO:



—11—012178/00069 Business 75311 18v2

IF TO THE AGENCY:


WITH A COPY TO:

Law Offices of Paul L. Wollman41 Market StreetAmsterdam, New York 12010Attention: Paul L. Wollman, Esq.

(C) The Agency or the Company may, by notice given hereunder, designate any further ordifferent addresses to which subsequent notices, certificates and other communications to the Agency orthe Company, as the case may be, shall be sent.

SECTION 5.3. APPLICABLE LAW. This Underlying Lease shall be governed exclusively by theapplicable laws of the State.

SECTION 5.4. BINDiNG EFFECT. This Underlying Lease shall inure to the benefit of, and shall bebinding upon the Agency and the Company and their respective successors and assigns; provided, that,except as provided elsewhere herein, the interest of the Agency in this Underlying Lease may not beassigned, sublet or otherwise transferred without the prior written consent of the Company.

SECTION 5.5. SEVERABILITY. If any one or more of the covenants or agreements provided herein onthe part of the Agency or the Company to be performed shall, for any reason, be held or shall, in fact, beinoperative, unenforceable or contrary to law in any particular case, such circumstance shall not renderthe provision in question inoperative or unenforceable in any other case or circumstance. Further, if anyone or more of the phrases, sentences, clauses, paragraphs or sections herein shall be contrary to law, thensuch covenant or covenants or agreement or agreements shall be deemed separable from the remainingprovisions hereof and shall in no way affect the validity of the other provisions of this Underlying Lease.

SECTION 5.6. AMENDMENTS, CHANGES AND MODIFICATIONS. This Underlying Lease maynot be amended, changed, modified, altered or terminated, except by an instrument in writing signed bythe parties hereto.

SECTION 5.7. EXECUTION OF COUNTERPARTS. This Underlying Lease may be executed inseveral counterparts, each of which shall be an original and all of which shall constitute but one and thesame instrument.

SECTION 5.8. TABLE OF CONTENTS AND SECTION HEADiNGS NOT CONTROLLING. TheTable of Contents and the headings of the several Sections in this Underlying Lease have been preparedfor convenience of reference only and shall not control, affect the meaning of or be taken as aninterpretation of any provision of this Underlying Lease.

SECTION 5.9. NO RECOURSE; SPECIAL OBLIGATION. (A) The obligations and agreements of theAgency contained herein and in the other Basic Documents shall be deemed the obligations andagreements of the Agency, and not of any member, officer, agent (other than the Company) or employee

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of the Agency in his individual capacity, and the members, officers, agents (other than the Company) andemployees of the Agency shall not be liable personally hereon or thereon or be subject to any personalliability or accountability based upon or in respect hereof or thereof or of any transaction contemplatedhereby or thereby.

(B) The obligations and agreements of the Agency contained herein and in the other BasicDocuments shall not constitute or give rise to an obligation of the State of New York or MontgomeryCounty, New York, and neither the State of New York nor Montgomery County, New York shall beliable hereon or thereon and, further, such obligations and agreements shall not constitute or give rise to ageneral obligation of the Agency, but rather shall constitute limited obligations of the Agency payablesolely from the revenues of the Agency derived and to be derived from the lease, sale or other dispositionof the Project Facility.

(C) No order or decree of specific performance with respect to any of the obligations of theAgency hereunder or under the other Basic Documents shall be sought or enforced against the Agencyunless (1) the party seeking such order or decree shall first have requested the Agency in writing to takethe action sought in such order or decree of specific performance, and ten (10) days shall have elapsedfrom the date of receipt of such request, and the Agency shall have refused to comply with such request(or, if compliance therewith would reasonably be expected to take longer than ten (10) days, shall havefailed to institute and diligently pursue action to cause compliance with such request) or failed to respondwithin such notice period, (2) if the Agency refuses to comply with such request and the Agency’s refusalto comply is based on its reasonable expectation that it will incur fees and expenses, the party seekingsuch order or decree shall have placed in an account with the Agency an amount or undertaking sufficientto cover such reasonable fees and expenses, and (3) if the Agency refuses to comply with such requestand the Agency’s refusal to comply is based on its reasonable expectation that it or any of its members,officers, agents (other than the Company) or employees shall be subject to potential liability, the partyseeking such order or decree shall (a) agree to indemnify and hold harmless the Agency and its members,officers, agents (other than the Company) and employees against any liability incurred as a result of itscompliance with such demand, and (b) if requested by the Agency, furnish to the Agency satisfactorysecurity to protect the Agency and its members, officers, agents (other than the Company) and employeesagainst all liability expected to be incurred as a result of compliance with such request.

SECTION 5.10. RECORDiNG. The Agency and the Company agree that this Underlying Lease (or amemorandum thereof) shall be recorded by the Agency in the appropriate office of the County Clerk ofMontgomery County, New York.

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IN WITNESS WHEREOF, the Agency and the Company have caused this Underlying Lease tobe executed in their respective names by their respective duly authorized officers and to be dated as of theday and year first above written.


BY:%j4,, W(V4e Chairman

HILL & MARKES REALTY, LLC.

BY:_____________Authorized Officer

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IN WITNESS WHEREOF, the Agency and the Company have caused this Underlying Lease tobe executed in their respective names by their respective duly authorized officers and to be dated as of theday and year first above written.


BY:__________________________(Vice) Chairman

HILL & MARKES REALTY, L ‘C.

BY:_____//Authorized Me ber

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On the 301h day of June, in the year 2010, before me, the undersigned, personally appearedWILLIAM HISERT, personally known to me or proved to me on the basis of satisfactory evidence to bethe individual whose name is subscribed to the within instrument and acknowledged to me that heexecuted the same in his capacity, and that by his signature on the instrument, the individual, or theperson upon behalf of which the individual acted, executed the• ment.

Notary Public

RE(,#o2Qg73O 185

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COUNTY OF FUON )

On the ‘7 of July, in the year 2010, before me, the undersigned, personally appeared NEALPACKER, personally known to me or proved to me on the basis of satisfactory evidence to be theindividual whose name is subscribed to the within instrument and acknowledged to me that he executedthe same in his capacity, and that by his signature on the instrument, the individual, or the person uponbehalf of which the individual acted, executed the instrument.

QjNotary PuL, V

- ‘---w ark

MyCL LFLHH- o1LJLt/

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Public

012178/00069 Business 75311 18v2

APPENDIX A

SCHEDULE OF DEFINITIONS

The following words and terms used in the attached document shall have the respective meaningsset forth below unless the context or use indicates another or different meaning or intent:


“Act” means Title 1 of Article 18-A of the General Municipal Law of the State, as amended fromtime to time, together with Chapter 666 of the 1970 Laws of the State, constituting Section 895-d of theGeneral Municipal Law of the State, as amended from time to time.

“Affected Tax Jurisdiction” shall have the meaning assigned to such term in Section 854(16) ofthe Act), which defines such term, in the context of the Project, to mean any village, town, city, county,and school district in which the Project Facility is located

“Affected Tax Jurisdictions” means all Affected Tax Jurisdictions in which the Project Facility islocated.

“Agency” means (A) Montgomery County Industrial Development Agency and its successors andassigns, and (B) any public benefit corporation or other public corporation resulting from or surviving anyconsolidation or merger to which Montgomery County Industrial Development Agency or its successorsor assigns may be a party.

“Applicable Laws” means all statutes, codes, laws, acts, ordinances, orders, judgments, decrees,injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of allGovernmental Authorities, foreseen or unforeseen, ordinary or extraordinary, which now or at any timehereafter may be applicable to or affect the Project Facility or any part thereof or the conduct of work onthe Project Facility or any part thereof or to the operation, use, manner of use or condition of the ProjectFacility or any part thereof (the applicability of such statutes, codes, laws, acts, ordinances, orders, rules,regulations, directions and requirements to be determined both as if the Agency were the owner of theProject Facility and as if the Company and not the Agency were the owner of the Project Facility),including but not limited to (1) applicable building, zoning, environmental, planning and subdivisionlaws, ordinances, rules and regulations of Governmental Authorities having jurisdiction over the ProjectFacility, (2) restrictions, conditions or other requirements applicable to any permits, licenses or othergovernmental authorizations issued with respect to the foregoing, and (3) judgments, decrees orinjunctions issued by any court or other judicial or quasi-judicial Governmental Authority.

“Approving Resolution” means the resolution duly adopted by the Agency on June 30, 2010,authorizing and directing the undertaking and completion of the Project and the execution and delivery ofthe Basic Documents to which the Agency is a party.

“Assignment of Rents” means the assignment of rents and leases dated as of June 30, 2010 fromthe Agency and the Company to the Lender.

“Authorized Representative” means (A) with respect to the Agency, its Chairman or ViceChairman, or such other Person or Persons at the time designated to act on behalf of the Agency bywritten certificate furnished to the Company containing the specimen signature of each such Person and

AppA-1012178/00069 Business 75311 18v2

signed on behalf of the Agency by its Chairman, Vice Chairman or such other person as may beauthorized by resolution of the Agency to act on behalf of the Agency, and (B) with respect to theCompany, its chief executive officer or chief financial officer, or such other Person or Persons at the timedesignated to act on behalf of the Company by written certificate furnished to the Agency containing thespecimen signature of each such Person and signed on behalf of the Company by its chief executiveofficer or chief financial officer, or such other person as may be authorized by the Board of the Companyto act on behalf of the Company.

“Basic Documents” means the Conveyance Documents, the Lease Agreement, the Payment inLieu of Tax Agreement, the Loan Documents and all other instruments and documents related thereto andexecuted in connection therewith, and any other instrument or document supplemental thereto, each asamended from time to time.

“Bill of Sale to Agency” means the bill of sale delivered on the Closing Date from the Companyto the Agency conveying all of the Company’s interest in the Equipment to the Agency.

“Bill of Sale to Company” means the bill of sale from the Agency to the Company conveying allof the Agency’s interest in the Equipment to the Company, substantially in the form attached as Exhibit Dto the Lease Agreement.

“Business Day” means a day on which banks located in the Town of Florida, MontgomeryCounty, New York are not required or authorized to remain closed and on which the New York StockExchange is not closed.

“Closing” means the closing at which the Basic Documents are executed and delivered by theCompany and the Agency.

“Closing Date” means the date of the Closing.

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations of the UnitedStates Treasury Department promulgated thereunder.

“Company” means Hill & Markes Realty, LLC, a limited liability company duly organized andexisting under the laws of the State of New York, and its successors and assigns, to the extent permittedpursuant to Section 8.4 of the Lease Agreement.

“Completion Date” means the earlier to occur of (A) July 1, 2011 or (B) such date as shall becertified by the Company to the Agency as the date of completion of the Project pursuant to Section 4.2 ofthe Lease Agreement, or (C) such earlier date as shall be designated by written communication from theCompany to the Agency as the date of completion of the Project.

“Condemnation” means the taking of title to, or the use of, Property under the exercise of thepower of eminent domain by any Governmental Authority.

“Conveyance Documents” means, collectively, the Lease to Agency, the License to Agency andthe Bill of Sale to Agency.

“Default Interest Rate” means a per annum rate of interest equal to twelve percent (12%) perannum, or the maximum rate of interest permitted by law, whichever is less.

AppA-2012178/00069 Business 7531118v2

“Equipment” means all equipment, fixtures, machines, building materials and items of personalproperty and all appurtenances intended to be acquired in connection with the completion of the Projectprior to the Completion Date with the proceeds of any payment made by the Company pursuant toSection 4.1(H) of the Lease Agreement, and such substitutions and replacements therefor as may be madefrom time to time pursuant to the Lease Agreement, including without limitation, all the Propertydescribed in Exhibit B attached to the Lease Agreement.

“Event of Default” means, with respect to any particular Basic Document, any event specified asan Event of Default pursuant to the provisions thereof.

“Facility” means all buildings (or portions thereof), improvements, structures and other relatedfacilities, and improvements thereto, (A) located on the Land, (B) financed with the proceeds of anypayment made by the Company pursuant to Section 4.1(H) of the Lease Agreement, and (C) notconstituting a part of the Equipment, all as they may exist from time to time.

“Financial Assistance” shall have the meaning assigned to such term in the fifth recital clause tothe Lease Agreement.

“Governmental Authority” means the United States of America, the State, any other state and anypolitical subdivision thereof, and any agency, department, commission, court, board, bureau orinstrumentality of any of them.

“Gross Proceeds” means one hundred percent (100%) of the proceeds of the transaction withrespect to which such term is used, including, but not limited to, the settlement of any insurance orCondemnation award.

“Hazardous Materials” shall mean all hazardous materials including, without limitation, anyflammable explosives, radioactive materials, radon, asbestos, urea formaldehyde foam insulation,polychlorinated byphenyls, petroleum, petroleum products, methane, hazardous materials, hazardouswastes, hazardous or toxic substances, or related materials as set forth in the ComprehensiveEnvironmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections9601, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, etseq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.),Articles 15 or 27 of the State Environmental Conservation Law, or in the regulations adopted andpublications promulgated pursuant thereto, or any other Federal, state or local environmental law,ordinance, rule or regulation.

“Indebtedness” means (1) the monetary obligations of the Company to the Agency and itsmembers, officers, agents, servants and employees under the Lease Agreement and the other BasicDocuments, (2) the monetary obligations of the Company to the Affected Tax Jurisdictions under thePayment in Lieu of Tax Agreement and the other Basic Documents, and (3) all interest accrued andaccruing on any of the foregoing.

“Independent Counsel” means an attorney or firm of attorneys duly admitted to practice lawbefore the highest court of any state and not a full-time employee of the Company or the Agency.

“Independent Engineer” means an engineer or architect or firm of engineers or architects dulyadmitted to practice engineering or architecture in the state and not a full-time employee of the Companyor the Agency.

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“Land” means the Premises, constituting the leasehold and license interests in real propertycreated by the License to Agency and the Lease to Agency, respectively, as more particularly describedon Exhibit A attached to the Lease Agreement.

“Lease Agreement” means the lease agreement dated as of June 1, 2010 by and between theAgency, as landlord, and the Company, as tenant, pursuant to which, among other things, the Agency hasleased the Project Facility to the Company, as said lease agreement may be amended or supplementedfrom time to time.

“Leased Premises” means the Property leased to the Agency pursuant to the Lease to Agency.

“Lender” means Royal Bank of Scotland and its successors and assigns as holder of theMortgage.

“License to Agency” means the license agreement dated as of June 1, 2010 and delivered on theClosing Date from the Company to the Agency, pursuant to which the Company has authorized theAgency to enter upon the Land for the purpose of (A) undertaking and completing the Project and(B) enforcing the provisions of the Lease Agreement, as said license agreement may be amended orsupplemented from time to time.

“Licensed Premises” means the Property licensed to the Agency pursuant to the License toAgency.

“Lien” means any interest in Property securing an obligation owed to a Person, whether suchinterest is based on the common law, statute or contract, and including but not limited to a securityinterest arising from a mortgage, a security agreement, encumbrance, pledge, conditional sale or trustreceipt or a lease, consignment or bailment for security purposes or a judgment against the Company.The term “Lien” includes reservations, exceptions, encroachments, projections, easements, rights of way,covenants, conditions, restrictions, leases and other similar title exceptions and encumbrances, includingbut not limited to mechanics’, materialmen’s, warehousemen’s and carriers’ liens and other similarencumbrances affecting real property. For purposes of the Basic Documents, a Person shall be deemed tobe the owner of any Property which it has acquired or holds subject to a conditional sale agreement orother arrangement pursuant to which title to the Property has been retained by or vested in some otherPerson for security purposes.

“Loan” means a loan in the principal sum of up to $7,000,000 to be made by the Lender to theCompany and to be secured by, among other things, the Mortgage.

“Loan Documents” means, collectively, the Mortgage and any building loan and otheragreements reasonably requested by the Lender in connection with the Loans.

“Mortgage” means the mortgage dated as of June 30, 2010 from the Company and the Agency tothe Lender to secure advances of up to $8,363,843 under the Loan.

“Mortgaged Property” means all Property which may from time to time be subject to the Lien ofthe Mortgage.

“Net Proceeds” means so much of the Gross Proceeds with respect to which that term is used asremain after payment of all fees for services, expenses, costs and taxes (including attorneys’ fees andexpenses) incurred in obtaining such Gross Proceeds.

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“Payment in Lieu of Tax Agreement” means the payment in lieu of tax agreement dated as ofJune 1, 2010 by and between the Agency and the Company, pursuant to which the Company has agreed tomake payments in lieu of taxes with respect to the Project Facility, as such agreement may be amended orsupplemented from time to time.

“Pennitted Encumbrances” means (A) utility, access and other easements, rights of way,restrictions, encroachments and exceptions that exist on the Closing Date and benefit or do not materiallyimpair the utility or the value of the Property affected thereby for the purposes for which it is intended,(B) mechanics’, materialmen’s, warehousemen’s, carriers’ and other similar Liens, to the extent permittedby Section 8.8 of the Lease Agreement, (C) Liens for taxes, assessments and utility charges, to the extentpermitted by Section 6.2(B) of the Lease Agreement, (D) any Lien on the Project Facility obtainedthrough any Basic Document, (E) the Mortgage and (F) any Lien requested by the Company in writingand consented to by the Agency, which consent of the Agency shall not be unreasonably withheld ordelayed.

“Person” means an individual, partnership, corporation, trust, unincorporated organization orGovernmental Authority.

“Plans and Specifications” means the description of the Project appearing in the fifth recitalclause to the Lease Agreement.

“Premises” means, collectively, the Leased Premises and the Licensed Premises.

“Project” means shall have the meaning set forth in the fifth recital clause to the LeaseAgreement.

“Project Facility” means, collectively, the Land, the Facility and the Equipment.

“Property” means any interest in any kind of property or asset, whether real, personal or mixed,or tangible or intangible.

“Real Property Tax Exemption Form” means a New York State Board of Real Property ServicesForm RP-4 12-a relating to the Project Facility.

“Sales Tax Exemption Letter” shall have the meaning assigned to such term in Section 8.12 of theLease Agreement.

“SEQRA” means Article Eight of the Environmental Conservation Law of the State and thestatewide regulations adopted pursuant thereto by the Department of Environmental Conservation of theState of New York.

“State” means the State of New York.

“Term” means the term of the Underlying Lease.

“Termination of Lease Agreement” means a termination of lease agreement by and between theCompany, as tenant, and the Agency, as landlord, intended to evidence the termination of the leaseagreement, substantially in the form attached as Exhibit E to the Lease Agreement.

“Termination of Lease to Agency” means the termination of the Lease to Agency from theAgency to the Company, evidencing termination of the Lease to Agency, substantially in the form

AppA-5012178/00069 Business 75311 18v2

attached as Exhibit C to the Lease Agreement, which termination is intended, upon certain terminations ofthe Lease Agreement, to terminate the leasehold interest of the Agency created pursuant to the Lease toAgency.

“Termination of License to Agency” means the termination of the License to Agency from theAgency to the Company, evidencing termination of the License to Agency, substantially in the formattached as Exhibit F to the Lease Agreement.

“Unassigned Rights” means (A) the rights of the Agency granted pursuant to Sections 2.2, 3.2,3.3, 4.1(B), 4.1(D), 4.1(E)(2), 4.1(F), 4.1(G), 5.2(A), 5.3(B), 5.4(B), 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 7.1, 7.2,8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 9.1, 9.3, 11.1, 12.4, 12.8 and 12.10 of the Lease Agreement, (B)the moneys due and to become due to the Agency for its own account or the members, officers, agents(other than the Company) and employees of the Agency for their own account pursuant to Sections2.2(F), 3.3, 4.1, 5.3(B)(2), 5.3(C), 6.4(B), 8.2, 10.2 and 10.4 of the Lease Agreement, (C) the moneys dueas payments in lieu of taxes pursuant to Section 6.6 of the Lease Agreement and the Payment in Lieu ofTax Agreement, and (D) the right to enforce the foregoing pursuant to Article X of the Lease Agreement.

“Underlying Lease” or “Lease to Agency” means the lease to agency dated as of June 1, 2010 byand between the Company, as landlord, and the Agency, as tenant, pursuant to which the Company hasconveyed a leasehold interest in the Premises to the Agency, as said lease to agency may be amended orsupplemented from time to time.

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EXHIBIT A


- SEE ATTACHED -

A-i012178/00069 Business 7531118v2

SCHEDULE A



Beginning at a point located on the southerly boundary of NYS Route 5S at its intersection withthe division line between Lot 1 on the east and Lot 2 on the west and proceeding in a clockwise directionthe following seven (7) courses and distances:



3.) South 63°-I l’-l 8” East, a distance of 198.52 feet to a point;


5.) South 58°-41 ‘-37” East, a distance of 78.05 feet to a point;


7.) South 70°-18’-15” East, a distance of 163.75 feet to a point located on the westerlybounds of land now or formerly of Itla Agosta on the east and lands herein described on the west; thencealong said division line the following course and distance:


I.) South 71° 13’ 00” East, a distance of 675.85 feet to apoint on the westerly boundary oflands now or formerly Alpine Haus Ski Shop, Inc. on the east and the lands herein described on thewest; thence along said division line the following course and distance:


1.) North 85°-50’-44” West, a distance of 553.58 feet to a point;


3.) North 86°-42’28” West, a distance of 310.17 feet to a point on the northerly boundary ofthe land now or formerly of Gilbert & Raymond Soodol on the south and the lands herein described onthe north; thence along said division line the following course and distance:

A-2012178/00069 Business 7531118v2


I.) North 23°-34’-09” East a distance of 1247.87 to the POINT OF BEGINNING, being45.25 acres, more or less.

A-3012178/00069 Business 7531118v2


HILL & MARKES REALTY, LLC,AS LANDLORD

AND

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY,AS TENANT

MEMORANDUM OF UNDERLYING LEASE


RELATING TO A LEASEHOLD INTEREST HELD BY THELANDLORD IN A CERTAIN PARCEL OF LAND LOCATED ONSTATE ROUTE 5S IN THE TOWN OF FLORIDA, MONTGOMERYCOUNTY, NEW YORK.

THIS DOCUMENT IS INTENDED TO BE RECORDED IN LIEU OFTHE WITHIN-DESCRIBED UNDERLYING LEASE INACCORDANCE WITH THE PROVISIONS OF SECTION 291-c OFTHE NEW YORK REAL PROPERTY LAW.

012178/00069 Business 7531127v1

MEMORANDUM OF UNDERLYING LEASE

The undersigned, HILL & MARKES REALTY, LLC, a limited liability company organized andexisting under the laws of the State of New York having an office for the transaction of business locatedat 120 Edson Street, Amsterdam, New York, as landlord (referred to in the hereinafter describedUnderlying Lease as the “Company”) and MONTGOMERY COUNTY INDUSTRIALDEVELOPMENT AGENCY, a public benefit corporation organized and existing under the laws of theState of New York having an office for the transaction of business located at Old County Courthouse,Park Street, Fonda, New York, as tenant (referred to in the hereinafter described Underlying Lease as the“Agency”) have entered into a certain lease to Agency dated as of June 1, 2010 the “Underlying Lease”).

The Underlying Lease covers a parcel of land (the “Land”) located on State Route 5S in the Townof Florida, Montgomery County, New York, said Land being more particularly described on Exhibit Aattached hereto and made a part hereof, together with any improvements now or hereafter located on theLand (the Land and all of said improvements being sometimes collectively referred to as the “Premises”).

The Underlying Lease provides for the rental of the Premises for a term (the “Term”)commencing as of June 1, 2010 and expiring on the earlier to occur of (A) December 31, 2022 or (B) solong as neither the term of a lease agreement dated as of June 1, 2010 (the “Lease Agreement”) by andbetween the Agency and the Company nor the Company’s right of possession as lessee thereunder shallhave been terminated by the Agency pursuant to Article X thereof, the termination of the LeaseAgreement. The Underlying Lease obligates the Agency, among other things, to pay rent of $1.00 for theTerm.

Pursuant to the Lease Agreement, the Company as agent of the Agency has agreed to improve thePremises by constructing certain improvements thereto and acquiring and installing certain personalproperty thereon and therein (collectively with the Premises, the “Project Facility”). The LeaseAgreement grants to the Company various rights to purchase the Project Facility. Upon any suchpurchase of the Project Facility, the Agency shall surrender and deliver the Premises and allimprovements located thereon to the Company. The Lease Agreement (or a memorandum thereof) isintended to be recorded in the Montgomery County Clerk’s Office immediately subsequent to therecording of this Memorandum of Underlying Lease.

Notwithstanding the lease of the Project Facility by the Agency to the Company pursuant to theLease Agreement, during the term of the Underlying Lease, there shall be no merger of the UnderlyingLease nor of the leasehold estate created by the Underlying Lease with the fee estate in the Premises orany part thereof by reason of the fact that the same person or entity may acquire, own or hold theUnderlying Lease or the leasehold estate created thereunder and the fee estate in the Premises.

012178/00069 Business 7531 127v1

IN WITNESS WHEREOF, the Company and the Agency have caused this Memorandum ofUnderlying Lease to be executed in their respective names, by their respective duly authorized officersand to be dated as of the 1st day of June, 2010.


BY:______()4k) Chairman


BY:______________Authorized Member

-2-000161/01178 Business 7531127v1

IN WITNESS WHEREOF, the Company and the Agency have caused this Memorandum ofUnderlying Lease to be executed in their respective names, by their respective duly authorized officersand to be dated as of the 1st day of June, 2010.


BY:____________________________(Vice) Chairman

HILL & MARKES R ALTY,,,LC

BY://Øuthorized Mmber

-2-012178/00069 Business7531127v1



On the 30th day of June, in the year 2010, before me, the undersigned, personally appearedWILLIAM HISERT, personally known to me or proved to me on the basis of satisfactory evidence to bethe individual whose name is subscribed to the within instrument and acknowledged to me that heexecuted the same in his capacity, and that by his signature on the instrument, the individual, or theperson upon behalf of which the individual acted, executed the i ment.

Notary Public

PAUL L.NOTARY PUBLIC STATE OF NEWOUAUFIEU IN ioTrGQ,ERy COUNTY

REG #UVV09730185MY 00MM XL JULY J’

012178/00069 Business 7531 127v1-3-


COUNTY OF F1TON )

On the7 day of July, in the year 2010, before me, the undersigned, personally appeared NEALPACKER, personally known to me or proved to me on the basis of satisfactory evidence to be theindividual whose name is subscribed to the within instrument and acknowledged to me that he executedthe same in his capacity, and that by his signature on the instrument, the individual, or the person uponbehalf of which the individual acted, executed the instrument.

Notary Public

.]‘D J. H/A

1 Cur S0H

-4-012178/00069 Business 7531 127v1

EXHIBIT A


- SEE ATTACHED -

A-iOI278/OOO69 Business 7531 127v1

SCHEDULE A






3.) South 63°- 11,-i 8” East, a distance of 198.52 feet to a point;





I.) South 06°39’ 15” West, a distance of 200.00 feet to a point on the southerly boundary oflands now or formerly Itla Agosta on the north and the lands herein described on the south; thence alongsaid division line the following course and distance:

1.) South 710 13’ 00” East, a distance of 675.85 feet to apoint on the westerly boundary oflands now or formerly Alpine Haus Ski Shop, Inc. on the east and the lands herein described on thewest; thence along said division line the following course and distance:

I.) South 570 38’ 30” West, a distance of 796.64 feet to a point on the northerly boundary ofthe NYS Thruway on the south and the lands herein described on the north; thence along said divisionline the following three (3) courses and distances:


2.) North 82°-5 1 ‘-17” West, a distance of 763.31 feet to a point;


A-2012178/00069 Business 7531127v1

I.) North 38°-19’29” West, a distance of 201.63 feet to a point at its intersection with thedivision line with Lot 2 on the west and the lands herein described on the east; thence along saiddivision line the following course and distance:

I.) North 23°-34’-09” East a distance of 1247.87 to the POINT OF BEGINNING, being45.25 acres, more or less.

A-3012178/00069 Business 7531 ]27v1

TP-584 (3/07) New York State Department of Taxation and Finance

Combined Real Estate Recording office time stamp

Transfer Tax Return,

Credit Line Mortgage Certificate, and

Certification of Exemption from the

Payment of Estimated Personal Income Tax

See Form TP-584-I, Instructions for Form TP-584, before completing this form. Please print or type.Schedule A — Information relating to conveyance

Grantor/Transferor Name (if individual: last, first, middle initial) Social security number

LI Individual HILL & MARKES REALTY,_LLC

LI Corporation Mailing address Social security number

LI Partnership 120 EDSON_STREET

LI EstateITrust City State ZIP code Federal employer ident. number

Other AMSTERDAM NEW YORK 12010 27-2466803Grantee/Transferee Name (if individual: last, first, middle initial) Social security number

LI Individual MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY

LI Corporation Mailing address Social security number

LI Partnership 3_PARK STREET,_P.O._BOX_1500

LI Estate/Trust City State ZIP code Federal employer ident. number

Other FONDA NEW YORK 12068 52-1283539

Location and description of property conveyed

Tax map designation Address City/village Town CountySection Block Lot

54- 2-2 .1 HIGHWAY 5S AMSTERDAM FLORIDA MONTGOMERY

Type of property conveyed (check applicable box)

i El One- to three-family house 5 LI Commercial/Industrial Date of conveyance Percentage of real property2 LI Residential cooperative 6 LI Apartment building conveyed which is residential

LI Residential condominium 7 LI Office building 07 07 2010 real property %month day year

4 Vacant land 8 Other (see instructions)

Condition of conveyance (check all that apply)

a. El Conveyance of fee interest fE Conveyance which consists of a I. LI Option assignment or surrendermere change of identity or form of

. .. . . ownership or organization (attachb. LI Acquisition of a controlling interest (state Form TP-584. 1, Schedule F) m. LI Leasehold assignment or surrender

percentage acquired %)g. LI Conveyance for which credit for tax n. I5j Leasehold grant

c. LI Transfer of a controlling interest (state previously paid will be claimed (attachForm TP-584. 1, Schedule G)

percentage transferred %) 0. El Conveyance of an easementh. El Conveyance of cooperative apartment(s)

d. LI Conveyance to cooperative housing p. LI Conveyance for which exemptioncorporation i LI Syndication from transfer tax claimed (complete

. Schedule B, Part HI)

e. LI Conveyance pursuant to or in lieu of j. El Conveyance of air rights or q. El Conveyance of property partly withinforeclosure or enforcement of security development rights and partly outside the stateinterest (attach Form TP-584. 1, Schedule E) k. LI_Contract_assignment r._LI_Other_(describe)_______________________

For recording officer’s use Amount received Date received Transaction number

Schedule B., Part I $Schedule B., Part II $

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Schedule B — Real estate transfer tax return (Tax Law, Article 31)

Part I — Computation of tax dueI Enter amount of consideration for the conveyance (if you are claiming a total exemption from tax, check the

exemption claimed box, enter consideration and proceed to Part III) Exemption claimed2 Continuing lien deduction (see instructions if property is taken subject to mortgage or lien)

3 Taxable consideration (subtract line 2 from line 1)

4 Tax: $2 for each $500, or fractional part thereof, of consideration on line 35 Amount of credit claimed (see instructions and attach Form TP-584. 1, Schedule G)6 Total tax due* (subtract line 5 from line 4)

Part H — Computation of additional tax due on the conveyance of residential real property for $1 million or moreI Enter amount of consideration for conveyance (from Part I, line 1)

2 Taxable consideration (multiply line 1 by the percentage of the premises which is residential real property, as shown in Schedule A)3 Total additional transfer tax due* (multiply line 2 by 1% (.01))

1.2.

—- 0.00.- 0,00

5.—- 0.00

1.2.3.

Part III — Explanation of exemption claimed on Part I, line 1 (check any boxes that apply)

The conveyance of real property is exempt from the real estate transfer tax for the following reason:

a. Conveyance is to the United Nations, the United States of America, the state of New York, or any of their instrumentalities,agencies, or political subdivisions (or any public corporation, including a public corporation created pursuant to agreement orcompact with another state or Canada) a

b. Conveyance is to secure a debt or other obligation b El

c. Conveyance is without additional consideration to confirm, correct, modify, or supplement a prior conveyance c

d. Conveyance of real property is without consideration and not in connection with a sale, including conveyances conveyingrealty as bona fide gifts d LI

e. Conveyance is given in connection with a tax sale e

f. Conveyance is a mere change of identity or form of ownership or organization where there is no change in beneficialownership. (This exemption cannot be claimed for a conveyance to a cooperative housing corporation of real propertycomprising the cooperative dwelling or dwellings.) Attach Form TP-584. 1, Schedule F LI

g. Conveyance consists of deed of partition g

h. Conveyance is given pursuant to the federal Bankruptcy Act h LIi. Conveyance consists of the execution of a contract to sell real property, without the use or occupancy of such property, or

the granting of an option to purchase real property, without the use or occupancy of such property

j. Conveyance of an option or contract to purchase real property with the use or occupancy of such property where theconsideration is less than $200,000 and such property was used solely by the grantor as the grantor’s personal residenceand consists of a one-, two-, or three-family house, an individual residential condominium unit, or the sale of stockin a cooperative housing corporation in connection with the grant or transfer of a proprietary leasehold covering anindividual residential cooperative apartment

k. Conveyance is not a conveyance within the meaning of Tax Law, Article 31, section 1401(e) (attach documentssupporting such claim) k LI

I. Other (attach explanation)

*Please make check(s) payable to the county clerk where the recording is to take place. If the recording is to take place in New YorkCity, make check(s) payable to the NYC Department of Finance. If a recording is not required, send this return and your check(s) madepayable to the NYS Department of Taxation and Finance, directly to the NYS Tax Department, RETT Return Processing, P0 Box 5045,Albany NY 12205-5045.

LI

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Schedule C — Credit Line Mortgage Certificate (Tax Law, Article 11)

Complete the following only if the interest being transferred is a fee simple interest.

I (we) certify that: (check the appropriate box)

1 LI The real property being sold or transferred is not subject to an outstanding credit line mortgage.

The real property being sold or transferred is subject to an outstanding credit line mortgage. However, an exemption from the taxis claimed for the following reason:

El The transfer of real property is a transfer of a fee simple interest to a person or persons who held a fee simple interest in thereal property (whether as a joint tenant, a tenant in common or otherwise) immediately before the transfer.

LI The transfer of real property is (A) to a person or persons related by blood, marriage or adoption to the original obligor orto one or more of the original obligors or (B) to a person or entity where 50% or more of the beneficial interest in such realproperty after the transfer is held by the transferor or such related person or persons (as in the case of a transfer to a trustee forthe benefit of a minor or the transfer to a trust for the benefit of the transferor).

El The transfer of real property is a transfer to a trustee in bankruptcy, a receiver, assignee, or other officer of a court.

El The maximum principal amount secured by the credit line mortgage is $3,000,000 or more, and the real property being soldor transferred is not principally improved nor will it be improved by a one- to six-family owner-occupied residence or dwelling.

Please note: for purposes of determining whether the maximum principal amount secured is $3,000,000 or more as described

above, the amounts secured by two or more credit line mortgages may be aggregated under certain circumstances. See

TSB-M-96(6)-R for more information regarding these aggregation requirements.

El Other (attach detailed explanation).

3. El The real property being transferred is presently subject to an outstanding credit line mortgage. However, no tax is due for thefollowing reason:

El A certificate of discharge of the credit line mortgage is being offered at the time of recording the deed.

El A check has been drawn payable for transmission to the credit line mortgagee or his agent for the balance due, and asatisfaction of such mortgage will be recorded as soon as it is available.

. LI The real property being transferred is subject to an outstanding credit line mortgage recorded in

____________________________

(insert liber and page or reel or other identification of the mortgage). The maximum principal amount of debt or obligation securedby the mortgage is

_________________________

. No exemption from tax is claimed and the tax of

________________________

is being paid herewith. (Make check payable to county clerk where deed will be recorded or, if the recording is to take place inNew York City, make check payable to the NYC Department of Finance.)

Signature (both the grantor(s) and grantee(s) must sign)

Title

The undersigned certify that the above information contained in schedules A, B, and C, including any return, certification, schedule, orattachment, is to the best of his/her knowledge, true and complete, and authorize the person(s) submitting such form on their behalf to receivea copy for purposes of recording the dee or other instrument effecting the conveyance.

HILL & M21 R)C

%__

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY

rantor signature /‘ Title Grantee sg nature

BY:.Grartor signature Title . . Grantee signature Title

Authorized iviemoer (Vice) ChairmanReminder: Did you complete all of the required information in Schedules A, B, and C? Are you required to complete Schedule D? If youchecked e, f, or gin Schedule A, did you complete Form TP-584.1? Have you attached your check(s) made payable to the county clerkwhere recording will take place or, if the recording is in New York City, to the NYC Department of Finance? If no recording is required, sendyour check(s), made payable to the Department of Taxation and Finance, directly to the NYS Tax Department, RETT Return Processing,P0 Box 5045, Albany NY 12205-5045.

of 4 TP-584 (3/07)

Title

Grantee signature

Schedule C — Credit Line Mortgage Certificate (Tax Law, Article II)

Complete the following only if the interest being transferred is a fee simple interest.I (we) certify that: (check the appropriate box)

1. LI The real property being sold or transferred is not subject to an outstanding credit line mortgage.

2. LI The real property being sold or transferred is subject to an outstanding credit line mortgage. However, an exemption from the taxis claimed for the following reason:

LI The transfer of real property is a transfer of a fee simple interest to a person or persons who held a fee simple interest in thereal property (whether as a joint tenant, a tenant in common or otherwise) immediately before the transfer.


LI The transfer of real property is a transfer to a trustee in bankruptcy, a receiver, assignee, or other officer of a court.

LI The maximum principal amount secured by the credit line mortgage is $3,000,000 or more, and the real property being soldor transferred is not principally improved nor will it be improved by a one- to six-family owner-occupied residence or dwelling.

Please note: for purposes of determining whether the maximum principal amount secured is $3,000,000 or more as described

above, the amounts secured by two or more credit line mortgages may be aggregated under certain circumstances. See

TSB-M-96(6)-R for more information regarding these aggregation requirements.

LI Other (attach detailed explanation).

3. LI The real property being transferred is presently subject to an outstanding credit line mortgage. However, no tax is due for thefollowing reason:

LI A certificate of discharge of the credit line mortgage is being offered at the time of recording the deed.

LI A check has been drawn payable for transmission to the credit line mortgagee or his agent for the balance due, and asatisfaction of such mortgage will be recorded as soon as it is available.

. LI The real property being transferred is subject to an outstanding credit line mortgage recorded in

__________________________


________________________


________________________



The undersigned certify that the above information contained in schedules A, B, and C, including any return, certification, schedule, orattachment, is to the best of his/her knowledge, true and complete, and authorize the person(s) submitting such form on their behalf to receivea copy for purposes of recording the deed or other instrument effecting the conveyance.

HILL & MARKES REALTY, LLC MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY

Title Title

BY:Jb/ 7/

___

Grartor signature . . Grantee signature TitleAuthorized iviemoer (ieChairman

Reminder: Did you complete all of the required information in Schedules A, B, and C? Are you required to complete Schedule D? If youchecked e, f, or gin Schedule A, did you complete Form TP-584.1? Have you attached your check(s) made payable to the county clerk

where recording will take place or, if the recording is in New York City, to the NYC Department of Finance? If no recording is required, sendyour check(s), made payable to the Department of Taxation and Finance, directly to the NYS Tax Department, RETT Return Processing,P0 Box 5045, Albany NY 12205-5045.

Grantor signature

BY:

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Schedule 0 — Certification of exemption from the payment of estimated personal income tax (Tax Law, Article 22, section 663)Complete the following only if a fee simple interest or a cooperative unit is being transferred by an individual or estate or trust.

Part I — New York State residentsIf you are a New York State resident transferor(s)/seller(s) listed in Schedule A of Form TP-584 (or an attachment to Form TP-584), you mustsign the certification below. If one or more transferors/sellers of the real property or cooperative unit is a resident of New York State, eachresident transferor/seller must sign in the space provided. If more space is needed, please photocopy this Schedule 0 and submit as manyschedules as necessary to accommodate all resident transferors/sellers.

Certification of resident transferor(s)Iseller(s)

This is to certify that at the time of the sale or transfer of the real property or cooperative unit, the transferor(s)/seller(s) as signed below was aresident of New York State, and therefore is not required to pay estimated personal income tax under Tax Law, section 663(a) upon the sale ortransfer of this real property or cooperative unit.Signature Print full name Date

Signature Print full name Date



Note: A resident of New York State may still be required to pay estimated tax under Tax Law, section 685(c), but not as a condition of recordinga deed.

Part II — Nonresidents of New York State

If you are a nonresident of New York State listed as a transferor/seller in Schedule A of Form TP-584 (or an attachment to Form TP-584) butare not required to pay estimated personal income tax because one of the exemptions below applies under Tax Law, section 663(c), checkthe box of the appropriate exemption below. If any one of the exemptions below applies to the transferor(s)/seller(s), that transferor(s)/seller(s)is not required to pay estimated personal income tax to New York State under Tax Law, section 663. Each nonresident transferor/seller whoqualifies under one of the exemptions below must sign in the space provided. If more space is needed, please photocopy this Schedule D andsubmit as many schedules as necessary to accommodate all nonresident transferors/sellers.

If none of these exemption statements apply, you must complete Form IT-2663, Nonresident Real Property Estimated Income Tax PaymentForm, or Form IT-2664, Nonresident Cooperative Unit Estimated Income Tax Payment Form. For more information, see Payment of estimatedpersonal income tax, on page 1 of Form TP-584-I.Exemption for nonresident transferor(s)/seller(s)

This is to certify that at the time of the sale or transfer of the real property or cooperative unit, the transferor(s)/seller(s) (grantor) of this realproperty or cooperative unit was a nonresident of New York State, but is not required to pay estimated personal income tax under Tax Law,section 663 due to one of the following exemptions:

The real property or cooperative unit being sold or transferred qualifies in total as the transferor’s/seller’s principal residence(within the meaning of Internal Revenue Code, section 121) from

___________

to

___________

(see instructions)Date Date

LI The transferor/seller is a mortgagor conveying the mortgaged property to a mortgagee in foreclosure, or in lieu of foreclosure withno additional consideration.

LI The transferor or transferee is an agency or authority of the United States of America, an agency or authority of the state ofNew York, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government NationalMortgage Association, or a private mortgage insurance company.






HILL & MARKES REALTY, LLC,AS LICENSOR

AND

MONTGOMERY COUNTYINDUSTRIAL DEVELOPMENT AGENCY,

AS LICENSEE

LICENSE AGREEMENT


RELATiNG TO A LICENSE INTEREST IN A CERTAIN PARCEL OFLAND LICENSED BY THE LICENSOR TO THE LICENSEE ANDLOCATED ON STATE ROUTE 5S IN THE TOWN OF FLORIDA,MONTGOMERY COUNTY, NEW YORK.

012178/00069 Business 7531 147v1

TABLE OF CONTENTS

(This Table of Contents is not part of this License Agreementand is for convenience of reference only.)

PARTIES 1RECITALS 1

Section 1. License to Construct 3Section 2. Additional License 3Section 3. Non-Merger 4Section 4. Limited Liability 4

TESTIMONIUM 5SIGNATURES 5ACKNOWLEDGEMENTS 6

EXHIBIT A - Description of the Licensed Land A-I

(i)012178/00069 Business 7531 147v1

LICENSE AGREEMENT

THIS LICENSE AGREEMENT dated as of June 1, 2010 (the “License to Agency”) by andbetween HILL & MARKES REALTY, LLC (the “Company”), a limited liability company organized andexisting under the laws of the State of New York having an office for the transaction of business locatedat 120 Edson Street, Amsterdam, New York, as licensor, and MONTGOMERY COUNTYINDUSTRIAL DEVELOPMENT AGENCY (the “Agency”), a public benefit corporation of the State ofNew York having an office for the transaction of business located at Old County Courthouse, Park Street,Fonda, New York, as licensee;

WITNESSETH:


WHEREAS, the Enabling Act authorizes and provides for the creation of industrial developmentagencies for the benefit of the several counties, cities, villages and towns in the State of New York (the“State”) and empowers such agencies, among other things, to acquire, construct, reconstruct, lease,improve, maintain, equip and dispose of land and any building or other improvement, and all real andpersonal properties, including, but not limited to, machinery and equipment deemed necessary inconnection therewith, whether or not now in existence or under construction, which shall be suitable forindustrial, manufacturing, warehousing, commercial, research, civic and recreation facilities, amongothers, in order to advance the job opportunities, health, general prosperity and economic welfare of thepeople of the State and to improve their standard of living; and

WHEREAS, the Enabling Act further authorizes each such agency, for the purpose of carryingout any of its corporate purposes, to lease or sell any or all of its facilities, whether then owned orthereafter acquired; and

WHEREAS, the Agency was created, pursuant to and in accordance with the provisions of theEnabling Act, by Chapter 666 of the Laws of 1970 of the State of New York, as amended, codified asSection 895-d of the General Municipal Law of the State of New York (said Chapter and the EnablingAct being hereinafter collectively referred to as the “Act”) and is empowered under the Act to undertakethe Project (as hereinafter defined) in order to so advance the job opportunities, health, general prosperityand economic welfare of the people of the State of New York and improve their standard of living; and

WHEREAS, in September, 2008, the Company presented an application (the “Application”) tothe Agency, which Application requested that the Agency consider undertaking a project (the “Project”)for the benefit of the Company, said Project to include the following: (A) (1) the acquisition of an interestin a 45.3+!- acre parcel of land (tax map parcel identification number 54-2-2.1) and located on Highway5S in the City of Amsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) theconstruction of two facilities on the Land: (a) an approximately 100,000 square foot warehouse, and (b)an approximately 15,000 square foot office building (both facilities being collectively referred to as the“Facility”), (3) the acquisition and installation of certain machinery and equipment therein and thereon(the “Equipment”) (the Land, the Facility and the Equipment hereinafter collectively referred to as the“Project Facility”), all of the foregoing to constitute new warehousing and office facilities to support thegrowth of the Company’s supply business and related activities; (B) the granting of certain “financialassistance” (within the meaning of Section 854(14) of the Act) with respect to the foregoing, includingpotential exemptions from certain sales and use taxes, real property taxes, real property transfer taxes and

012178/00069 Business 7531147v1

mortgage recording taxes (collectively, the “Financial Assistance”); and (C) the lease (with an obligationto purchase) or sale of the Project Facility to the Company or such other person as may be designated bythe Company and agreed upon by the Agency; and

WHEREAS, pursuant to the authorization contained in a resolution adopted by the members ofthe Agency on April 9, 2009 (the “Public Hearing Resolution”), the Chief Executive Officer of theAgency (A) caused notice of a public hearing of the Agency pursuant to Section 859-a of the Act (the“Public Hearing”) to hear all persons interested in the Project and the Financial Assistance beingcontemplated by the Agency with respect to the Project, to be mailed on April 20, 2009 to the chiefexecutive officers of the county and of each city, town, village and school district in which the Project isto be located, (B) caused notice of the Public Hearing to be posted on April 20, 2009 on a public bulletinboard located at the Old County Courthouse, Fonda, New York, (C) caused notice of the Public Hearingto be published on April 22, 2009 in The Recorder, a newspaper of general circulation available to theresidents of the Town of Florida, New York, (D) conducted the Public Hearing on May 21, 2009 at 9:30a.m., local time at the Town of Florida Town Hall, located at 214 Fort Hunter Road, in the Town ofFlorida, Montgomery County, New York, and (E) prepared a report of the Public Hearing (the “PublicHearing Report”) fairly summarizing the views presented at such Public Hearing and caused copies ofsaid Public Hearing Report to be made available to the members of the Agency; and



WHEREAS, pursuant to the terms of the Lease Agreement, (A) the Company will agree (1) tocause the Project to be undertaken and completed, and (2) as agent of the Agency, to undertake andcomplete the Project and (B) the Agency has leased the Project Facility to the Company for a lease termending on the earlier to occur of(1) December 31, 2022 or (2) the date on which the Lease Agreement isterminated pursuant to the optional termination provisions thereof; and


WHEREAS, simultaneously with the execution and delivery of the Lease Agreement (the“Closing”), (A) the Company will execute and deliver to the Agency (1) a certain lease to agency dated asof June 1, 2010 (the “Lease to Agency”) by and between the Company, as landlord, and the Agency, astenant, pursuant to which the Company will lease to the Agency a portion of the Land and allimprovements now or hereafter located on said portion of the Land (collectively, the “Leased Premises”)for a lease term ending on December 31, 2022; (2) a certain license agreement dated as of June 1, 2010

-2-012178/00069 Business 7531 147v1

(the “License to Agency”) by and between the Company, as licensor, and the Agency, as licensee,pursuant to which the Company will grant to the Agency (a) a license to enter upon the balance of theLand (the “Licensed Premises”) for the purpose of undertaking and completing the Project and (b), in theevent of an occurrence of an Event of Default by the Company, an additional license to enter upon theLicensed Premises for the purpose of pursuing its remedies under the Lease Agreement; and (3) a bill ofsale dated as of June 1, 2010 (the “Bill of Sale to Agency”), which conveys to the Agency all right, titleand interest of the Company in the Equipment, (B) the Company and the Agency will execute and delivera payment in lieu of tax agreement dated as of June 1, 2010 (the “Payment in Lieu of Tax Agreement”) byand between the Agency and the Company, pursuant to which the Company will agree to pay certainpayments in lieu of taxes with respect to the Project Facility, (C) the Agency will file with the assessorand mail to the chief executive officer of each “affected tax jurisdiction” (within the meaning of suchquoted term in Section 854(16) of the Act) a copy of a New York State Board of Real Property ServicesForm 412-a (the form required to be filed by the Agency in order for the Agency to obtain a real propertytax exemption with respect to the Project Facility under Section 412-a of the Real Property Tax Law) (the“Real Property Tax Exemption Form”) relating to the Project Facility and the Payment in Lieu of TaxAgreement, (D) the Agency will execute and deliver to the Company a sales tax exemption letter (the“Sales Tax Exemption Letter”) to ensure the granting of the sales tax exemption which forms a part of theFinancial Assistance and (E) the Agency will file with the New York State Department of Taxation andFinance the form entitled “IDA Appointment of Project Operator or Agent for Sales Tax Purposes” (theform required to be filed pursuant to Section 874(9) of the Act) (the “Thirty-Day Sales Tax Report”); and

WHEREAS, in connection with the Project, the Agency proposes pursuant to this License toAgency to acquire from the Company the right to enter upon the Land for the purpose of undertaking andcompleting the Project and, in the event of any occurrence of an Event of Default under the InstallmentSale Agreement, for the purpose of pursuing its remedies under the Installment Sale Agreement; and

WHEREAS, all things necessary to constitute this License to Agency a valid and binding agreementby and between the parties hereto in accordance with the terms hereof have been done and performed, andthe creation, execution and delivery of this License to Agency have in all respects been duly authorizedby the Company and the Agency;

NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE PREMISES AND THEMUTUAL COVENANTS HEREINAFTER CONTAINED, THE PARTIES HERETO HEREBYFORMALLY COVENANT, AGREE AND BIND THEMSELVES AS FOLLOWS, TO WIT:

SECTION 1. LICENSE TO CONSTRUCT. The Company hereby grants to the Agency a license toenter upon a certain parcel of land owned by the Company and located on State Route 5S in the Town ofFlorida, Montgomery County, New York in the Town of Florida, Montgomery County, New York (the“Licensed Land”), said Licensed Land being more particularly described in Exhibit A attached hereto,together with any improvements now or hereafter located on the Licensed Land (the Licensed Land andall such improvements being sometimes collectively referred to as the “Licensed Premises”) for thepurpose of undertaking and completing and financing the Project Facility, to have and to hold the sameunto the Agency and its assigns from the date of the execution and delivery hereof until the completion ofthe Project, as evidenced in the manner described in Section 4.2 of the Lease Agreement.

SECTION 2. ADDITIONAL LICENSE. Pursuant to Section 5.5 of the Lease Agreement, theCompany has granted the Agency a security interest in all of the right, title and interest of the Company inthe Project Facility and in all additions and accessions thereto, all replacements and substitutions thereforand all proceeds thereof and all books, records and accounts of the Company pertaining to the ProjectFacility as security for payment of the rental payments and all other payments and obligations of theCompany thereunder. In the event of an occurrence of an Event of Default under the Lease Agreement,

-3-012178/00069 Business 7531147v1

the Company hereby grants the Agency an additional license to enter upon the Licensed Premises for thepurpose of pursuing its remedies under Article X of the Lease Agreement.

SECTION 3. NON-MERGER. Notwithstanding the lease of the Project Facility by the Agency to theCompany pursuant to the Lease Agreement, during the term of this License to Agency, there shall be nomerger of this License to Agency nor of the license interest created by this License to Agency with the feeestate in the Licensed Premises or any part thereof by reason of the fact that the same person, firm,corporation or other entity may acquire or own or hold, directly or indirectly, (1) this License to Agencyor the interest in the Project Facility created by this License to Agency or any interest in this License toAgency or in any such license interest in the Project Facility and (2) the fee estate in the LicensedPremises or any other interest in the Licensed Premises or any part thereof or any interest in such feeestate in the Licensed Premises or other interest in the Licensed Premises, and no such merger shall occurunless and until all corporations, firms and other entities, including any assignee having any interest in (a)this License to Agency or the license interest created by this License to Agency and (b) the fee estate inthe Licensed Premises or any other interest in the Licensed Premises or any part thereof or any interest insuch fee estate in the Licensed Premises or other interest in the Licensed Premises, shall join in a writteninstrument effecting such merger and shall duly record the same.

SECTION 4. LIMITED LIABILITY. (A) The obligations and agreements to the Agency containedherein and in any other instrument or document executed in connection herewith and any instrument ordocument supplemental hereto shall be deemed the obligations and agreements of the Agency, and not ofany member, officer, agent (other than the Company) or employee of the Agency in his individualcapacity, and the members, officers, agents (other than the Company) and employees of the Agency shallnot be liable personally hereon or thereon or be subject to any personal liability or accountability basedupon or in respect hereof or thereof or of any transaction contemplated hereby or thereby.

(B) The obligations and agreements of the Agency contained herein shall not constitute orgive rise to an obligation of the State of New York or Montgomeiy County, New York and neither theState of New York nor Montgomery County, New York shall be liable thereon, and further, suchobligations and agreements shall not constitute or give rise to a general obligation of the Agency, butrather shall constitute limited obligations of the Agency payable solely from the revenues of the Agencyderived and to be derived from the lease, sale or other disposition of the Project Facility.

(C) No order or decree of specific performance with respect to any of the obligations of theAgency hereunder shall be sought or enforced against the Agency unless (1) the party seeking such orderor decree shall first have requested the Agency in writing to take the action sought in such order of decreeof specific performance, and ten days shall have elapsed from the date of receipt of such request, and theAgency shall have refused to comply with such request, (or if compliance therewith would reasonably beexpected to take longer than ten days, shall have failed to institute and diligently pursue action to causecompliance with such request) or failed to respond within such notice period, (2) if the Agency refuses tocomply with such request and the Agency’s refusal to comply is based on its reasonable expectation thatit will incur fees and expenses, the party seeking such order or decree shall have placed in an account withthe Agency an amount or undertaking sufficient to cover such reasonable fees and expenses and (3) if theAgency refuses to comply with such request and the Agency’s refusal to comply is based on itsreasonable expectation that it or any of its members, officers, agents (other than the Company) oremployees shall be subject to potential liability, the party seeking such order or decree shall (a) agree toindemnify and hold harmless the Agency and its members, officers, agents (other than the Company) andemployees against any liability incurred as a result of its compliance with such demand and (b) ifrequested by the Agency shall furnish to the Agency satisfactory security to protect the Agency and itsmembers, officers, agents (other than the Company) and employees against all liability expected to beincurred as a result of compliance with such request.

-4-012178/00069 Business 7531147v1

IN WITNESS WHEREOF, the Company and the Agency have caused this License to Agency tobe executed in their respective names by their duly authorized officers, all as of the day and year firstabove written.

HILL & MARKES

BY:

MONTGOMERY COUNTYINDUSTRIAL DEVELOPMENT AGENCY

BY:(Vice) Chairman

012178/00069 Busmess 7531 147v1-5-

IN WITNESS WHEREOF, the Company and the Agency have caused this License to Agency tobe executed in their respective names by their duly authorized officers, all as of the day and year firstabove written.


BY:_________________________Authorized Member


BY:______e Chairman

-5-000161/01178 Business 7531147v1

STATE OF NEW YORK ))ss.:

COUNTY OF FULTON )

11On the ) day of July, in the year 2010, before me, the undersigned, a notary public in and for

said state, personally appeared NEAL PACKER, personally known to me or proved to me on the basis ofsatisfactory evidence to be the individual whose name is subscribed to the within instrument andacknowledged to me that he executed the same in his capacity, and that by his signature on theinstrument, the individual, or the person upon behalf of which the individual acted, executed theinstrument.

MAP!DJ. P/PANolOrv of Iew York

C) f:j./ FLH[:fl Co/t Iy Co:r!, SOfl Exos

-6-012178/00069 Business 7531 147v1

STATE OF NEW YORK ))ss.:


On the 30th day of June, in the year 2010, before me, the undersigned, a notary public in and forsaid state, personally appeared WILLIAM HISERT, personally known to me or proved to me on the basisof satisfactory evidence to be the individual whose name is subscribed to the within instrument andacknowledged to me that he executed the same in his capacity, and that by his signature on theinstrument, the individual, or the person upon behalf of which the individual acted, executed theinstrument.

Notary Public

i’ PAUL L WOLLMAN

-7-012178/00069 Business 7531 147v1

EXHIBIT A


- SEE ATTACHED -

A-i012178/00069 Business 7531147v1

SCHEDULE A


Being Lot 1 as shown on the map entitled “Map Showing Proposed Subdivision Lands now orformerly of Carl E. Gottier L. 663, P. 277 & Lands now or formerly of Montgomery County IndustrialDevelopment Agency L. 1655, P.75” prepared by ABD Engineers & Surveyors, dated 3/23/09, moreparticularly bounded and described as follows:



2.) South 68°-4 1 ‘-07” East, a distance of 376.96 feet to a point;

3.) South 63°-11-i 8” East, a distance of 198.52 feet to a point;




7.) South 70°-18’-IS” East, a distance of 163.75 feet to a point located on the westerlybounds of land now or formerly of Itla Agosta on the east and lands herein described on the west; thencealong said division line the following course and distance:


1.) South 710 13’ 00” East, a distance of 675.85 feet to apoint on the westerly boundary oflands now or formerly Alpine Haus Ski Shop, Inc. on the east and the lands herein described on thewest; thence along said division line the following course and distance:

I.) South 57° 38’ 30” West, a distance of 796.64 feet to a point on the northerly boundary ofthe NYS Thruway on the south and the lands herein described on the north; thence along said divisionline the following three (3) courses and distances:


2.) North 82°-S l’-l 7” West, a distance of 763.31 feet to a point;


A-2012178/00069 Business 7531147v1


1.) North 23°-34’-09” East a distance of 1247.87 to the POINT OF BEGINNING, being45.25 acres, more or less.

A-3012178/00069 Business 7531 147v1

TP-584 (3/07) New York State Department of Taxation and Finance

41 Combined Real Estate Recording office time stamp

Transfer Tax Return,

Credit Line Mortgage Certificate, and

Certification of Exemption from the

Payment of Estimated Personal Income Tax

See Form TP-584-J, Instructions for Form TP-584, before completing this form. Please print or type.Schedule A — Information relating to conveyance

Grantor/Transferor Name (if individual: last, first, middle initial) Social security number

LI Individual HILL & MARKES_REALTY, LLCLI Corporation Mailing address Social security number

LI Partnership 120 EDSON_STREET

LI EstatelTrust City State ZIP code Federal employer dent. number

Other AMSTERDAM NEW YORK 12010 27-2466803Grantee/Transferee Name (if individual: last, first, middle initial) Social security number

LI Individual MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCYLI Corporation Mailing address Social security number

LI Partnership 3 PARK_STREET,_P.O._BOX_1500LI Estate/Trust City State ZIP code Federal employer dent. number

Other FONDA NEW YORK 12068 52-1283539

Location and description of property conveyed

Tax map designation Address City/village Town CountySection Block Lot

54- 2-2 .1 HIGHWAY 5S AMSTERDAM FLORIDA MONTGOMERY

Type of property conveyed (check applicable box)

i LI One- to three-family house 5 LI Commercial/Industrial Date of conveyance Percentage of real property2 LI Residential cooperative 6 El Apartment building conveyed which is residential

El Residential condominium 7 El Office building 07 07 2010 I real property %month day year4 Vacant land 8 Other (see instructions)

Condition of conveyance (check all that apply)

a. LI Conveyance of fee interest f. LI Conveyance which consists of a I. LI Option assignment or surrendermere change of identity or form of

. .. . . ownership or organization (attachb. LI Acquisition of a controlling interest (state Form TP-584 1, Schedule F) m. LI Leasehold assignment or surrenderpercentage acquired %)

g.E Conveyance for which credit for tax n. LI Leasehold grantc. El Transfer of a controlling interest (state previously paid will be claimed (attach

Form TP-584. 1, Schedule G)percentage transferred %) 0. El Conveyance of an easement

hE Conveyance of cooperative apartment(s)d. LI Conveyance to cooperative housing p. LI Conveyance for which exemption

corporation i. LI Syndication from transfer tax claimed (completeSchedule B, Part III)

e. LI Conveyance pursuant to or in lieu of j. LI Conveyance of air rights or q. El Conveyance of property partly withinforeclosure or enforcement of security development rights and partly outside the stateinterest (attach Form TP-584.l, Schedule E) k.E Contract assignment r. jj Other (describe) LICENSE

For recording officer’s use Amount received Date received Transaction number

Schedule B., Part I $Schedule B., Part II $

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Schedule B — Real estate transfer tax return (Tax Law. Article 31)

Part I — Computation of tax dueI Enter amount of consideration for the conveyance (if you are claiming a total exemption from tax, check the

exemption claimed box, enter consideration and proceed to Part III) Exemption claimed2 Continuing lien deduction (see instructions if property is taken subject to mortgage or lien)3 Taxable consideration (subtract line 2 from line 1)4 Tax: $2 for each $500. or fractional part thereof, of consideration on line 35 Amount of credit claimed (see instructions and attach Form TP-584. 1, Schedule G)6 Total tax due* (subtract line 5 from line 4)

Part II — Computation of additional tax due on the conveyance of residential real property for $1 million or moreI Enter amount of consideration for conveyance (from Part 1, line 1)2 Taxable consideration (multiply line 1 by the percentage of the premises which is residential real property, as shown in Schedule A)3 Total additional transfer tax due* (multiply line 2 by 1% (.01))

Part Ill — Explanation of exemption claimed on Part I, line 1 (check any boxes that apply)The conveyance of real property is exempt from the real estate transfer tax for the following reason:

I.2.

—.- 0.00—- 0.00

5.0.00

I.2.3.

a. Conveyance is to the United Nations, the United States of America, the state of New York, or any of their instrumentalities,agencies, or political subdivisions (or any public corporation, including a public corporation created pursuant to agreement orcompact with another state or Canada) a

b. Conveyance is to secure a debt or other obligation b

c. Conveyance is without additional consideration to confirm, correct, modify, or supplement a prior conveyance c

d. Conveyance of real property is without consideration and not in connection with a sale, including conveyances conveyingrealty as bona fide gifts d

e. Conveyance is given in connection with a tax sale e LIf. Conveyance is a mere change of identity or form of ownership or organization where there is no change in beneficial

ownership. (This exemption cannot be claimed for a conveyance to a cooperative housing corporation of real propertycomprising the cooperative dwelling or dwellings.) Attach Form TP-584.1, Schedule F f LI

g. Conveyance consists of deed of partition g LIh. Conveyance is given pursuant to the federal Bankruptcy Act h LIi. Conveyance consists of the execution of a contract to sell real property, without the use or occupancy of such property, or

the granting of an option to purchase real property, without the use or occupancy of such property

j. Conveyance of an option or contract to purchase real property with the use or occupancy of such property where theconsideration is less than $200,000 and such property was used solely by the grantor as the grantor’s personal residenceand consists of a one-, two-, or three-family house, an individual residential condominium unit, or the sale of stockin a cooperative housing corporation in connection with the grant or transfer of a proprietary leasehold covering anindividual residential cooperative apartment

k. Conveyance is not a conveyance within the meaning of Tax Law, Article 31, section 1401(e) (attach documentssupporting such claim) k LI

I. Other (attach explanation)

*Please make check(s) payable to the county clerk where the recording is to take place. If the recording is to take place in New YorkCity, make check(s) payable to the NYC Department of Finance. If a recording is not required, send this return and your check(s) madepayable to the NYS Department of Taxation and Finance, directly to the NYS Tax Department, RETT Return Processing, PD Box 5045,Albany NY 12205-5045.

LI

LI

of 4 TP-584 (3/07)


Complete the following only if the interest being transferred is a fee simple interest.

I (we) certify that: (check the appropriate box)

1. El The real property being sold or transferred is not subject to an outstanding credit line mortgage.

The real property being sold or transferred is subject to an outstanding credit line mortgage. However, an exemption from the taxis daimed for the following reason:

El The transfer of real property is a transfer of a fee simple interest to a person or persons who held a fee simple interest in thereal property (whether as a joint tenant, a tenant in common or otherwise) immediately before the transfer.



El The maximum principal amount secured by the credit line mortgage is $3,000,000 or more, and the real property being soldor transferred is not principally improved nor will it be improved by a one- to six-family owner-occupied residence or dwelling.

Please note: for purposes of determining whether the maximum principal amount secured is $3,000,000 or more as describedabove, the amounts secured by two or more credit line mortgages may be aggregated under certain circumstances. SeeTSB-M-96(6)-R for more information regarding these aggregation requirements.

El Other (attach detailed explanation).

The real property being transferred is presently subject to an outstanding credit line mortgage. However, no tax is due for thefollowing reason:

El A certificate of discharge of the credit line mortgage is being offered at the time of recording the deed.

El A check has been drawn payable for transmission to the credit line mortgagee or his agent for the balance due, and asatisfaction of such mortgage will be recorded as soon as it is available.

The real property being transferred is subject to an outstanding credit line mortgage recorded in

____________________________


_________________________


________________________



The undersigned certify that the above information contained in schedules A, B, and C, including any return, certification, schedule, orattachment, is to the best of his/her knowledge, true and complete, and authorize the person(s) submitting such form on their behalf to receivea copy for purposes of recording the deed 04 other instrument effecting the conveyance.HILL & MARKES REALJY, LLcY’) MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY

//9rof€Inature Title

BY:

Grantee signature

BY:

Title

.Grartor signature Title . . Grantee signature TitleAuthorized iviemoer (Vice) ChairmanReminder: Did you complete all of the required information in Schedules A, B, and C? Are you required to complete Schedule D? If youchecked e, f or gin Schedule A, did you complete Form TP-584.1? Have you attached your check(s) made payable to the county clerkwhere recording will take place or, if the recording is in NewYork City, to the NYC Department of Finance? If no recording is required, sendyour check(s), made payable to the Department of Taxation and Finance, directly to the NYS Tax Department, RETT Return Processing,PC Box 5045, Albany NY I 2205-5045.

of 4 TP-584 (3/0 7)


Complete the following only if the interest being transferred is a fee simple interest.I (we) certify that: (check the appropriate box)

1. LI The real property being sold or transferred is not subject to an outstanding credit line mortgage.

The real property being sold or transferred is subject to an outstanding credit line mortgage. However, an exemption from the taxis claimed for the following reason:

LI The transfer of real property is a transfer of a fee simple interest to a person or persons who held a fee simple interest in thereal property (whether as a joint tenant, a tenant in common or otherwise) immediately before the transfer.



LI The maximum principal amount secured by the credit line mortgage is $3,000,000 or more, and the real property being soldor transferred is not principally improved nor will it be improved by a one- to six-family owner-occupied residence or dwelling.

Please note: for purposes of determining whether the maximum principal amount secured is $3,000,000 or more as describedabove, the amounts secured by two or more credit line mortgages may be aggregated under certain circumstances. SeeTSB-M-96(6)-R for more information regarding these aggregation requirements.

LI Other (attach detailed explanation).

The real property being transferred is presently subject to an outstanding credit line mortgage. However, no tax is due for thefollowing reason:

LI A certificate of discharge of the credit line mortgage is being offered at the time of recording the deed.

LI A check has been drawn payable for transmission to the credit line mortgagee or his agent for the balance due, and asatisfaction of such mortgage will be recorded as soon as it is available.

The real property being transferred is subject to an outstanding credit line mortgage recorded in

__________________________


_________________________


________________________



The undersigned certify that the above information contained in schedules A, B, and C, including any return, certification, schedule, orattachment, is to the best of his/her knowledge, true and complete, and authorize the person(s) submitting such form on their behalf to receivea copy for purposes of recording the deed or other instrument effecting the conveyance.HILL & MARKES REALTY, LLC MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY

Grantor signature

BY:

Title Grantee signature Title

Title

______

BY://t%.Grartor signature . . Grantee signature TitleAuthorized iviemoer ( e) Chairman

Reminder; Did you complete all of the required information in Schedules A, B, and C? Are you required to complete Schedule D? If youchecked e, f or gin Schedule A, did you complete Form TP-584.1? Have you attached your check(s) made payable to the county clerkwhere recording will take place or, if the recording is in New York City, to the NYC Department of Finance? If no recording is required, sendyour check(s), made payable to the Department of Taxation and Finance, directly to the NYS Tax Department, RETT Return Processing,P0 Box 5045, Albany NY 12205-5045.

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Schedule D — Certification of exemption from the payment of estimated personal income tax (Tax Law, Article 22, section 663)

Complete the following only if a fee simple interest or a cooperative unit is being transferred by an individual or estate or trust.

Part I — New York State residentsIf you are a New York State resident transferor(s)/seller(s) listed in Schedule A of Form TP-584 (or an attachment to Form TP-584), you mustsign the certification below. If one or more transferors/sellers of the real property or cooperative unit is a resident of New York State, eachresident transferor/seller must sign in the space provided. If more space is needed, please photocopy this Schedule D and submit as manyschedules as necessary to accommodate all resident transferors/sellers.

Certification of resident transferor(s)lseller(s)

This is to certify that at the time of the sale or transfer of the real property or cooperative unit, the transferor(s)/seller(s) as signed below was aresident of New York State, and therefore is not required to pay estimated personal income tax under Tax Law, section 663(a) upon the sale ortransfer of this real property or cooperative unit.Signature Print full name Date




Note: A resident of New York State may still be required to pay estimated tax under Tax Law, section 685(c), but not as a condition of recordinga deed.

Part II — Nonresidents of New York State

If you are a nonresident of New York State listed as a transferor/seller in Schedule A of Form TP-584 (or an attachment to Form TP-584) butare not required to pay estimated personal income tax because one of the exemptions below applies under Tax Law, section 663(c), checkthe box of the appropriate exemption below. If any one of the exemptions below applies to the transferor(s)/seller(s), that transferor(s)/seller(s)is not required to pay estimated personal income tax to New York State under Tax Law, section 663. Each nonresident transferor/seller whoqualifies under one of the exemptions below must sign in the space provided. If more space is needed, please photocopy this Schedule D andsubmit as many schedules as necessary to accommodate all nonresident transferors/sellers.

If none of these exemption statements apply, you must complete Form lT-2663, Nonresident Real Property Estimated Income Tax PaymentForm, or Form IT-2664, Nonresident Cooperative Unit Estimated Income Tax Payment Form. For more information, see Payment of estimatedpersonal income tax, on page 1 of Form TP-584-I.Exemption for nonresident transferor(s)Iseller(s)

This is to certify that at the time of the sale or transfer of the real property or cooperative unit, the transferor(s)/seller(s) (grantor) of this realproperty or cooperative unit was a nonresident of New York State, but is not required to pay estimated personal income tax under Tax Law,section 663 due to one of the following exemptions:

The real property or cooperative unit being sold or transferred qualifies in total as the transferor’s/seller’s principal residence(within the meaning of Internal Revenue Code, section 121) from

____________

to

____________

(see instructions)Date Date

The transferor/seller is a mortgagor conveying the mortgaged property to a mortgagee in foreclosure, or in lieu of foreclosure withno additional consideration.

The transferor or transferee is an agency or authority of the United States of America, an agency or authority of the state ofNew York, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government NationalMortgage Association, or a private mortgage insurance company.






BILL OF SALE

TO


HILL & MARKES REALTY, LLC, a limited liability company organized and existing under thelaws of the State of New York, having an office for the transaction of business located at 120 EdsonStreet, Amsterdam, New York (the “Grantor”), for the consideration of One Dollar ($1.00), cash in handpaid, and other good and valuable consideration received by the Grantor from MONTGOMERYCOUNTY INDUSTRIAL DEVELOPMENT AGENCY, a public benefit corporation of the State of NewYork having an office for the transaction of business located at Old County Courthouse, Park Street,Fonda, New York (the “Grantee”), the receipt of which is hereby acknowledged by the Grantor, herebysells, transfers and delivers unto the Grantee, and its successors and assigns, all right, title and interest ofthe Grantor in and to the materials, machinery, equipment, fixtures or furnishings which are described inExhibit B attached hereto (the “Equipment”), whether now owned or hereafter acquired by the Grantor,which Equipment is located or intended to be located on the real property (the “Land”) located on StateRoute 5 S in the Town of Florida, Montgomery County, New York, New York, which Land is moreparticularly described on Exhibit A attached hereto.

TO HAVE AND TO HOLD the same unto the Grantee, and its successors and assigns, forever,and the said Grantor, for itself, its successors and assigns, covenants and agrees to and with the Grantee,its successors and assigns, to warrant and defend the sale of said Equipment hereby made unto theGrantee, its successors and assigns against the claims and demands of every and all persons whomsoever.

012178/00069 Business 7531299v1

IN WITNESS W[IEREOF, the Grantor has caused this bill of sale to be executed in its name byits duly authorized oFficer and dated as of the 1st day of June, 2010.

HILL & MARKES REALTY, LC

• “Authori edMember

-2-012178/00069 Business 7531299v1


COUNTYOFFU ON

On the day of July, in the year 2010, before me, the undersigned, personally appeared NEALPACKER, personally known to me or proved to me on the basis of satisfactory evidence to be theindividual whose name is subscribed to the within instrument and acknowledged to me that he executedthe same in his capacity, and that by his signature on the instrument, the individual, or erson uponbehalf of which the individual acted, executed the instrument.

Notary Public

MARiO J. PAPA

Notary Public, State ol New1York,

Qualified ri Fulton Co t/My Commission Expires II 3

-3-012178/00069 Business 753 1299v1

EXHIBIT A


- SEE ATTACHED -

A-i012178/00069 Business 7531299v1

SCHEDULE A






3.) South 63°-Il ‘-18” East, a distance of 198.52 feet to a point;



6.) Along a curve to the left, having a radius of 1466.00 feet, an arc distance of 297.20 feet toa point, said curve containing a chord 5 64° 29’ 43”E a distance of 296.69 feet;



1.) South 710 13’ 00” East, a distance of 675.85 feet to a point on the westerly boundary oflands now or formerly Alpine Haus Ski Shop, Inc. on the east and the lands herein described on thewest; thence along said division line the following course and distance:



2.) North 82°-S 1’-! 7” West, a distance of 763.31 feet to a point;


A-2012178/00069 Business 7531299v1



A-3012178/00069 Business 7531299v1

EXHIBIT B

DESCRIPTION OF THE EQUIPMENT

All equipment, fixtures, machines, building materials and items of personal property and allappurtenances (A) acquired, constructed and/or intended to be installed and/or to be acquired, constructedor installed prior to the Completion Date (as defined in the hereinafter defined Lease Agreement) inconnection with the acquisition, construction and installation of the Hill & Markes Realty, LLC Project(the “Project”) of Montgomery County Industrial Development Agency (the “Agency”) located on thereal property described on Exhibit A hereto (the “Land”), said Project to be acquired, constructed andinstalled by Hill & Markes Realty, LLC (the “Company”) as agent of the Agency pursuant to a leaseagreement dated as of June 1, 2010 (the “Lease Agreement”) by and between the Agency and theCompany and (B) now or hereafter attached to, contained in or used in connection with the Land orplaced on any part thereof, though not attached thereto, including but not limited to the following:

(1) Pipes, screens, fixtures, heating, lighting, plumbing, ventilation, air conditioning,compacting and elevator plants, call systems, stoves, ranges, refrigerators and other lunch room facilities,rugs, movable partitions, cleaning equipment, maintenance equipment, shelving, flagpoles, signs, wastecontainers, outdoor benches, drapes, blinds and accessories, security system, sprinkler systems and otherfire prevention and extinguishing apparatus and materials, motors and machinery; and

(2) Together with any and all products of any of the above, all substitutions, replacements,additions or accessions therefor and any and all cash proceeds or non-cash proceeds realized from thesale, transfer or conversion of any of the above.

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AND


LEASE AGREEMENT


RELATING TO A LEASEHOLD INTEREST AND A LICENSEINTEREST HELD BY THE LANDLORD IN A CERTAIN PARCELOF LAND LOCATED ON STATE ROUTE 5S IN THE TOWN OFFLORIDA, MONTGOMERY COUNTY, NEW YORK.

THIS LEASE AGREEMENT CONSTITUTES A SECURITYAGREEMENT UNDER THE UNIFORM COMMERCIALCODE OF THE STATE OF NEW YORK.

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TABLE OF CONTENTS

(This Table of Contents is not part of the LeaseAgreement and is for convenience of reference only.)

PAGE

PARTIES 1RECITALS 1

ARTICLE I

DEFINITIONS

Section 1.1. Definitions 4Section 1.2. Interpretation 4

ARTICLE II

REPRESENTATIONS, WARRANTIESAND COVENANTS

Section 2.1. Representations, Warranties and Covenants of the Agency 5Section 2.2. Representations, Warranties and Covenants of the Company 5

ARTICLE III

CONVEYANCE AND USE OFPROJECT FACILITY

Section 3. L Conveyance to the Agency 8Section 3.2. Use of the Project Facility 8Section 3.3. Hazardous Materials 8Section 3.4. Non-Merger 9Section 3.5. Compliance with Underlying Lease 10Section 3.6. Compliance with License to Agency 10

ARTICLE IV

UNDERTAKING AND COMPLETION OF THE PROJECT

Section 4.1. Acquisition, Construction and Installation of the Project Facility 11Section 4.2. Completion of the Project Facility 12Section 4.3. Remedies to be Pursued Against Contractors, Subcontractors,

Materialmen and their Sureties 12

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ARTICLE V

LEASE OF THE PROJECT FACILITY; RENTAL PAYMENTSAND OTHER AMOUNTS PAYABLE

Section 5.1. Lease of the Project Facility 14Section 5.2. Duration of the Lease Term; Quiet Enjoyment 14Section 5.3. Rental Payments and Other Amounts Payable 14Section 5.4. Nature of Obligations of the Company Hereunder 15Section 5.5. Grant of Security Interest 15

ARTICLE VI

MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE

Section 6.1. Maintenance and Modifications of the Project Facility 16Section 6.2. Taxes, Assessments and Utility Charges 16Section 6.3. Insurance Required 17Section 6.4. Additional Provisions Respecting Insurance 17Section 6.5. Application of Net Proceeds of Insurance 18Section 6.6. Payments in Lieu of Real Estate Taxes 18

ARTICLE VII

DAMAGE, DESTRUCTION AND CONDEMNATION

Section 7.1. Damage or Destruction 20Section 7.2. Condemnation 21Section 7.3. Additions to the Project Facility 22

ARTICLE VIII

SPECIAL COVENANTS

Section 8.1. No Warranty of Condition or Suitability by the Agency;Acceptance “As Is” 23

Section 8.2. Hold Harmless Provisions 23Section 8.3. Right of Access to the Project Facility 24Section 8.4. Company not to Terminate Existence or Dispose of Assets; Conditions

under which Exceptions are Permitted 24Section 8.5. Agreement to Provide Information 24Section 8.6. Books of Record and Account; Compliance Certificates 24Section 8.7. Compliance with Applicable Laws 25Section 8.8. Discharge of Liens and Encumbrances 25Section 8.9. Performance of the Company’s Obligations 25Section 8.10. Depreciation Deductions and Tax Credits 25Section 8.11. Employment Opportunities 25Section 8.12. Sales and Use Tax Exemption 26Section 8.13. Identification of the Equipment 27

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ARTICLE IX

ASSIGNMENTS; MERGER OF THE AGENCY

Section 9.1. Assignment of the Lease Agreement 28Section 9.2. Merger of the Agency 28Section 9.3. Sale or Lease of the Project Facility 28

ARTICLE X


Section 10.1. Events of Default Defined 29Section 10.2. Remedies on Default 30Section 10.3. Remedies Cumulative 31Section 10.4. Agreement to Pay Attorneys’ Fees and Expenses 3 1Section 10.5. No Additional Waiver Implied by One Waiver 31

ARTICLE XI

OPTIONS AND OBLIGATION TO PURCHASE

Section 11.1. Early Termination of the Lease Agreement 32Section 11.2. Obligation to Sell and Purchase the Project Facility 32Section 11.3. Conveyance on Purchase of the Project Facility 32

ARTICLE XII

MISCELLANEOUSSection 12.1. Notices 34Section 12.2. Binding Effect 35Section 12.3. Severability 35Section 12.4. Amendment 35Section 12.5. Execution of Counterparts 35Section 12.6. Applicable Law 35Section 12.7. Recording and Filing 35Section 12.8. Survival of Obligations 35Section 12.9. Table of Contents and Section Headings Not Controlling 35Section 12.10. No Recourse; Special Obligation 36Section 12.11. Subordination to the Mortgage 36

TESTIMON1UM 37SIGNATURES 37ACKNOWLEDGMENTS 38

APPENDIX A - Schedule of Definitions AppA- 1

EXHIBIT A - Description of the Land A-iEXHIBIT B - Description of the Equipment B-iEXHIBIT C - Form of Termination of Underlying Lease C-iEXHIBIT D - Form of Bill of Sale to Company D-i

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EXHIBIT E - Form of Termination of Lease Agreement E-lEXHIBIT F - Form of Termination of License to Agency F-IEXHIBIT G - Initial Employment Plan G-iEXHIBIT H - Form of Annual Employment Report H-iEXHIBIT I - Form of Sales Tax Exemption Letter I-iEXHIBIT J - Form of Annual Sales Tax Report J-iEXHIBIT K - Form of Thirty-Day Sales Tax Report K-i

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LEASE AGREEMENT

THIS LEASE AGREEMENT dated as of June 1, 2010 (the “Lease Agreement”) by and betweenMONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY, a public benefit corporationorganized and existing under the laws of the State of New York having an office for the transaction ofbusiness located at Old County Courthouse, Park Street, Fonda, New York (the “Agency”), and HILL &MARKES REALTY, LLC, a limited liability company organized and existing under the laws of the Stateof New York having an office for the transaction of business located at 120 Edson Street, Amsterdam,New York (the “Company”);

WITN ES SETH:


WHEREAS, the Enabling Act authorizes and provides for the creation of industrial developmentagencies for the benefit of the several counties, cities, villages and towns in the State of New York (the“State”) and empowers such agencies, among other things, to acquire, construct, reconstruct, lease,improve, maintain, equip and dispose of land and any building or other improvement, and all real andpersonal properties, including, but not limited to, machinery and equipment deemed necessary inconnection therewith, whether or not now in existence or under construction, which shall be suitable formanufacturing, warehousing, research, commercial or industrial purposes, in order to advance the jobopportunities, health, general prosperity and economic welfare of the people of the State and to improvetheir standard of living; and

WHEREAS, the Enabling Act further authorizes each such agency, for the purpose of carryingout any of its corporate purposes, to lease or sell any or all of its facilities, whether then owned orthereafter acquired; and


WHEREAS, in September, 2008, the Company presented an application (the “Application”) tothe Agency, which Application requested that the Agency consider undertaking a project (the “Project”)for the benefit of the Company, said Project to include the following: (A) (1) the acquisition of an interestin a 45.3+!- acre parcel of land (tax map parcel identification number 54-2-2.1) and located on Highway5S in the City of Amsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) theconstruction of two facilities on the Land: (a) an approximately 100,000 square foot warehouse, and (b)an approximately 15,000 square foot office building (both facilities being collectively referred to as the“Facility”), (3) the acquisition and installation of certain machinery and equipment therein and thereon(the “Equipment”) (the Land, the Facility and the Equipment hereinafter collectively referred to as the“Project Facility”), all of the foregoing to constitute new warehousing and office facilities to support thegrowth of the Company’s supply business and related activities; (B) the granting of certain “financialassistance” (within the meaning of Section 854(14) of the Act) with respect to the foregoing, includingpotential exemptions from certain sales and use taxes, real property taxes, real property transfer taxes and

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mortgage recording taxes (collectively, the “Financial Assistance”); and (C) the lease (with an obligationto purchase) or sale of the Project Facility to the Company or such other person as may be designated bythe Company and agreed upon by the Agency; and




WHEREAS, pursuant to the terms of the Lease Agreement, (A) the Company will agree (1) tocause the Project to be undertaken and completed, and (2) as agent of the Agency, to undertake andcomplete the Project and (B) the Agency has leased the Project Facility to the Company for a lease termending on the earlier to occur of (1) December 31, 2022 or (2) the date on which the Lease Agreement isterminated pursuant to the optional termination provisions thereof; and


WHEREAS, simultaneously with the execution and delivery of the Lease Agreement (the“Closing”), (A) the Company will execute and deliver to the Agency (1) a certain lease to agency dated asof June 1, 2010 (the “Lease to Agency”) by and between the Company, as landlord, and the Agency, astenant, pursuant to which the Company will lease to the Agency a portion of the Land and allimprovements now or hereafter located on said portion of the Land (collectively, the “Leased Premises”)for a lease term ending on December 31, 2022; (2) a certain license agreement dated as of June 1, 2010

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(the “License to Agency”) by and between the Company, as licensor, and the Agency, as licensee,pursuant to which the Company will grant to the Agency (a) a license to enter upon the balance of theLand (the “Licensed Premises”) for the purpose of undertaking and completing the Project and (b), in theevent of an occurrence of an Event of Default by the Company, an additional license to enter upon theLicensed Premises for the purpose of pursuing its remedies under the Lease Agreement; and (3) a bill ofsale dated as of June 1, 2010 (the “Bill of Sale to Agency”), which conveys to the Agency all right, titleand interest of the Company in the Equipment, (B) the Company and the Agency will execute and delivera payment in lieu of tax agreement dated as of June 1, 2010 (the “Payment in Lieu of Tax Agreement”) byand between the Agency and the Company, pursuant to which the Company will agree to pay certainpayments in lieu of taxes with respect to the Project Facility, (C) the Agency will file with the assessorand mail to the chief executive officer of each “affected tax jurisdiction” (within the meaning of suchquoted term in Section 854(16) of the Act) a copy of a New York State Board of Real Property ServicesForm 412-a (the form required to be filed by the Agency in order for the Agency to obtain a real propertytax exemption with respect to the Project Facility under Section 412-a of the Real Property Tax Law) (the“Real Property Tax Exemption Form”) relating to the Project Facility and the Payment in Lieu of TaxAgreement, (D) the Agency will execute and deliver to the Company a sales tax exemption letter (the“Sales Tax Exemption Letter”) to ensure the granting of the sales tax exemption which forms a part of theFinancial Assistance and (E) the Agency will file with the New York State Department of Taxation andFinance the form entitled “IDA Appointment of Project Operator or Agent for Sales Tax Purposes” (theform required to be filed pursuant to Section 874(9) of the Act) (the “Thirty-Day Sales Tax Report”); and

WHEREAS, the providing of the Project Facility and the lease of the Project Facility to theCompany pursuant to this Lease Agreement is for a proper purpose, to wit, to advance the jobopportunities, health, general prosperity and economic welfare of the inhabitants of the State, pursuant tothe provisions of the Act; and

WHEREAS, all things necessary to constitute this Lease Agreement a valid and bindingagreement by and between the parties hereto in accordance with the terms hereof have been done andperformed, and the creation, execution and delivery of this Lease Agreement have in all respects beenduly authorized by the Agency and the Company;

NOW, THEREFORE, FOR AND iN CONSff)ERATION OF THE PREMISES AND THEMUTUAL COVENANTS HEREINAFTER CONTAINED, THE PARTWS HERETO HEREBYFORMALLY COVENANT, AGREE AND BIND THEMSELVES AS FOLLOWS, TO WIT:

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ARTICLE I

DEFINITIONS

SECTION 1.1. DEFINITIONS. All of the capitalized terms used in this Lease Agreement and thepreambles hereto not otherwise defined shall have the meanings assigned thereto in the Schedule ofDefinitions attached hereto as Appendix A and made a part hereof.

SECTION 1.2. INTERPRETATION. In this Lease Agreement, unless the context otherwise requires:

(A) the terms “hereby”, “hereof’, “herein”, “hereunder” and any similar terms as used in thisLease Agreement, refer to this Lease Agreement, and the term “heretofore” shall mean before, and theterm “hereafter” shall mean after, the date of this Lease Agreement;

(B) words of masculine gender shall mean and include correlative words of feminine andneuter genders;

(C) words importing the singular number shall mean and include the plural number, and viceversa;

(D) any headings preceding the texts of the several Articles and Sections of this LeaseAgreement, and any table of contents or marginal notes appended to copies hereof, shall be solely forconvenience of reference and shall neither constitute a part of this Lease Agreement nor affect itsmeaning, construction or effect; and

(E) any certificates, letters or opinions required to be given pursuant to this Lease Agreementshall mean a signed document attesting to or acknowledging the circumstances, representations, opinionsof law or other matters therein stated or set forth or setting forth matters to be determined pursuant to thisLease Agreement.

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ARTICLE II

REPRESENTATIONS, WARRANTIESAND COVENANTS

SECTION 2.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE AGENCY. TheAgency makes the following representations, warranties and covenants as the basis for the undertakingson its part herein contained:

(A) The Agency is duly established under the provisions of the Act and has the power to enterinto this Lease Agreement and the other Basic Documents to which the Agency is a party and to carry outits obligations hereunder and thereunder. Based upon the representations of the Company as to theutilization of the Project Facility, the Project will constitute a “project”, as such quoted term is defined inthe Act. By proper official action, the Agency has been duly authorized to execute, deliver and performthis Lease Agreement and the other Basic Documents to which the Agency is a party.

(B) Neither the execution and delivery of this Lease Agreement or the other BasicDocuments to which the Agency is a party, the consummation of the transactions contemplated hereby orthereby nor the fulfillment of or compliance with the provisions of this Lease Agreement or the otherBasic Documents to which the Agency is a party will conflict with or result in a breach by the Agency ofany of the terms, conditions or provisions of the Act, the by-laws of the Agency or any order, judgment,agreement or instrument to which the Agency is a party or by which the Agency is bound, or willconstitute a default by the Agency under any of the foregoing.

(C) Pursuant to the Basic Documents, the Agency will acquire a leasehold interest in thePremises from the Company, will cause the Project Facility to be acquired, constructed and installed andwill lease the Project Facility to the Company pursuant to this Lease Agreement, all for the purpose ofadvancing the job opportunities, health, general prosperity and economic welfare of the people of theState and improving their standard of living.

(D) Except as provided in Article IX and Article X hereof, the Agency, to the extent of itsinterest therein, shall not sell, assign, transfer, encumber or pledge as security the Project Facility or anypart thereof and shall maintain the Project Facility free and clear of all Liens or encumbrances, except forthe Permitted Encumbrances and as contemplated or allowed by the terms of this Lease Agreement andthe other Basic Documents.

SECTION 2.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.The Company makes the following representations, warranties and covenants as the basis for theundertakings on its part herein contained:

(A) The Company is a limited liability company duly organized and validly existing underthe laws of the State of New York, is qualified and authorized to do business in the State of New Yorkand all other jurisdictions in which its operations or ownership of Properties so require, and has the powerto enter into this Lease Agreement and the other Basic Documents to which the Company is a party and tocarry out its obligations hereunder and thereunder. By proper action of its Members, the Company hasbeen duly authorized to execute, deliver and perform this Lease Agreement and the other BasicDocuments to which the Company is a party.

(B) Except as has been heretofore disclosed to the Agency, neither the execution and deliveryof this Lease Agreement or the other Basic Documents to which the Company is a party, the

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consummation of the transactions contemplated hereby and thereby nor the fulfillment of or compliancewith the provisions of this Lease Agreement or the other Basic Documents to which the Company is aparty will (1) conflict with or result in a breach of any of the terms, conditions or provisions of theCompany’s Articles of Organization or Operating Agreement or any other restriction, order, judgment,agreement or instrument to which the Company is a party or by which the Company or any of its Propertyis bound, or (2) constitute a default by the Company under any of the foregoing, or result in the creationor imposition of any Lien of any nature upon any Property of the Company under the terms of any suchinstrument or agreement, other than the Permitted Encumbrances, or (3) require consent (which has notbeen heretofore received) under any restriction, agreement or instrument to which the Company is a partyor by which the Company or any of its Property may be bound or affected, or (4) require consent (whichhas not been heretofore obtained) under or conflict with or violate any existing law, rule, regulation,judgment, order, writ, injunction or decree of any government, governmental instrumentality or court(domestic or foreign) having jurisdiction over the Company or any of the Property of the Company.

(C) While the completion of the Project Facility may result in the removal of a plant orfacility of the Company or an occupant of the Project Facility from one area of the State of New York toanother area of the State of New York and in the abandonment of one or more plants or facilities of theCompany or an occupant of the Project Facility located in the State of New York, such removal andabandonment is reasonably necessary to preserve the competitive position of the Company or an occupantof the Project Facility in their respective industries.

(D) The Project Facility does not constitute a project where facilities or property that areprimarily used in making retail sales of goods and/or services to customers who personally visit suchfacilities constitute more than one-third of the total cost of the Project, and accordingly the Project is notprohibited by the provisions of Section 862(2)(a) of the Act, and accordingly the Agency is authorized toprovide financial assistance in respect of the Project pursuant to Section 862(2)(a) of the Act.

(E) The Basic Documents to which the Company is a party constitute, or upon theirexecution and delivery in accordance with the terms thereof will constitute, valid and legally bindingobligations of the Company, enforceable in accordance with their respective terms.

(F) The Project Facility is, and so long as this Lease Agreement shall remain in effect, theProject Facility will continue to be a “project”, as such quoted term is defined in the Act, and theCompany will not take any action (or omit to take any action required by the Basic Documents or whichthe Agency advises the Company in writing should be taken), or allow any action to be taken, whichaction (or omission) would in any way (1) cause the Project Facility not to constitute a “project”, as suchquoted term is defined in the Act, or (2) cause the Financial Assistance to be applied in a manner contraryto that provided in the Basic Documents.

(G) The Project Facility and the operation thereof will comply with all Applicable Laws, andthe Company will defend and save the Agency and its officers, members, agents and employees harmlessfrom all fines and penalties due to failure to comply therewith. The Company shall cause all notices asrequired by all Applicable Laws to be given, and shall comply or cause compliance with all ApplicableLaws, and the Company will defend and save the Agency and its officers, members, agents andemployees harmless from all fines and penalties due to failure to comply therewith.

(H) The Project will not have a “significant impact on the environment” (within the meaningof such term as used in SEQRA), and the Company hereby covenants to comply with all mitigationmeasures, requirements and conditions, if any, enumerated in the Findings Statement issued by the Townof Florida Planning Board on March 30, 2009 under SEQRA (and any other environmentaldeterminations issued under SEQRA by any other Governmental Authority) applicable to the acquisition,

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construction, reconstruction and installation of the Project Facility and in any other approvals issued byany other Governmental Authority with respect to the Project and/or the Project Facility. No materialchanges with respect to any aspect of the Project Facility have arisen from the date of the issuance of suchFindings Statement which would cause the determinations of the Town of Florida Planning Boardcontained therein to be untrue.

(1) The Company acknowledges receipt of notice of Section 874(8) of the Act, whichrequires that, if the Company claims any sales tax exemption by virtue of the Agency’s involvement inthe Project, the Company as agent of the Agency must annually file a statement with the New York StateDepartment of Taxation and Finance, on a form and in such a manner as is prescribed by theCommissioner of Taxation and Finance, of the value of all sales tax exemptions claimed by the Companyunder the authority granted by the Agency.

(J) The Company acknowledges receipt of notice of Section 858-b of the Act, which requiresthat the Company list new employment opportunities created as a result of the Project with the followingentities (hereinafter, the “JTPA Entities”): (1) the New York State Department of Labor CommunityServices Division and (2) the administrative entity of the service delivery area created by the Federal JobTraining Partnership Act (P.L. No. 97-300) in which the Project Facility is located (while currently citedin Section 858-b of the Act, the Federal Job Training Partnership Act was repealed effective June 1, 2000,and has been supplanted by the Workplace Investment Act of 1998 (P.L. No. 105-220)). The Companyagrees, where practicable, to first consider for such new employment opportunities persons eligible toparticipate in federal job training partnership programs who shall be referred by the JTPA Entities.

(K) The Company acknowledges receipt of notice of Section 874(9) of the Act, whichrequires the Company, as agent of the Agency, to file within thirty (30) days of the date the Company isappointed the agent of the Agency, a statement with the New York State Department of Taxation andFinance, on a form and in such a manner as is prescribed by the Commissioner of Taxation and Finance,identifying the Company as agent of the Agency, setting forth the taxpayer identification number of theCompany, giving a brief description of the goods and/or services intended to be exempted from salestaxes as a result of such appointment as agent, indicating a rough estimate of the value of the goods and/orservices to which such appointment as agent relates, indicating the date when such designation as agentbecame effective and indicating the date upon which such designation as agent shall cease.

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ARTICLE Ill

CONVEYANCE AND USE OFPROJECT FACILITY

SECTION 3.1. CONVEYANCE TO THE AGENCY. (A) Pursuant to the Conveyance Documents, theCompany has or will convey, or will cause to be conveyed, to the Agency (1) a leasehold interest in theLeased Land and all improvements located or to be located thereon, (2) a license interest in the LicensedLand and all improvements located or to be located thereon, and (3) title to the Equipment. The Companyshall execute, deliver and record or file all instruments necessary or appropriate to so vest title in theAgency and shall take all action necessary or appropriate to protect such title against claims of any thirdPersons. The Company shall, however, be entitled to physical possession and control of the ProjectFacility and shall be liable at all times for all risk, loss and damage with respect to the Project Facility.

(B) Pursuant to the Underlying Lease the Company has or will convey, or will cause to beconveyed, to the Agency a leasehold interest in the Land and all improvements located or to be locatedthereon. Pursuant to the Bill of Sale to Agency the Company has or, will convey, or will cause to beconveyed, to the Agency title to the Equipment. The Company hereby represents and warrants that it hasgood and marketable title to the portions of the Project Facility that exist on the Closing Date, free andclear from all Liens except for Penriitted Encumbrances, and agrees that the Company will defend,indemnify and hold the Agency harmless from any expense or liability due to any defect in title thereto.The Company shall execute, deliver and record or file all instruments necessary or appropriate to so vesttitle in the Agency and shall take all action necessary or appropriate to protect such title against claims ofany third Persons. The Company also agrees to pay all reasonable expenses incurred by the Agency indefending any action with respect to title to or a Lien affecting the Project Facility, except for PermittedEncumbrances.

SECTION 3.2. USE OF PROJECT FACILITY. Subsequent to the Closing Date, the Company shall beentitled to use the Project Facility in any manner not otherwise prohibited by the Basic Documents or theAct, provided such use causes the Project Facility to qualify or continue to qualify as a “project” underthe Act and does not tend, in the reasonable judgment of the Agency, to bring the Project Facility intodisrepute as a public project; provided, however, that the Project Facility will not be used (1) as facilitiesused or to be used primarily for sectarian instruction or as a place of religious worship or (2) primarily asin connection with any part of a program of a school or department of divinity for any religiousdenomination; provided, further, however, that at no time shall any such use of the Project Facility beother than as new warehousing and office facilities to support the growth of the Company’s supplybusiness and uses related thereto, without the written consent of the Agency.

SECTION 3.3. HAZARDOUS MATERIALS. (A) The Company represents, warrants and covenantsthat the Company has not used Hazardous Materials on, from or affecting the Project Facility in anymanner which violates any Applicable Law, including but not limited to those governing the use, storage,treatment, transportation, manufacture, refinement, handling, production or disposal of HazardousMaterials, and no prior owner of the Project Facility or any tenant, subtenant, prior tenant or priorsubtenant has used Hazardous Materials on, from or affecting the Project Facility in any manner whichviolates any Applicable Law, including but not limited to those governing the use, storage, treatment,transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials.

(B) The Company shall keep or cause the Project Facility to be kept free of all HazardousMaterials. Without limiting the foregoing, the Company shall not cause or permit the Project Facility tobe used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce or

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process Hazardous Materials, except in compliance with all Applicable Laws, nor shall the Companycause or permit, as a result of any intentional or unintentional act or omission on the part of the Company,or any tenant or subtenant of the Company, an unlawful release of Hazardous Materials onto the ProjectFacility or onto any other property.

(C) The Company shall comply with, and ensure compliance by all tenants and subtenants ofthe Company with, all Applicable Laws regarding Hazardous Materials whenever and by whomevertriggered, and shall obtain and comply with, and ensure that all tenants and subtenants of the Companyobtain and comply with, any and all approvals, registrations or permits required thereunder.

(D) The Company shall (1) conduct and complete all investigations, studies, sampling, andtesting, and all remedial, removal, and other actions necessary to clean up, remove or contain allHazardous Material on, from or affecting the Project Facility (a) in accordance with all Applicable Laws,(b) to the satisfaction of the Agency, and (c) in accordance with the orders and directives of all federal,state and local governmental authorities and (2) defend, indemnify, and hold harmless the Agency and itsemployees, agents, officers and members from and against any claims, demands, penalties, fines,liabilities, settlements, damages, costs or expenses of whatever kind or nature, known or unknown,contingent or otherwise, arising out of, or in any way related to, (a) the presence, disposal, release orthreatened release of any Hazardous Materials used, transported, stored, manufactured, refined, handled,produced or disposed of on or in the Project Facility which are on, from or affecting soil, water,vegetation, buildings, personal property, persons, animals or otherwise, (b) any personal injury (includingwrongful death) or property damage (real or personal) arising out of or related to such HazardousMaterials, (c) any lawsuit brought or threatened, settlement reached, or any government order relating tosuch Hazardous Materials, and/or (d) any violations of Applicable Laws which are based upon or in anyway related to such Hazardous Materials, including, without limitation, attorney and consultant fees,investigation and laboratory fees, court costs and litigation expenses. Costs under this subsection (D) willbe repaid immediately with interest at the Default Interest Rate or the maximum permitted by law,whichever is less.

(E) In the event the Project Facility is foreclosed by the Agency, or the Company tenders adeed in lieu of foreclosure, the Company shall deliver the Project Facility to the purchaser free of any andall Hazardous Materials (except Hazardous Materials the presence of which do not violate any Federal,State or local laws, ordinances, rules and regulations governing the use and storage of such materials), sothat the condition of the Project Facility shall conform with all Applicable Laws affecting the ProjectFacility.

(F) The Company agrees that the Agency and its officers, agents or representatives, may atany reasonable time and at the Company’s expense inspect the Company’s books and records and inspectand conduct any tests on the Project Facility, including taking soil samples, in order to determine that theCompany is in compliance with all Applicable Laws.

(G) In the event that insurance shall become available at a reasonable cost to cover theCompany’s obligations under this Section 3.3, then, at the option of the Agency, the Company shallobtain adequate coverage.

SECTION 3.4. NON-MERGER. During the term of this Lease Agreement, there shall be no merger ofthis Lease Agreement nor of the leasehold estate created by this Lease Agreement with the fee estate inthe Premises or any part thereof by reason of the fact that the same person, firm, corporation or otherentity may acquire or own or hold, directly or indirectly, (1) this Lease Agreement or the leasehold estatecreated by this Lease Agreement or any interest in this Lease Agreement or in any such leasehold estateand (2) the fee estate in the Premises or any part thereof or any interest in such fee estate, and no such

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merger shall occur unless and until all corporations, firms and other entities, including any mortgageehaving any interest in (x) this Lease Agreement or the leasehold estate created by this Lease Agreementand (y) the fee estate in the Premises or any part thereof or any interest in such fee estate, shall join in awritten instniment effecting such merger and shall duly record the same.

SECTION 3.5. COMPLIANCE WITH UNDERLYING LEASE. (A) Notwithstanding the granting ofthe leasehold interest created by the Underlying Lease in the Premises to the Agency pursuant to theUnderlying Lease, the Company agrees, in consideration of the undertakings of the Agency set forthherein, that the Company will be and remain solely liable under the Underlying Lease for the performanceof all covenants, agreements, obligations and duties of the Agency as tenant under the Underlying Lease,including but not limited to the making of all rental and other payments thereunder, and the Company willperform all of the covenants, agreements and obligations of the Agency as tenant under the UnderlyingLease, at no expense to the Agency, in consideration of the execution and delivery by the Agency of theBasic Documents.

(B) The Company shall, on behalf of the Agency, (I) pay all rents, additional rents and othersums required to be paid by the Agency as tenant under and pursuant to the provisions of the UnderlyingLease and (2) diligently perform and observe all of the terms, covenants and conditions of the UnderlyingLease on the part of the Agency, as tenant thereunder, to be performed and observed, unless suchperformance or observance shall be waived or not required in writing by the landlord under theUnderlying Lease, to the end that all things shall be done which are necessary to keep unimpaired therights of the Agency, as tenant, under the Underlying Lease.

SECTION 3.6. COMPLIANCE WITH LICENSE TO AGENCY. (A) Notwithstanding the granting ofthe license interest created by the License to Agency in the Licensed Premises to the Agency pursuant tothe License to Agency, the Company agrees, in consideration of the undertakings of the Agency set forthherein, that the Company will be and remain solely liable under the License to Agency for theperformance of all covenants, agreements, obligations and duties of the Agency as licensee under theLicense to Agency, including but not limited to the making of all payments thereunder, and the Companywill perform all of the covenants, agreements and obligations of the Agency as licensee under the Licenseto Agency, at no expense to the Agency, in consideration of the execution and delivery by the Agency ofthe Basic Documents.

(B) The Company shall, on behalf of the Agency, (1) pay all sums required to be paid by theAgency as licensee under and pursuant to the provisions of the License to Agency and (2) diligentlyperform and observe all of the terms, covenants and conditions of the License to Agency on the part of theAgency, as licensee thereunder, to be performed and observed, unless such performance or observanceshall be waived or not required in writing by the licensor under the License to Agency, to the end that allthings shall be done which are necessary to keep unimpaired the rights of the Agency, as licensee, underthe License to Agency.

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ARTICLE IV

UNDERTAKING AND COMPLETION OF THE PROJECT

SECTION 4.1. ACQUISITION, CONSTRUCTION AND INSTALLATION OF THE PROJECTFACILITY. (A) The Company shall, on behalf of the Agency, promptly acquire, construct, and installthe Project Facility, or cause the acquisition, construction and installation of the Project Facility, all inaccordance with the Plans and Specifications.

(B) No material change in the Plans and Specifications shall be made unless the Agency shallhave consented thereto in writing (which consent of the Agency shall not be unreasonably withheld ordelayed).

(C) Title to all materials, equipment, machinery and other items of Property now owned orhereafter acquired by the Company and which are intended to be a part of the Project Facility shall vest inthe Agency immediately upon execution of the Bill of Sale to Agency. Title to all materials, equipment,machinery and other items of Property acquired by the Company subsequent to the Closing Date andintended to be incorporated or installed in and to become part of the Project Facility shall vest in theAgency immediately upon deposit on the Land or incorporation or installation in the Project Facility,whichever shall first occur. The Company shall execute, deliver and record or file all instrumentsnecessary or appropriate to vest title to the above in the Agency and shall take all action necessary orappropriate to protect such title against claims of any third Persons.

(D) The Agency shall enter into, and accept the assignment of, such contracts as theCompany may request in order to effectuate the purposes of this Section 4.1; provided, however, that theliability of the Agency thereunder shall be limited to the moneys of the Company available therefor andadvanced by the Company for such purpose pursuant to Section 4.1(H) hereof.

(E) The Agency hereby appoints the Company as its true and lawful agent to perform thefollowing in compliance with the terms, purposes and intent of the Basic Documents, and the Companyhereby accepts such appointment: (1) to acquire, construct and install the Project Facility, (2) to make,execute, acknowledge and deliver any contracts, orders, receipts, writings and instructions with any otherPersons, and in general to do all things which may be requisite or proper, all for the acquisition,construction and installation of the Project Facility, with the same powers and with the same validity asthe Agency could do if acting in its own behalf, provided that the liability of the Agency thereunder shallbe limited to the moneys made available therefore by the Company and advanced for such purposes bythe Company pursuant to this Lease Agreement, (3) to pay all fees, costs and expenses incurred in theacquisition, construction and installation of the Project Facility from funds made available therefor inaccordance with this Lease Agreement, and (4) to ask, demand, sue for, levy, recover and receive all suchsums of money, debts, dues and other demands whatsoever which may be due, owing and payable to theAgency under the terms of any contract, order, receipt or writing in connection with the acquisition,construction and installation of the Project Facility and to enforce the provisions of any contract,agreement, obligation, bond or other performance security in connection with the same.

(F) The Company has given or will give or cause to be given all notices and has complied orwill comply or cause compliance with all Applicable Laws applying to or affecting the conduct of workon the Project Facility, and the Company will defend, indemnify and save the Agency and its officers,members, agents, servants and employees harmless from all fines and penalties due to failure to complytherewith. All permits and licenses necessary for the prosecution of work on the Project Facility shall beprocured promptly by the Company.

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(G) To the extent required by Applicable Law, the Company, as agent of the Agency, willcause (I) compliance with the requirements of Article 8 of the New York Labor Law, and (2) anycontractor, subcontractor and other person involved in the acquisition, construction and installation of theProject Facility to comply with Article 8 of the New York Labor Law. The covenant in this subsection isnot intended as a representation that Article 8 of the New York Labor Law applies to the Project.

(H) The Company agrees, for the benefit of the Agency, to undertake and complete theProject and to pay all such sums as may be required in connection therewith. Title to portions of theProject Facility acquired, constructed and installed at the Company’s cost shall immediately upon suchacquisition, construction or installation vest in the Agency. The Company shall execute, deliver andrecord or file such instruments as the Agency may request in order to perfect or protect the Agency’s titleto such portions of the Project Facility.

(I) No payment by the Company pursuant to this Section 4.1 shall entitle the Company toany reimbursement for any such expenditure from the Agency or to any diminution or abatement of anyamounts payable by the Company under this Lease Agreement.

SECTION 4.2. COMPLETION OF THE PROJECT FACILITY. The Company will proceed with duediligence to commence and complete the acquisition, construction and installation of the Project Facility.Completion of the same shall be evidenced by a certificate signed by an Authorized Representative of theCompany delivered to the Agency stating (A) the date of such completion, (B) that all labor, services,materials and supplies used therefor and all costs and expenses in connection therewith have been paid,(C) that the acquisition, construction and installation of the Project Facility has been completed, with theexception of ordinary punchlist items and work awaiting seasonal opportunity, (D) that the Company orthe Agency has good and valid title to all Property constituting a portion of the Project Facility, free andclear of all Liens and encumbrances except Permitted Encumbrances, and (E) that the Project Facility isready for occupancy, use and operation for its intended purposes. Notwithstanding the foregoing, suchcertificate may state (1) that it is given without prejudice to any rights of the Company against thirdparties which exist at the date of such certificate or which may subsequently come into being, (2) that it isgiven only for the purposes of this Section 4.2, and (3) that no Person other than the Agency may benefittherefrom. Such certificate shall be accompanied by a certificate of occupancy, or a letter from the localGovernmental Authority stating that no certificate of occupancy is required, and any and all permissions,licenses or consents required of Governmental Authorities for the occupancy, operation and use of theProject Facility for its intended purposes.

SECTION 4.3. REMEDIES TO BE PURSUED AGAiNST CONTRACTORS, SUBCONTRACTORS,MATERIALMEN AND THEIR SURETIES. In the event of a default by any contractor, subcontractor ormaterialman under any contract made by it in connection with the acquisition, construction andinstallation of the Project Facility or in the event of a breach of warranty or other liability with respect toany materials, workmanship or performance guaranty, the Company shall proceed, either separately or inconjunction with others, to exhaust the remedies of the Company and the Agency against the contractor,subcontractor or materialman so in default and against each surety for the performance of such contract.The Company may, in its own name or, with the prior written consent of the Agency, in the name of theAgency, prosecute or defend any action or proceeding or take any other action involving any suchcontractor, subcontractor, materialman or surety which the Company deems reasonably necessary, and insuch event the Agency hereby agrees, at the Company’s sole expense, to cooperate fully with theCompany and to take all action necessary to effect the substitution of the Company for the Agency in anysuch action or proceeding. The Company shall advise the Agency of any actions or proceedings takenhereunder. The Net Proceeds of any recovery secured by the Company as a result of any action pursuedagainst a contractor, subcontractor, materialman or their sureties pursuant to this Section 4.3 shall be used

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to the extent necessary to complete the Project Facility, and thereafter be paid to the Company for its ownuse. The Company shall advise the Agency of any actions or proceedings taken hereunder.

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ARTICLE V

DEMISE OF PROJECT FACILITY; RENTAL PAYMENTS ANDOTHER AMOUNTS PAYABLE

SECTION 5.1. LEASE OF THE PROJECT FACILITY. In consideration of the Company’s covenantherein to make rental payments hereunder, and in consideration of the other covenants of the Companycontained herein, including the covenant to make additional and other payments required hereby, theAgency hereby agrees to lease to the Company, and the Company hereby agrees to rent and lease fromthe Agency, the Agency’s interest in the Project Facility, subject only to Permitted Encumbrances. Theobligation of the Agency under this Section 5.1 to lease the Project Facility to the Company shall besubject to there being no Event of Default existing hereunder, or any other event which would, but for thepassage of time, be such an Event of Default.

SECTION 5.2. DURATION OF THE LEASE TERM; QUIET ENJOYMENT. (A) The Agency shalldeliver to the Company possession of the Project Facility, and the leasehold estate created hereby shallcommence, on the Closing Date, and the Company shall accept possession of the Project Facility on theClosing Date.

(B) Except as otherwise provided in Article X hereof, the leasehold estate created herebyshall terminate on the earlier to occur of (1) December 31, 2022 or (2) the date that this Lease Agreementshall terminate pursuant to Article X or Article XI hereof.

(C) The Agency shall take no action, other than pursuant to Article X of this LeaseAgreement, to prevent the Company from having quiet and peaceable possession and enjoyment of theProject Facility during the term of this Lease Agreement and will, at the request of the Company and atthe Company’s expense, cooperate with the Company in order that the Company may have quiet andpeaceable possession and enjoyment of the Project Facility.

SECTION 5.3. RENTAL PAYMENTS AND OTHER AMOUNTS PAYABLE. (A) The Company shallpay basic rental payments for the Project Facility as follows: On the date of execution and delivery of thisLease Agreement, the Company shall pay, as the basic lease payments due hereunder, (1) a single lumpsum basic rental payment, equal to the Agency’s initial administrative fee relating to the Project; and (2)the fees and expenses of general counsel and special counsel to the Agency relating to the Project.

(B) Within seven (7) days after receipt of a demand therefor from the Agency, the Companyshall pay to the Agency the sum of the reasonable expenses of the Agency and the officers, members,agents and employees thereof incurred by reason of the Agency’s ownership, leasing or sale of the ProjectFacility or in connection with the carrying out of the Agency’s duties and obligations under this LeaseAgreement or any of the other Basic Documents, and any other fee or expense of the Agency with respectto the Project Facility, the leasing or sale of the Project Facility to the Company, or any of the other BasicDocuments, the payment of which is not otherwise provided for under this Lease Agreement.

(C) The Company agrees to make the above-mentioned payments, without any further notice,by check or wire transfer, in lawful money of the United States of America as, at the time of payment,shall be legal tender for the payment of public and private debts. In the event the Company shall fail tomake any payment required by this Section 5.3 within ten (10) days of the date such payment is due, theCompany shall pay the same, together with interest thereon at the Default Interest Rate or the maximumrate permitted by law, whichever is less, from the date on which such payment was due until the date onwhich such payment is made.

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SECTION 5.4. NATURE OF OBLIGATIONS OF THE COMPANY HEREUNDER. (A) Theobligations of the Company to make the payments required by this Lease Agreement and to perform andobserve any and all of the other covenants and agreements on its part contained herein shall be generalobligations of the Company and shall be absolute and unconditional irrespective of any defense or anyright of set-off, recoupment, counterclaim or abatement that the Company may otherwise have against theAgency. The Company agrees that it will not suspend, discontinue or abate any payment required by, orfail to observe any of its other covenants or agreements contained in, this Lease Agreement, or terminatethis Lease Agreement for any cause whatsoever, including, without limiting the generality of theforegoing, failure to complete the Project, any defect in the title, design, operation, merchantability,fitness or condition of the Project Facility or any part thereof or in the suitability of the Project Facility orany part thereof for the Company’s purposes or needs, failure of consideration for, destruction of ordamage to, Condemnation of title to or the use of all or any part of the Project Facility, any change in thetax or other laws of the United States of America or of the State or any political subdivision thereof, orany failure of the Agency to perform and observe any agreement, whether expressed or implied, or anyduty, liability or obligation arising out of or in connection with this Lease Agreement.

(B) Nothing contained in this Section 5.4 shall be construed to release the Agency from theperformance of any of the agreements on its part contained in this Lease Agreement, and, in the event theAgency should fail to perform any such agreement, the Company may institute such action against theAgency as the Company may deem necessary to compel performance or recover damages for non-performance (subject to the provisions of Section 12.10 hereof); provided, however, that the Companyshall look solely to the Agency’s estate and interest in the Project Facility for the satisfaction of any rightor remedy of the Company for the collection of a judgment (or other judicial process) requiring thepayment of money by the Agency in the event of any liability on the part of the Agency, and no otherProperty or assets of the Agency or of the members, officers, agents (other than the Company) oremployees of the Agency shall be subject to levy, execution, attachment or other enforcement procedurefor the satisfaction of the Company’s remedies under or with respect to this Lease Agreement, therelationship of the Agency and the Company hereunder or the Company’s use and occupancy of orpurchase of or title to the Project Facility, or any other liability of the Agency to the Company.

SECTION 5.5. GRANT OF SECURITY INTEREST. The Company hereby grants the Agency asecurity interest in all of the right, title and interest of the Company in the Project Facility and in alladditions and accessions thereto, all replacements and substitutions therefor and all proceeds thereof, andall books, records and accounts of the Company pertaining to the Project Facility, and all proceedsthereof, as security for payment of the rental payments and all other payments and obligations of theCompany hereunder. The Company hereby irrevocably appoints the Agency as its attorney-in-fact toexecute and deliver and file any instruments necessary or convenient to perfect and continue the securityinterest granted herein.

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ARTICLE VI

MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE

SECTION 6.1. MAINTENANCE OF AND MODIFICATIONS TO THE PROJECT FACILITY. (A)During the term of this Lease Agreement, the Company shall (1) keep the Project Facility in goodcondition and repair and preserve the same against waste, loss, damage and depreciation, ordinary wearand tear excepted, (2) make all necessary repairs and replacements to the Project Facility or any partthereof (whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen), and (3)operate the Project Facility in a sound and economic manner.

(B) The Company shall not make any structural additions, modifications or improvements tothe Project Facility or any part thereof unless:

(1) the Company shall (a) give or cause to be given all notices and comply or causecompliance with all Applicable Laws applying to or affecting the conduct of work on suchaddition, modification or improvement to the Project Facility, or a part thereof, (b) defend andsave the Agency and its officers, members, agents (other than the Company) and employeesharmless from all fines and penalties due to failure to comply therewith, (c) promptly procure allpermits and licenses necessary for the prosecution of any work described in this Section 6.1(B)and (d) make all payments in lieu of taxes required by Section 6.6 hereof and the Payment in Lieuof Tax Agreement, including those required by Section 2.03(D) thereof;

(2) the addition, modification or improvement to the Project Facility shall notconstitute a default under any of the Basic Documents; and

(3) the Company shall furnish to the Agency, at least thirty (30) days prior tocommencing such addition, modification or improvement to the Project Facility detailed plansand specifications therefor; provided, further, however, that such plans need not be furnished tothe Agency for nonstructural additions, modifications or improvements to the Project Facilitywhich do not exceed, at any one time, $250,000 in value.

SECTION 6.2. TAXES, ASSESSMENTS AND UTILITY CHARGES. (A) The Company shall pay orcause to be paid, as the same respectively become due, (1) all taxes and governmental charges of any kindwhatsoever which may at any time be lawfully assessed or levied against or with respect to the ProjectFacility, (2) all utility and other charges, including “service charges”, incurred or imposed for theoperation, maintenance, use, occupancy, upkeep and improvement of the Project Facility, (3) allassessments and charges of any kind whatsoever lawfully made against the Project Facility by anyGovernmental Authority for public improvements; provided that, with respect to special assessments orother governmental charges that may lawfully be paid in installments over a period of years, the Companyshall be obligated hereunder to pay only such installments as are required to be paid during the term ofthis Lease Agreement and (4) all payments in lieu of taxes with respect to the Project Facility payablepursuant to the Payment in Lieu of Tax Agreement and Section 6.6 hereof.

(B) Notwithstanding the provisions of subsection (A) of this Section 6.2, the Company mayin good faith actively contest any such taxes, assessments and other charges, provided that the Company(1) first shall have notified the Agency in writing of such contest and (2) is not in default under any of theBasic Documents. Otherwise, the Company shall promptly take such action with respect thereto as shallbe satisfactory to the Agency.

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SECTION 6.3. INSURANCE REQUIRED. During the term of this Lease Agreement, the Companyshall maintain insurance with respect to the Project Facility against such risks and for such amounts as arecustomarily insured against by businesses of like size and type, paying, as the same become due andpayable, all premiums with respect thereto, including, but not necessarily limited to:

(A) (1) During and prior to completion of the Project Facility, builder’s risk (or equivalentcoverage) insurance upon any work done or material furnished in connection with the acquisition,construction, reconstruction and installation of the Project Facility, issued to the Company and theAgency, as insureds, as their interests may appear, and (2) at such time that builder’s risk insurance is nolonger available by virtue of completion of the acquisition, construction, reconstruction and installation ofthe Project Facility, insurance protecting the interests of the Company and the Agency, as insureds, astheir interests may appear, against loss or damage to the Project Facility by fire, lightning, vandalism,malicious mischief and other perils normally insured against with a uniform extended coverageendorsement, such insurance at all times to be in an amount acceptable to the Company and the Agency.

(B) To the extent applicable, workers’ compensation insurance, disability benefits insuranceand such other forms of insurance which the Company is required by law to provide, covering lossresulting from injury, sickness, disability or death of employees of the Company who are located at orassigned to the Project Facility or who are responsible for the acquisition, construction or installation ofthe Project Facility.

(C) Insurance protecting the Company and the Agency, as additional insureds, against loss orlosses from liabilities imposed by law or assumed in any written contract (including, without limitation,the contractual liability assumed by the Company under Section 8.2 of this Lease Agreement) and arisingfrom personal injury or death or damage to the Property of others caused by any accident or occurrence,with limits of not less than $1,000,000 per person per accident or occurrence on account of personalinjury, including death resulting therefrom, and $500,000 per accident or occurrence on account ofdamage to the Property of others, excluding liability imposed upon the Company by any applicableworkers’ compensation law, and a separate umbrella liability policy protecting the Company and theAgency with a limit of not less than $2,000,000.

(D) THE AGENCY DOES NOT IN ANY WAY REPRESENT THAT THE INSURANCESPECIFIED HEREIN, WHETHER IN SCOPE OR COVERAGE OR LIMITS OF COVERAGE, ISADEQUATE OR SUFFICIENT TO PROTECT THE COMPANY’S BUSINESS OR iNTEREST.

SECTION 6.4. ADDITIONAL PROVISIONS RESPECTING INSURANCE. (A) All insurance requiredby Section 6.3 hereof shall be procured and maintained in financially sound and generally recognizedresponsible insurance companies selected by the Company and authorized to write such insurance in theState and satisfactory and having a Best rating satisfactory to the Agency. Such insurance may be writtenwith deductible amounts comparable to those on similar policies carried by other companies engaged inbusinesses similar in size, character and other respects to those in which the Company is engaged. Allpolicies evidencing such insurance shall name the Company and the Agency as insureds, as their interestsmay appear, and provide for at least thirty (30) days’ written notice to the Company and the Agency priorto cancellation, lapse, reduction in policy limits or material change in coverage thereof. All insurancerequired hereunder shall be in form, content and coverage satisfactory to the Agency. Certificatessatisfactory in form and substance to the Agency to evidence all insurance required hereby shall bedelivered to the Agency on or before the Closing Date. The Company shall deliver to the Agency on orbefore the first Business Day of each calendar year thereafter a certificate dated not earlier than theimmediately preceding month reciting that there is in full force and effect, with a term covering at leastthe next succeeding calendar year, insurance in the amounts and of the types required by Sections 6.3 and6.4 hereof. At least thirty (30) days prior to the expiration of any such policy, the Company shall furnish

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to the Agency evidence that the policy has been renewed or replaced or is no longer required by thisLease Agreement.

(B) All premiums with respect to the insurance required by Section 6.3 hereof shall be paidby the Company. If at any time the Agency is not in receipt of written evidence that all insurance requiredhereunder is in force and effect, the Agency shall have the right without notice to the Company to takesuch action as the Agency deems necessary to protect its interest in the Project Facility, including, withoutlimitation, the obtaining of such insurance coverage as the Agency in its sole discretion deemsappropriate, and all expenses incurred by the Agency in connection with such action or in obtaining suchinsurance and keeping it in effect shall be paid by the Company to the Agency upon demand, togetherwith interest thereon at the Default Interest Rate.

SECTION 6.5. APPLICATION OF NET PROCEEDS OF INSURANCE. The Net Proceeds of theinsurance carried pursuant to the provisions of Section 6.3 hereof shall be applied as follows: (A) the NetProceeds of the insurance required by Section 6.3(A) hereof shall be applied as provided in Section 7.1hereof, and (B) the Net Proceeds of the insurance required by Section 6.3(B) and 6.3(C) hereof shall beapplied toward extinguishment or satisfaction of the liability with respect to which such insuranceproceeds may be paid.

SECTION 6.6. PAYMENTS IN LIEU OF REAL ESTATE TAXES. (A) It is recognized that under theprovisions of the Act, the Agency is required to pay no taxes or assessments upon any of the Propertyacquired by it or under its jurisdiction, control or supervision or upon its activities. It is not the intention,however, of the parties hereto that the Project Facility be treated as exempt from real property taxation.Accordingly, the parties hereto acknowledge that the Payment in Lieu of Tax Agreement is expected to beexecuted with respect to the Project Facility, and a Real Property Tax Exemption Form will be filed bythe Agency with respect to the Project Facility once the Payment in Lieu of Tax Agreement is executedby the Agency and the Company. Once the Payment in Lieu of Tax Agreement is executed by theAgency and the Company, and thereafter until the expiration date of the Payment in Lieu of TaxAgreement, the Agency and the Company hereby agree that the Company (or any subsequent user of theProject Facility pursuant to this Lease Agreement) shall be required to make or cause to be madepayments in lieu of real estate taxes in the amounts and in the manner set forth in the Payment in Lieu ofTax Agreement.

(B) In the event that (1) the Project Facility would be subject to real property taxation ifowned by the Company but shall be deemed exempt from real property taxation due to the involvement ofthe Agency therewith, and (2) the Payment in Lieu of Tax Agreement shall not have been entered into bythe Agency and the Company, or if entered into the Payment in Lieu of Tax Agreement shall for anyreason no longer be in effect, the Agency and the Company hereby agree that the Company, or anysubsequent user of the Project Facility under this Lease Agreement, shall in such event be required tomake or cause to be made payments in lieu of real property taxes to the school district or school districts,city, town, county, village and other political units wherein the Project Facility is located having taxingpowers (such political units are hereinafter collectively referred to as the “Taxing Entities”) in suchamounts as would result from real property taxes being levied on the Project Facility by the TaxingEntities if the Project Facility were privately owned by the Company and not deemed owned by or underthe jurisdiction, control or supervision of the Agency, but with appropriate reductions similar to the taxexemptions and credits, if any, which would be afforded to the Company if it were the owner of theProject Facility. It is agreed that the Agency, in cooperation with the Company, (a) shall cause theProject Facility to be valued for purposes of determining the amounts due hereunder as if owned by theCompany as aforesaid by the appropriate officer or officers of any of the Taxing Entities as may fromtime to time be charged with responsibility for making such valuations, (b) shall cause to be appropriatelyapplied to the valuation or valuations so determined the respective real property tax rate or rates of the

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Taxing Entities that would be applicable to the Project Facility if so privately owned, (c) shall cause theappropriate officer or officers of the Taxing Entities charged with the duty of levying and collecting suchreal property taxes to submit to the Company, when the respective levies are made for purposes of suchreal property taxes upon Property privately owned as aforesaid, statements specifying the amounts anddue dates of such real property taxes which the Taxing Entities would receive if such Property were soprivately owned by the Company and not deemed owned by or under the jurisdiction, control orsupervision of the Agency, and (d) shall file with the appropriate officer or officers any accounts or taxreturns furnished to the Agency by the Company for the purpose of such filing.

(C) The Company shall pay or cause to be paid to the Taxing Entities when due all suchpayments in lieu of real property taxes with respect to the Project Facility required by Section 6.6(B) ofthis Lease Agreement to be paid to the Taxing Entities, subject in each case to the Company’s right to (1)obtain exemptions and credits, if any, which would be afforded to a private owner of the Project Facility,including any available exemption under Section 485-b of the New York Real Property Tax Law withrespect to the Project Facility, (2) contest valuations of the Project Facility made for the purpose ofdetermining such payments therefrom, and (3) seek to obtain a refund of any such payments made.

(D) Pursuant to Section 874(5) of the Act, if the Company shall fail to make or cause to bemade any payments in lieu of real property taxes required under this Section 6.6, the amount or amountsso in default shall continue as an obligation of the Company until fully paid, and the Company herebyagrees to pay or cause to be paid the same, together with a late payment penalty equal to five percent(5%) of the amount due. If the Company shall fail to make any payment required by this Section 6.6when due and such delinquency shall continue beyond the first month, the Company’s obligation to makethe payment so in default shall continue as an obligation of the Company to the affected Taxing Entityuntil such payment in default shall have been made in full, and the Company shall pay the same to theaffected Taxing Entity together with (1) an additional late payment penalty of one percent (1%) per monthfor each month, or part thereof, that the payment due hereunder is delinquent beyond the first month, plus(2) interest thereon, to the extent permitted by law, at the greater of(a) the Default Interest Rate, or (b) thesame rate per annum which would be payable if such amounts were delinquent taxes, until so paid in full.

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ARTICLE VII

DAMAGE, DESTRUCTION AND CONDEMNATION

SECTION 7.1. DAMAGE OR DESTRUCTION. (A) If the Project Facility shall be damaged ordestroyed, in whole or in part:

(1) the Agency shall have no obligation to replace, repair, rebuild or restore theProject Facility;

(2) there shall be no abatement or reduction in the amounts payable by the Companyunder this Lease Agreement or under any other Basic Document (whether or not the ProjectFacility is replaced, repaired, rebuilt or restored);

(3) the Company shall promptly give notice thereof to the Agency; and

(4) except as otherwise provided in subsection (B) of this Section 7.1, (a) theCompany shall promptly replace, repair, rebuild or restore the Project Facility to substantially thesame condition and value as an operating entity as existed prior to such damage or destruction,with such changes, alterations and modifications as may be desired by the Company andconsented to in writing by the Agency, provided that such changes, alterations or modificationsdo not so change the nature of the Project Facility that it does not constitute a “project”, as suchquoted term is defined in the Act, or change the use of the Project Facility as specified in Section3.2 hereof without the prior written consent of the Agency, and (b)(1) the Agency shall makeavailable to the Company (from the Net Proceeds of any insurance settlement relating to theProject Facility, if any, on deposit with the Agency) such moneys as may be necessary to pay thecosts of the replacement, repair, rebuilding or restoration of the Project Facility, and in the eventthat the funds from the Net Proceeds of any insurance settlement provided by the Agency to theCompany are not sufficient to pay in full the costs of such replacement, repair, rebuilding orrestoration, the Company shall nonetheless complete such work and shall pay from its ownmoneys that portion of the costs thereof in excess of such funds, and (2) any balance of suchfunds from the Net Proceeds of any insurance settlement relating to the Project Facility, if any,remaining on deposit with the Agency after payment of all of the costs of such replacement,repair, rebuilding or restoration shall be paid to the Company for its own purposes.

(B) Notwithstanding anything to the contrary contained in subsection (A) of this Section 7.1,the Company shall not be obligated to replace, repair, rebuild or restore the Project Facility, and the NetProceeds of any insurance settlement shall not be applied as provided in subsection (A) of this Section7.1, if the Company shall notify the Agency that it elects to exercise its option under Article XI hereof topurchase the Project Facility. In such event, or if an Event of Default shall have occurred and becontinuing, the lesser of (1) the total amount of the Net Proceeds collected under any and all policies ofinsurance covering the damage to or destruction of the Project Facility, or (2) the amount necessary toprepay the Indebtedness in full shall be applied to the prepayment of the Indebtedness in full. If the NetProceeds collected under any and all policies of insurance are less than the amount necessary to prepaythe Indebtedness in full, the Company shall pay to the Agency the difference between the Net Proceeds ofsuch insurance and the amount necessary to prepay the Indebtedness in full.

(C) If all Indebtedness has been paid in full, all such Net Proceeds (or the balance thereof)shall be paid to the Company for its purposes.

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(D) Unless an Event of Default under any of the Basic Documents shall have occurred and becontinuing, the Company may adjust all claims under any policies of insurance required by Section6.3(A) hereof.

SECTION 7.2. CONDEMNATION. (A) To the knowledge of the Company, no condemnation oreminent domain proceeding has been commenced or threatened against any part of the Project Facility.The Company shall notify the Agency of the institution of any condemnation proceedings and, withinseven days after inquiry from the Agency, inform the Agency in writing of the status of such proceeding.

(B) If title to, or the use of, all or any part of the Project Facility shall be taken byCondemnation:

(1) the Agency shall have no obligation to restore the Project Facility;

(2) there shall be no abatement or reduction in the amounts payable by the Companyunder this Lease Agreement or under any other Basic Document (whether or not the ProjectFacility is restored);

(3) the Company shall promptly give notice thereof to the Agency; and

(4) except as otherwise provided in subsection (C) of this Section 7.2, (a) theCompany shall promptly restore the Project Facility (excluding any part of the Land or theFacility taken by Condemnation) as a complete architectural unit of substantially the sameusefulness, design and construction as existed immediately prior to such Condemnation, withsuch changes, alterations and modifications as may be desired by the Company and consented toin writing by the Agency, provided that such changes, alterations or modifications do not sochange the nature of the Project Facility that it does not constitute a “project” as such quoted termis defined in the Act, or change the use of the Project Facility as specified in Section 3.2 hereofwithout the prior written consent of the Agency, and (b)(l) the Agency shall make available tothe Company (from the Net Proceeds of any Condemnation award relating to the Project Facility,if any, on deposit with the Agency) such moneys as may be necessary to pay the costs of therestoration of the Project Facility, and in the event that the funds from the Net Proceeds of anyCondemnation award on deposit with the Agency provided by the Agency to the Company arenot sufficient to pay in full the costs of such restoration, the Company shall nonetheless completesuch restoration and shall pay from its own moneys that portion of the costs thereof in excess ofsuch funds, and (2) any balance of such funds from the Net Proceeds of any Condemnationaward, if any, remaining on deposit with the Agency after payment of all of the costs of suchrestoration shall be paid to the Company for its own purposes.

(C) Notwithstanding anything to the contrary contained in subsection (B) of this Section 7.2,the Company shall not be obligated to restore the Project Facility, and the Net Proceeds of anyCondemnation award shall not be applied as provided in subsection (B) of this Section 7.2, if theCompany shall notify the Agency that it elects to exercise its option under Article XI hereof to purchasethe Project Facility. In such event, or if an Event of Default shall have occurred and be continuing, thelesser of (1) the Net Proceeds of any Condemnation award, or (2) the amount necessary to prepay all ofthe Indebtedness in full shall be applied to the prepayment of the Indebtedness in full. If the Net Proceedscollected under any and all Condemnation awards are less than the amount necessary to prepay theIndebtedness in full, the Company shall pay to the Agency the difference between such amounts and theNet Proceeds of such Condemnation awards so that the Indebtedness shall be prepaid in full.

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(D) If all of the Indebtedness has been paid in full, all such Net Proceeds or the balancethereof shall be paid to the Company for its purposes.

(E) Unless an Event of Default under any of the Basic Documents shall have occurred and becontinuing, the Company shall have sole control of any Condemnation proceeding with respect to theProject Facility or any part thereof and may negotiate the settlement of any such proceeding. TheCompany shall notify the Agency of the institution of any condemnation proceedings and, within sevendays after inquiry from the Agency, inform the Agency in writing of the status of such proceeding.

(F) The Agency shall, at the expense of the Company, cooperate fully with the Company inthe handling and conduct of any such Condemnation proceeding. In no event shall the Agencyvoluntarily settle, or consent to the settlement of, any such Condemnation proceeding without the writtenconsent of the Company.

SECTION 7.3. ADDITIONS TO THE PROJECT FACILITY. All replacements, repairs, rebuilding orrestoration made pursuant to Sections 7.1 or 7.2, whether or not requiring the expenditure of theCompany’s own money, shall automatically become part of the Project Facility as if the same werespecifically described herein.

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ARTICLE VIII

SPECIAL COVENANTS

SECTION 8.1. NO WARRANTY OF CONDITION OR SUITABILITY BY THE AGENCY;ACCEPTANCE “AS IS”. THE AGENCY MAKES NO WARRANTY, EITHER EXPRESS ORIMPLIED, AS TO THE CONDITION, TITLE, DESIGN, OPERATION, MERCHANTABILITY ORFITNESS OF THE PROJECT FACILITY OR ANY PART THEREOF OR AS TO THE SUITABILITYOF THE PROJECT FACILITY OR ANY PART THEREOF FOR THE COMPANY’S PURPOSES ORNEEDS. THE COMPANY SHALL ACCEPT TITLE TO THE PROJECT FACILITY “AS IS”,WiTHOUT RECOURSE OF ANY NATURE AGAINST THE AGENCY FOR ANY CONDITIONNOW OR HEREAFTER EXISTING. NO WARRANTY OF FITNESS FOR A PARTICULARPURPOSE OR MERCHANTABILITY IS MADE. IN THE EVENT OF ANY DEFECT ORDEFICIENCY OF ANY NATURE, WHETHER PATENT OR LATENT, THE AGENCY SHALLHAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECT THERETO.

SECTION 8.2. HOLD HARMLESS PROVISIONS. (A) The Company hereby releases the Agency andits members, officers, agents (other than the Company) and employees from, agrees that the Agency andits members, officers, agents (other than the Company) and employees shall not be liable for and agrees toindemnify, defend and hold the Agency and its members, officers, agents (other than the Company) andemployees harmless from and against any and all claims, causes of action, judgments, liabilities,damages, losses, costs and expenses arising as a result of the Agency’s undertaking the Project, including,but not limited to, (1) liability for loss or damage to Property or bodily injury to or death of any and allPersons that may be occasioned, directly or indirectly, by any cause whatsoever pertaining to the ProjectFacility or arising by reason of or in connection with the occupation or the use thereof or the presence ofany Person or Property on, in or about the Project Facility, (2) liability arising from or expense incurredby the Agency’s acquiring, constructing, equipping, installing, owning, leasing or selling the ProjectFacility, including, without limiting the generality of the foregoing, any sales or use taxes which may bepayable with respect to goods supplied or services rendered with respect to the Project Facility, allliabilities or claims arising as a result of the Agency’s obligations under this Lease Agreement or any ofthe other Basic Documents or the enforcement of or defense of validity of any provision of any of theBasic Documents, (3) all claims arising from the exercise by the Company of the authority conferred on itpursuant to Section 4.1(E) hereof, and (4) all causes of action and attorneys’ fees and other expensesincurred in connection with any suits or actions which may arise as a result of any of the foregoing;provided that any such claims, causes of action, judgments, liabilities, damages, losses, costs or expensesof the Agency are not incurred or do not result from the intentional wrongdoing of the Agency or any ofits members, officers, agents (other than the Company) or employees. The foregoing indemnities shallapply notwithstanding the fault or negligence in part of the Agency or any of its officers, members, agents(other than the Company) or employees and notwithstanding the breach of any statutory obligation or anyrule of comparative or apportioned liability.

(B) In the event of any claim against the Agency or its members, officers, agents (other thanthe Company) or employees by any employee of the Company or any contractor of the Company oranyone directly or indirectly employed by any of them or anyone for whose acts any of them may beliable, the obligations of the Company hereunder shall not be limited in any way by any limitation on theamount or type of damages, compensation or benefits payable by or for the Company or such contractorunder workers’ compensation laws, disability benefits laws or other employee benefit laws.

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(C) To effectuate the provisions of this Section 8.2, the Company agrees to provide for andinsure, in the liability policies required by Section 6.3(C) of this Lease Agreement, its liabilities assumedpursuant to this Section 8.2.

(D) Notwithstanding any other provisions of this Lease Agreement, the obligations of theCompany pursuant to this Section 8.2 shall remain in full force and effect after the termination of thisLease Agreement until the expiration of the period stated in the applicable statute of limitations duringwhich a claim, cause of action or prosecution relating to the matters herein described may be brought andthe payment in full or the satisfaction of such claim, cause of action or prosecution and the payment of allexpenses, charges and costs incurred by the Agency, or its officers, members, agents (other than theCompany) or employees, relating thereto.

SECTION 8.3. RIGHT OF ACCESS TO THE PROJECT FACILITY. The Company agrees that theAgency and its duly authorized agents shall have the right at all reasonable times to enter upon and toexamine and inspect the Project Facility. The Company further agrees that the Agency shall have suchrights of access to the Project Facility as may be reasonably necessary to cause the proper maintenance ofthe Project Facility in the event of failure by the Company to perform its obligations hereunder.

SECTION 8.4. COMPANY NOT TO TERMiNATE EXISTENCE OR DISPOSE OF ASSETS;CONDITIONS UNDER WHICH EXCEPTIONS ARE PERMITTED. The Company agrees that, duringthe term of this Lease Agreement, it will maintain its existence, will not dissolve or otherwise dispose ofall or substantially all of its assets, and will not consolidate with or merge into another entity, or permitone or more entities to consolidate with or merge into it, without notice to the Agency and obtaining theprior written consent of the Agency which consent shall not be unreasonably withheld or delayed;provided, however, that, if no Event of Default specified in Section 10.1 hereof shall have occurred andbe continuing (and if no event exists which with the passage of time or notice or both would become anEvent of Default), the Company may consolidate with or merge into another domestic entity organizedand existing under the laws of one of the states of the United States, or permit one or more such domesticentities to consolidate with or merge into it, or sell or otherwise transfer to another Person all orsubstantially all of its assets as an entirety and thereafter dissolve, provided that (A) the Agency hasreceived notice of such action, (B) the Agency gives its written consent to the proposed transaction, whichconsent shall not be unreasonably withheld or delayed, (C) the surviving, resulting or transferee entityassumes in writing all of the obligations of and restrictions on the Company under this Lease Agreementand the other Basic Documents, and (D) as of the date of such transaction, the Agency shall be furnishedwith (1) an opinion of counsel to the Company as to compliance with item (C) of this Section 8.4 and (2)a certificate, dated the effective date of such transaction, signed by an Authorized Representative of theCompany and an authorized officer of the surviving, resulting or transferee entity, as the case may be, orthe transferee of its assets, as the case may be, to the effect that immediately after the consummation ofthe transaction and after giving effect thereto, no Event of Default exists under this Lease Agreement andno event exists which, with notice or lapse of time or both, would become such an Event of Default(unless waived by the Agency in writing).

SECTION 8.5. AGREEMENT TO PROVIDE INFORMATION. The Company agrees, wheneverrequested by the Agency, to provide and certif’ or cause to be provided and certified such informationconcerning the Company, its finances and other topics as the Agency from time to time reasonablyconsiders necessary or appropriate, including, but not limited to, such information as to enable theAgency to make any reports required by law or governmental regulation.

SECTION 8.6. BOOKS OF RECORD AND ACCOUNT; COMPLIANCE CERTIFICATES. (A) TheCompany agrees to maintain proper accounts, records and books in which full and correct entries shall be

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made, in accordance with generally accepted accounting principles, of all business and affairs of theCompany.

(B) As soon as possible after the end of each fiscal year of the Company, but in any eventwithin thirty (30) days after such date, the Company shall furnish to the Agency a certificate of anAuthorized Representative of the Company stating that no Event of Default hereunder has occurred or iscontinuing or, if any Event of Default exists, specifying the nature and period of existence thereof andwhat action the Company has taken or proposes to take with respect thereto.

SECTION 8.7. COMPLIANCE WITH APPLICABLE LAWS. (A) The Company agrees, for the benefitof the Agency, that it will, during the term of this Lease Agreement, promptly comply with all ApplicableLaws.

(B) Notwithstanding the provisions of subsection (A) of this Section 8.7, the Company mayin good faith actively contest the validity or the applicability of any Applicable Law, provided that theCompany (1) first shall have notified the Agency in writing of such contest, (2) is not in default under anyof the Basic Documents, (3) shall have set aside adequate reserves for any such requirement, and (4)demonstrates to the reasonable satisfaction of the Agency that noncompliance with such Applicable Lawwill not subject the Project Facility or any part thereof to loss or forfeiture. Otherwise, the Company shallpromptly take such action with respect thereto as shall be satisfactory to the Agency.

(C) Notwithstanding the provisions of subsection (B) of this Section 8.7, if the Agency or anyof its members, officers, agents (other than the Company), servants or employees may be liable forprosecution for failure to comply therewith, the Company shall promptly take such action with respectthereto as shall be satisfactory to the Agency.

SECTION 8.8. DISCHARGE OF LIENS AND ENCUMBRANCES. The Company hereby agrees not tocreate or suffer to be created any Lien on any Properties of the Agency (other than the Project Facility) oron any funds of the Agency applicable to the Project Facility.

SECTION 8.9. PERFORMANCE OF THE COMPANY’S OBLIGATIONS. Should the Company fail tomake any payment or to do any act as herein provided, the Agency may, but need not, without notice to ordemand on the Company and without releasing the Company from any obligation herein, make or do thesame, including, without limitation, appearing in and defending any action purporting to affect the rightsor powers of the Company or the Agency, and paying all fees, costs and expenses, including, withoutlimitation, reasonable attorneys’ fees, incurred by the Agency in connection therewith, and the Companyshall pay immediately upon demand all sums so incurred or expended by the Agency under the authorityhereof, together with interest thereon at the Default Interest Rate or the maximum rate permitted by law,whichever is less.

SECTION 8.10. DEPRECIATION DEDUCTIONS AND TAX CREDITS. The parties agree that asbetween them the Company shall be entitled to all depreciation deductions and accelerated cost recoverysystem deductions with respect to any portion of the Project Facility pursuant to Sections 167 and 168 ofthe Code and to any investment credit pursuant to Section 38 of the Code with respect to any portion ofthe Project Facility which constitutes “Section 38 Property” and to all other state and/or federal incometax deductions and credits which may be available with respect to the Project Facility.

SECTION 8.11. EMPLOYMENT OPPORTUNITIES. (A) The Company shall insure that all employeesand applicants for employment opportunities created as a result of the completion of the Project areafforded equal employment opportunities without discrimination.

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(B) Pursuant to Section 858-b of the Act, except as otherwise provided by collectivebargaining contracts or agreements, the Company agrees that except as otherwise provided by collectivebargaining agreements where applicable, (1) to list all new employment opportunities created as a resultof the Project with the New York State Department of Labor, Community Services Division(“NYSDOL”) and with the administrative entity (collectively with NYSDOL, the “JTPA ReferralEntities”) of the service delivery area created by the Federal Job Training Partnership Act (P.L. No. 97-300) in which the Project Facility is located (while currently cited in Section 858-b of the Act, the FederalJob Training Partnership Act was repealed effective June 1, 2000, and has been supplanted by theWorkplace Investment Act of 1998 (P.L. No. 105-220)) and (2) where practicable, to first consider forsuch new employment opportunities persons eligible to participate in federal JTPA programs who shall bereferred by the JTPA Referral Entities.

(C) Pursuant to the requirements of subsection one of Section 6 of Chapter 127 of the 1995Laws of the State, the Company agrees to file with the Agency, prior to the effective date of this LeaseAgreement, an employment plan, in substantially the form attached hereto as Exhibit G.

(D) Pursuant to the requirements of subsection one of Section 6 of Chapter 127 of the 1995Laws of the State, the Company agrees to file with the Agency, on an annual basis, reports regarding thenumber of people employed at the Project Facility and certain other matters, the initial said annualemployment report to be in substantially the form annexed hereto as Exhibit H.

SECTION 8.12. SALES AND USE TAX EXEMPTION. (A) Pursuant to Section 874 of the Act, theparties understand that the Agency is exempt from certain sales taxes and use taxes imposed by the Stateand local governments in the State, and that the Project may be exempted from those taxes due to theinvolvement of the Agency in the Project. The Agency makes no representations or warranties that anyproperty is exempt from the payment of New York sales or use taxes. Any exemption from the paymentof New York sales or use taxes resulting from the involvement of the Agency with the Project shall belimited to purchases of services and tangible personal property conveyed to the Agency or utilized by theAgency or by the Company as agent of the Agency as a part of the Project prior to the Completion Date,or incorporated within the Project Facility prior to the Completion Date. No operating expenses of theProject Facility, and no other purchases of services or property shall be subject to an exemption from thepayment of New York sales or use tax. It is the intention of the parties hereto that the Company willreceive a sales tax exemption letter with respect to the Project, said sales tax exemption letter to be issuedon the date of the execution of this Lease Agreement and in a form similar to the form attached hereto asExhibit I.

(B) Pursuant to Section 874(8) of the Act, the Company agrees to annually file and cause anysublessee or other operator of the Project Facility to file annually, with the New York State Department ofTaxation and Finance, on a form and in such manner as is prescribed by the New York StateCommissioner of Taxation and Finance (the “Annual Sales Tax Report”), a statement of the value of allsales and use tax exemptions claimed by the Company and all contractors, subcontractors, consultants andother agents of the Company under the authority granted to the Company pursuant to Section 4.1(E) ofthis Lease Agreement. Pursuant to Section 874(8) of the Act, the penalty for failure to file the AnnualSales Tax Report shall be removal of authority to act as agent of the Agency. Additionally, if theCompany shall fail to comply with the requirements of this subsection (B) the Company shallimmediately cease to be the agent of the Agency in connection with the Project. A current sample formof such Annual Sales Tax Report required to be completed by the Company pursuant to this LeaseAgreement is attached hereto as Exhibit J. For future filings of the Annual Sales Tax Report, theCompany is responsible for obtaining from the New York State Department of Taxation and Finance anyupdated or revised versions of such Annual Sales Tax Report.

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(C) The Company agrees to furnish to the Agency a copy of each such Annual Sales TaxReport submitted to the New York State Department of Taxation and Finance by the Company pursuantto Section 874(8) of the Act.

(D) Pursuant to Section 874(9) of the Act, the Company agrees to file within thirty (30) daysof the Closing Date with the New York State Department of Taxation and Finance, on a form and in suchmanner as is prescribed by the New York State Commissioner of Taxation and Finance (the “Thirty-DaySales Tax Report”), a statement identifying the Company as agent of the Agency, setting forth thetaxpayer identification number of the Company, giving a brief description of the goods and/or servicesintended to be exempted from sales taxes as a result of such appointment as agent, indicating a roughestimate of the value of the goods and/or services to which such appointment as agent relates, indicatingthe date when such designation as agent became effective and indicating the date upon which suchdesignation as agent shall cease. A current sample form of such Thirty-Day Sales Tax Report required tobe completed by the Company pursuant to this Lease Agreement is attached hereto as Exhibit K. Forfuture filings of the Thirty-Day Sales Tax Report, the Company is responsible for obtaining from the NewYork State Department of Taxation and Finance any updated or revised versions of such Thirty-Day SalesTax Report.

SECTION 8.13. IDENTIFICATION OF THE EQUIPMENT. All Equipment which is or may becomepart of the Project Facility pursuant to the provisions of this Lease Agreement shall be properly identifiedby the Company by such appropriate records, including computerized records, as may be approved by theAgency.

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ARTICLE IX

ASSIGNMENTS; MERGER OF THE AGENCY

SECTION 9.1. ASSIGNMENT OF THE LEASE AGREEMENT. Except as otherwise provided inSection 8.4 hereof, this Lease Agreement may not be assigned by the Company, in whole or in part,without the prior written consent of the Agency.

SECTION 9.2. MERGER OF THE AGENCY. (A) Nothing contained in this Lease Agreement shallprevent the consolidation of the Agency with, or merger of the Agency into, or assignment by the Agencyof its rights and interests hereunder to, any other public benefit corporation of the State or politicalsubdivision thereof which has the legal authority to perform the obligations of the Agency hereunder,provided that upon any such consolidation, merger or assignment, the due and punctual performance andobservance of all of the agreements and conditions of this Lease Agreement to be kept and performed bythe Agency shall be expressly assumed in writing by the public benefit corporation or politicalsubdivision resulting from such consolidation or surviving such merger or to which the Agency’s rightsand interests under this Lease Agreement shall be assigned.

(B) As of the date of any such consolidation, merger or assignment, the Agency shall givenotice thereof in reasonable detail to the Company. The Agency shall promptly furnish to the Companysuch additional information with respect to any such consolidation, merger or assignment as the Companymay reasonably request.

SECTION 9.3. SALE OR LEASE OF THE PROJECT FACILITY. (A) Except for subleases of portionsof the Project Facility entered into by the Company in the ordinary course of business and in compliancewith the terms of this Lease Agreement and the other Basic Documents and as otherwise provided herein,the Company may not sell, lease, transfer, convey or otherwise dispose of the Project Facility or any partthereof without the prior written consent of the Agency, which consent shall not be unreasonably withheldor delayed; provided, however, that the prior written consent of the Agency shall not be required when theCompany proposes to sublease a portion of the Project Facility in the ordinary course of business andsuch sublease is consistent with Section 3.2 hereof and the provisions of Section 854(4) and Section862(1) of the Act.

(B) Notwithstanding anything to the contrary contained in this Lease Agreement, in anyinstance after the Completion Date where the Company reasonably determines that any portion of theProject Facility has become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary, theCompany may remove such portion of the Project Facility and may sell, trade in, exchange or otherwisedispose of the same, as a whole or in part, without the prior written consent of the Agency, provided thatsuch removal will not materially impair the value of the Project Facility as collateral and provided thesame is forthwith replaced with similar items. At the request of the Company, the Agency shall executeand deliver to the Company all instruments necessary or appropriate to enable the Company to sell orotherwise dispose of any such item of Property free from the Liens of the Basic Documents. TheCompany shall pay all costs and expenses (including counsel fees) incurred in transferring title to andreleasing from the Liens of the Basic Documents any item of Property removed pursuant to thisSection 9.3.

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ARTICLE X


SECTION 10.1. EVENTS OF DEFAULT DEFINED. (A) The following shall be “Events of Default”under this Lease Agreement, and the terms “Event of Default” or “default” shall mean, whenever they areused in this Lease Agreement, any one or more of the following events:

(1) A default by the Company in the due and punctual payment of the amountsspecified to be paid pursuant to Section 5.3 or Section 6.6 hereof, and the continuance thereof fora period often (10) days after written notice thereof is given by the Agency to the Company.

(2) A default in the performance or observance of any other of the covenants,conditions or agreements on the part of the Company in this Lease Agreement and thecontinuance thereof for a period of thirty (30) days after written notice thereof is given by theAgency to the Company, provided that, if such default is capable of cure but cannot be curedwithin such thirty (30) day period, the failure of the Company to commence to cure within suchthirty (30) day period and to prosecute the same with due diligence.

(3) The occurrence of an “Event of Default” under any other Basic Document.

(4) Any representation or warranty made by the Company herein or in any otherBasic Document proves to have been false at the time it was made.

(5) The Company shall generally not pay its debts as such debts become due oradmits its inability to pay its debts as they become due.

(6) The Company shall conceal, remove or permit to be concealed or removed anypart of its Property, with intent to hinder, delay or defraud its creditors, or any one of them, orshall make or suffer a transfer of any of its Property which is fraudulent under any bankruptcy,fraudulent conveyance or similar law; or shall make any transfer of its Property to or for thebenefit of a creditor at a time when other creditors similarly situated have not been paid; or shallsuffer or permit, while insolvent, any creditor to obtain a Lien upon any of its Property throughlegal proceedings or distraint which is not vacated within thirty (30) days from the date thereof.

(7) (a) The filing by the Company (as debtor) of a voluntary petition under Title11 of the United States Code or any other federal or state bankruptcy statute, (b) the failure by theCompany within sixty (60) days to lift any execution, garnishment or attachment of suchconsequence as will impair the Company’s ability to carry out its obligations hereunder, (c) thecommencement of a case under Title 11 of the United States Code against the Company as thedebtor or commencement under any other federal or state bankruptcy statute of a case, action orproceeding against the Company and continuation of such case, action or proceeding withoutdismissal for a period of sixty (60) days, (d) the entry of an order for relief by a court ofcompetent jurisdiction under Title 11 of the United States Code or any other federal or statebankruptcy statute with respect to the debts of the Company, or (e) in connection with anyinsolvency or bankruptcy case, action or proceeding, appointment by final order, judgment ordecree of a court of competent jurisdiction of a receiver or trustee of the whole or a substantialportion of the Property of the Company, unless such order, judgment or decree is vacated,dismissed or dissolved within sixty (60) days of such appointment.

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(8) The imposition of a Lien on the Project Facility other than a PermittedEncumbrance.

(9) The removal of the Project Facility, or any portion thereof, outside MontgomeryCounty, New York, without the prior written consent of the Agency, other than in connectionwith a removal under Section 9.3(B) hereof.

(B) Notwithstanding the provisions of Section 10.1(A) hereof, if by reason of force majeure(as hereinafter defined) either party hereto shall be unable, in whole or in part, to carry out its obligationsunder this Lease Agreement and if such party shall give notice and full particulars of such force majeurein writing to the other party and to the Agency within a reasonable time after the occurrence of the eventor cause relied upon, the obligations under this Lease Agreement of the party giving such notice, so far asthey are affected by such force majeure, shall be suspended during the continuance of the inability, whichshall include a reasonable time for the removal of the effect thereof. The suspension of such obligationsfor such period pursuant to this subsection (B) shall not be deemed an Event of Default under this Section10.1. Notwithstanding anything to the contrary in this subsection (B) an event of force majeure shall notexcuse, delay or in any way diminish the obligations of the Company to make the payments required bySections 4.1(H), 5.3, 6.2 and 6.6 hereof, to obtain and continue in full force and effect the insurancerequired by Article VI hereof, to provide the indemnity required by Sections 3.3 and 8.2 hereof and tocomply with the provisions of Sections 2.2(G), 6.6, 8.2, 8.4, 8.5 and 8.7(C) hereof. The term “forcemajeure” as used herein shall include acts outside of the control of the Agency and the Company,including but not limited to acts of God, strikes, lockouts or other industrial disturbances, acts of publicenemies, orders of any kind of any Governmental Authority or any civil or military authority,insurrections, riots, epidemics, landslides, lightning, earthquakes, fire, hurricanes, storms, floods,washouts, droughts, arrests, restraint of government and people, civil disturbances, explosions, breakageor accident to machinery, transmission pipes or canals, partial or entire failure of utilities, or any othercause or event not reasonably within the control of the party claiming such inability. It is agreed that thesettlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion ofthe party having difficulty, and the party having difficulty shall not be required to settle any strike,lockout or other industrial disturbances by acceding to the demands of the opposing party or parties.

SECTION 10.2. REMEDIES ON DEFAULT. (A) Whenever any Event of Default hereunder shall haveoccurred, the Agency may, to the extent permitted by law, take any one or more of the following remedialsteps:

(1) declare, by written notice to the Company, to be immediately due and payable,whereupon the same shall become immediately due and payable, (a) all amounts payable pursuantto Section 5.3 hereof, and (b) all other payments due under this Lease Agreement or any of theother Basic Documents; or

(2) re-enter and take possession of the Project Facility, enforce or terminate thisLease Agreement, sell the Project Facility, subject to Permitted Encumbrances, at public orprivate sale, as a whole or piecemeal, for such consideration as may be deemed appropriate in thecircumstances, and hold the Company liable for the amount, if any, by which the aggregateunpaid amounts due hereunder exceed the Net Proceeds received upon such sale, or manage andoperate the Project Facility, collect all or any rents accruing therefrom, let or relet the ProjectFacility or any part thereof for the Agency’s own account or the account of the Company, holdingthe Company liable for payments due up to the effective date of such leasing and for thedifference in the rent and other amounts paid by the lessee pursuant to such lease and the rentalpayments and other amounts payable by the Company hereunder, cancel or modify leases, evicttenants, bring or defend any suits in connection with the possession of the Project Facility in its

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own name or in the Company’s name, make repairs as the Agency deems appropriate, andperform such other acts in connection with the management and operation of the Project Facilityas the Agency, in its discretion, may deem proper; or

(3) terminate this Lease Agreement and convey to the Company all the Agency’sright, title and interest in and to the Project Facility (The conveyance of the Agency’s right, titleand interest in and to the Project Facility shall be effected by the recording by the Agency of theTermination of Lease to Agency and the Bill of Sale to Company. The Company hereby agreesto pay all expenses and taxes, if any, applicable to or arising from any such transfer of title); or

(4) take any other action at law or in equity which may appear necessary or desirableto collect any amounts then due or thereafter to become due hereunder and to enforce theobligations, agreements or covenants of the Company under this Lease Agreement.

(B) No action taken pursuant to this Section 10.2 (including repossession of the ProjectFacility) shall relieve the Company from its obligations to make all payments required by this LeaseAgreement and the other Basic Documents.

(C) In the event that the Company fails to prepare at the request of the Agency theinstruments described in Section 10.2(A)(3) hereof, the Company agrees that the Agency may prepare orcause to prepare such instruments. The Company hereby appoints the Agency as its true and lawful agentto execute, deliver and record all such instruments necessary to provide for the termination of this LeaseAgreement and the conveyance to the Company all the Agency’s right, title and interest in and to theProject Facility. The Company acknowledges that the foregoing appointment is coupled with an interestand is irrevocable.

SECTION 10.3. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to theAgency is intended to be exclusive of any other available remedy, but each and every such remedy shallbe cumulative and in addition to every other remedy given under this Lease Agreement or any other BasicDocument now or hereafter existing at law or in equity. No delay or omission to exercise any right orpower accruing upon any default shall impair any such right or power or shall be construed to be a waiverthereof, but any such right and power may be exercised from time to time and as often as may be deemedexpedient. In order to entitle the Agency to exercise any remedy reserved to it in this Article X, it shallnot be necessary to give any notice, other than such notice as may be herein expressly required.

SECTION 10.4. AGREEMENT TO PAY ATTORNEYS’ FEES AND EXPENSES. In the event theCompany should default under any of the provisions of this Lease Agreement and the Agency shouldemploy attorneys or incur other expenses for the collection of amounts payable hereunder or theenforcement of performance or observance of any obligations or agreements on the part of the Companyherein contained, the Company shall, on demand therefor, pay to the Agency the reasonable fees of suchattorneys and such other expenses so incurred, whether an action is commenced or not.

SECTION 10.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event anyagreement contained herein should be breached by either party and thereafter such breach be waived bythe other party, such waiver shall be limited to the particular breach so waived and shall not be deemed towaive any other breach hereunder.

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ARTICLE Xl

OPTIONS AND OBLIGATION TO PURCHASE

SECTION 11.1. EARLY TERMINATION OF THE LEASE AGREEMENT. The Company shall havethe option to terminate this Lease Agreement prior to the termination date specified in Section 5.2 hereofby filing with the Agency a certificate signed by an Authorized Representative of the Company stating theCompany’s intention to do so pursuant to this Section 11.1.

SECTION 11.2. OBLIGATION TO SELL AND PURCHASE THE PROJECT FACILITY.Contemporaneously with the termination of this Lease Agreement in accordance with Section 5.2 orSection 11 .1 hereof, the Agency shall sell and the Company shall purchase all the Agency’s right, titleand interest in and to the Project Facility for a purchase price equal to the sum of One Dollar ($1.00), pluspayment of all sums due and payable to the Agency or any other Person pursuant to this Lease Agreementand the other Basic Documents. The obligation of the Agency under this Section 11.2 to convey theProject Facility to the Company will be subject to there being no Event of Default existing hereunder orunder the Payment in Lieu of Tax Agreement or under any other Basic Document, or any other eventwhich would, but for the passage of time or the giving of notice, or both, be such an Event of Default.

SECTION 11.3. CONVEYANCE ON PURCHASE OF THE PROJECT FACILITY. (A) At the closingof any purchase of the Project Facility pursuant to Section 11.2 hereof, the Agency shall, upon thesatisfaction of the conditions set forth in Section 11.1 and Section 11.2 hereof, as appropriate, deliver tothe Company all necessary documents (1) to convey to the Company all the Agency’s right, title andinterest in and to the Property being purchased, as such property then exists, subject only to the following:(a) any Liens or title defects to which title to such Property was subject when conveyed to the Agency, (b)any Liens created at the request of the Company or to the creation of which the Company consented, (c)any Permitted Encumbrances, and (d) any Liens resulting from the failure of the Company to perform orobserve any of the agreements on its part contained in this Lease Agreement or arising out of an Event ofDefault; and (2) to release and convey to the Company all of the Agency’s rights and interest in and toany rights of action or any net proceeds of insurance settlements or Condemnation awards with respect tothe Project Facility (but not including amounts relating to the Unassigned Rights).

(B) The termination of the Agency’s leasehold interest in the Project Facility created pursuantto the Lease to Agency shall be effected by the execution and delivery by the Agency to the Company ofthe Termination of Lease to Agency (an unexecuted copy of which is attached hereto as Exhibit C and bythis reference made a part hereof). The sale and conveyance of the Agency’s right, title and interest in andto the Equipment shall be effected by the execution and delivery by the Agency to the Company of theBill of Sale to Company (an unexecuted copy of which is attached hereto as Exhibit D and by thisreference made a part hereof). The termination of this Lease Agreement shall be effected by the executionand delivery of the Company and the Agency of the Termination of Lease Agreement (an unexecutedcopy of which is attached hereto as Exhibit E and by this reference made a part hereof). The terminationof the Agency’s license interest in the Project Facility created pursuant to the License to Agency shall beeffected by the execution and delivery by the Agency to the Company of the Termination of License toAgency (in substantially the form attached hereto as Exhibit F and by this reference made a part hereof).The Company hereby agrees to pay all expenses and taxes, if any, applicable to or arising from suchtransfers of title.

(C) The Company agrees to prepare the Termination of Lease to Agency and/or the Bill ofSale to Company and/or the Termination of Lease Agreement and/or the Termination of License toAgency and all schedules thereto, together with all equalization and assessment forms and other necessary

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documentation, and to forward same to the Agency at least thirty (30) days prior to the date that theProject Facility or any portion thereof is to be conveyed to the Company.

(D) The Company hereby agrees to pay all expenses and taxes, if any, applicable to or arisingfrom the transfers contemplated by this Section 11.3.

(E) This Lease Agreement shall survive the transfer of the Project Facility to the Companypursuant to this Section 11.3 and shall remain in full force and effect until all of the Indebtedness shallhave been paid in full, and thereafter the obligations of the Company shall survive as set forth in Section12.8 hereof.

(F) Upon the payment in full of all Indebtedness under or secured by this Lease Agreement,and notwithstanding the survival of certain obligations of the Company as described in Section 12.8hereof, the Agency shall upon the request of the Company execute and deliver to the Company suchdocuments as the Company may reasonably request, in recordable form if so requested, to evidence thetermination and release of all Liens granted to the Agency hereunder.

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ARTICLE XII

MISCELLANEOUS

SECTION 12.1. NOTICES. (A) All notices, certificates and other communications hereunder shall be inwriting and shall be sufficiently given and shall be deemed given when (1) sent to the applicable addressstated below by registered or certified mail, return receipt requested, or by such other means as shallprovide the sender with documentary evidence of such delivery, or (2) delivery is refused by theaddressee, as evidenced by the affidavit of the Person who attempted to effect such delivery.

(B) The addresses to which notices, certificates and other communications hereunder shall bedelivered are as follows:

IF TO THE COMPANY:

Hill & Markes Realty, LLC120 Edson StreetAmsterdam, New York 12010Attention: Neal Packer, COO

WITH COPIES TO:



IF TO THE AGENCY:


WITH A COPY TO:

Law Offices of Paul L. Woilman41 Market StreetAmsterdam, New York 12010Attention: Paul L. Wolirnan, Esq.

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(C) The Agency and the Company may, by notice given hereunder, designate any further ordifferent addresses to which subsequent notices, certificates and other communications shall be sent.

SECTION 12.2. BINDING EFFECT. This Lease Agreement shall inure to the benefit of the Agency andthe Company and shall be binding upon the Agency, the Company and, as permitted by this LeaseAgreement, their respective successors and assigns.

SECTION 12.3. SEVERABILITY. If any one or more of the covenants or agreements provided hereinon the part of the Agency or the Company to be performed shall, for any reason, be held or shall, in fact,be inoperative, unenforceable or contrary to law in any particular case, such circumstance shall not renderthe provision in question inoperative or unenforceable in any other case or circumstance. Further, if anyone or more of the phrases, sentences, clauses, paragraphs or sections herein shall be contrary to law, thensuch covenant or covenants or agreement or agreements shall be deemed separable from the remainingcovenants and agreements hereof and shall in no way affect the validity of the other provisions of thisLease Agreement.

SECTION 12.4. AMENDMENT. This Lease Agreement may not be amended, changed, modified,altered or terminated, except by an instrument in writing signed by the parties hereto.

SECTION 12.5. EXECUTION OF COUNTERPARTS. This Lease Agreement may be executed inseveral counterparts, each of which shall be an original and all of which shall constitute but one and thesame instrument.

SECTION 12.6. APPLICABLE LAW. This Lease Agreement shall be governed exclusively by andconstrued in accordance with the applicable laws of the State.

SECTION 12.7. RECORDING AND FILING. The Lease to Agency (or a memorandum thereof), theLicense to Agency, this Lease Agreement (or a memorandum hereof) and the Mortgage, and financingstatements relating to the security interests created and/or assigned thereby, shall be recorded or filed, asthe case may be, by the Agency (but at the sole cost and expense of the Company) in the office of theCounty Clerk of Montgomery County, New York, or in such other office as may at the time be providedby law as the proper place for the recordation or filing thereof.

SECTION 12.8. SURVIVAL OF OBLIGATIONS. (A) The obligations of the Company to make thepayments required by Sections 5.3 and 6.6 hereof and to provide the indemnity required by Sections 3.3and 8.2 hereof shall survive the termination of this Lease Agreement, and all such payments after suchtermination shall be made upon demand of the party to whom such payment is due.

(B) The obligations of the Company to the Agency with respect to the Unassigned Rightsshall survive the termination of this Lease Agreement until the expiration of the period stated in theapplicable statute of limitations during which a claim, cause of action or prosecution relating to theUnassigned Rights may be brought and the payment in full or the satisfaction of such claim, cause ofaction or prosecution and the payment of all expenses and charges incurred by the Agency, or its officers,members, agents or employees, relating thereto.

SECTION 12.9. TABLE OF CONTENTS AND SECTION HEADINGS NOT CONTROLLING. TheTable of Contents and the headings of the several Sections in this Lease Agreement have been preparedfor convenience of reference only and shall not control, affect the meaning of or be taken as aninterpretation of any provision of this Lease Agreement.

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SECTION 12.10. NO RECOURSE; SPECIAL OBLIGATION. (A) The obligations and agreements ofthe Agency contained herein and in the other Basic Documents and any other instrument or documentexecuted in connection herewith or therewith, and any other instrument or document supplemental theretoor hereto, shall be deemed the obligations and agreements of the Agency, and not of any member, officer,agent (other than the Company), servant or employee of the Agency in his individual capacity, and themembers, officers, agents (other than the Company), servants and employees of the Agency shall not beliable personally hereon or thereon or be subject to any personal liability or accountability based upon orin respect hereof or thereof or of any transaction contemplated hereby or thereby.

(B) The obligations and agreements of the Agency contained herein and therein shall notconstitute or give rise to an obligation of the State of New York or Montgomery County, New York, andneither the State of New York nor Montgomery County, New York shall be liable hereon or thereon, and,further, such obligations and agreements shall not constitute or give rise to a general obligation of theAgency, but rather shall constitute limited obligations of the Agency payable solely from the revenues ofthe Agency derived and to be derived from the lease, sale or other disposition of the Project Facility(except for revenues derived by the Agency with respect to the Unassigned Rights).

(C) No order or decree of specific performance with respect to any of the obligations of theAgency hereunder shall be sought or enforced against the Agency unless (1) the party seeking such orderor decree shall first have requested the Agency in writing to take the action sought in such order or decreeof specific performance, and ten (10) days shall have elapsed from the date of receipt of such request, andthe Agency shall have refused to comply with such request (or, if compliance therewith would reasonablybe expected to take longer than ten days, shall have failed to institute and diligently pursue action to causecompliance with such request within such ten day period) or failed to respond within such notice period,(2) if the Agency refuses to comply with such request and the Agency’s refusal to comply is based on itsreasonable expectation that it will incur fees and expenses, the party seeking such order or decree shallhave placed in an account with the Agency an amount or undertaking sufficient to cover such reasonablefees and expenses, and (3) if the Agency refuses to comply with such request and the Agency’s refusal tocomply is based on its reasonable expectation that it or any of its members, officers, agents (other than theCompany) or employees shall be subject to potential liability, the party seeking such order or decree shall(a) agree to indemnify, defend and hold harmless the Agency and its members, officers, agents (other thanthe Company) and employees against any liability incurred as a result of its compliance with suchdemand, and (b) if requested by the Agency, furnish to the Agency satisfactory security to protect theAgency and its members, officers, agents (other than the Company) and employees against all liabilityexpected to be incurred as a result of compliance with such request.

SECTION 12.11. SUBORDINATION TO THE MORTGAGE. This Lease Agreement and all rights ofthe Company and the Agency hereunder are and shall be subordinate to the Lien of the Mortgage on theProject Facility. The subordination of this Lease Agreement to the Mortgage shall be automatic, withoutthe execution of any further subordination agreement by the Company or the Agency. Nonetheless, if theLender requires a further written subordination agreement, the Company and the Agency hereby agree toexecute, acknowledge and deliver the same.

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012178/00069 Business 7531616v2

IN WITNESS WHEREOF, the Agency and the Company have caused this Lease Agreement tobe executed in their respective names by their respective duly authorized officers, all as of the day andyear first above written.

MONTGOMERY COU1’4TY INDUSTRIALDEVELOPMENT AGENCY

BY:%t £SI(.!Lj Chairman



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000161/01178 Business 7531616v1

IN WITNESS W[IEREOF, the Agency and the Company have caused this Lease Agreement tobe executed in their respective names by their respective duly authorized officers, all as of the day andyear first above written.


BY:__________________________(Vice) Chairman

HILL & MARKES EALT1,LLC

Authorized Vember

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O]2178/00069 Business 7531616v1

STATE OF NEW YORK )) ss:


On the 30th day of June, in the year 2010, before me, the undersigned, personally appearedWILLIAM HISERT, personally known to me or proved to me on the basis of satisfactory evidence to bethe individual whose name is subscribed to the within instrument and acknowledged to me that heexecuted the same in his capacity, and that by his signature on the instrument, the individual, or theperson upon behalf of which the individual acted exec e instrument.

Notary Public

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PA L (JLLMA’j

QUAIl EU IN EiuI (jMEHY CUIJU YREG#02W097301U5

MYCOMM EXP JULUji

012178/00069 Business 7531616v2


COUNTY OF FUL4 )

On the 7 day of July, in the year 2010, before me, the undersigned, personally appeared NEALPACKER, personally known to me or proved to me on the basis of satisfactory evidence to be theindividual whose name is subscribed to the within instrument and acknowledged to me that he executedthe same in his capacity, and that by his signature on the instrument, the individual, or the person uponbehalf of which the individual acted, executed the instrument.

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9’—

MARK) J. PAPANotary PubHc, State of Ne York

C ual tied i ri Pu on elyMy Commission Expires 3 LlJ?

012178/00069 Business 7531616v1

APPENDIX A



“Act” means Title 1 of Article 1 8-A of the General Municipal Law of the State, as amended fromtime to time, together with Chapter 666 of the 1970 Laws of the State, constituting Section 895-d of theGeneral Municipal Law of the State, as amended from time to time.

“Affected Tax Jurisdiction” shall have the meaning assigned to such term in Section 854(16) ofthe Act), which defines such term, in the context of the Project, to mean any village, town, city, county,and school district in which the Project Facility is located

“Affected Tax Jurisdictions” means all Affected Tax Jurisdictions in which the Project Facility islocated.

“Agency” means (A) Montgomery County Industrial Development Agency and its successors andassigns, and (B) any public benefit corporation or other public corporation resulting from or surviving anyconsolidation or merger to which Montgomery County Industrial Development Agency or its successorsor assigns may be a party.

“Applicable Laws” means all statutes, codes, laws, acts, ordinances, orders, judgments, decrees,injunctions, rules, regulations, permits, licenses, authorizations, directions and requirements of allGovernmental Authorities, foreseen or unforeseen, ordinary or extraordinary, which now or at any timehereafter may be applicable to or affect the Project Facility or any part thereof or the conduct of work onthe Project Facility or any part thereof or to the operation, use, manner of use or condition of the ProjectFacility or any part thereof (the applicability of such statutes, codes, laws, acts, ordinances, orders, rules,regulations, directions and requirements to be determined both as if the Agency were the owner of theProject Facility and as if the Company and not the Agency were the owner of the Project Facility),including but not limited to (1) applicable building, zoning, environmental, planning and subdivisionlaws, ordinances, rules and regulations of Governmental Authorities having jurisdiction over the ProjectFacility, (2) restrictions, conditions or other requirements applicable to any permits, licenses or othergovernmental authorizations issued with respect to the foregoing, and (3) judgments, decrees orinjunctions issued by any court or other judicial or quasi-judicial Governmental Authority.

“Approving Resolution” means the resolution duly adopted by the Agency on June 30, 2010,authorizing and directing the undertaking and completion of the Project and the execution and delivery ofthe Basic Documents to which the Agency is a party.

“Assignment of Rents” means the assignment of rents and leases dated as of June 30, 2010 fromthe Agency and the Company to the Lender.

“Authorized Representative” means (A) with respect to the Agency, its Chairman or Vice-Chairman, or such other Person or Persons at the time designated to act on behalf of the Agency bywritten certificate furnished to the Company containing the specimen signature of each such Person andsigned on behalf of the Agency by its Chairman, Vice Chairman or such other person as may beauthorized by resolution of the Agency to act on behalf of the Agency, and (B) with respect to theCompany, its chief executive officer or chief financial officer, or such other Person or Persons at the timedesignated to act on behalf of the Company by written certificate furnished to the Agency containing the

AppA-1012178/00069 Business 753 1616v2

specimen signature of each such Person and signed on behalf of the Company by its chief executiveofficer or chief financial officer, or such other person as may be authorized by the Board of the Companyto act on behalf of the Company.

“Basic Documents” means the Conveyance Documents, the Lease Agreement, the ProjectBenefits Agreement, the Payment in Lieu of Tax Agreement, the Loan Documents and all otherinstruments and documents related thereto and executed in connection therewith, and any otherinstrument or document supplemental thereto, each as amended from time to time.

“Bill of Sale to Agency” means the bill of sale delivered on the Closing Date from the Companyto the Agency conveying all of the Company’s interest in the Equipment to the Agency.

“Bill of Sale to Company” means the bill of sale from the Agency to the Company conveying allof the Agency’s interest in the Equipment to the Company, substantially in the form attached as Exhibit Dto the Lease Agreement.

“Business Day” means a day on which banks located in the Town of Florida, MontgomeryCounty, New York are not required or authorized to remain closed and on which the New York StockExchange is not closed.

“Closing” means the closing at which the Basic Documents are executed and delivered by theCompany and the Agency.

“Closing Date” means the date of the Closing.

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations of the UnitedStates Treasury Department promulgated thereunder.

“Company” means Hill & Markes Realty, LLC, a limited liability company duly organized andexisting under the laws of the State of New York, and its successors and assigns, to the extent permittedpursuant to Section 8.4 of the Lease Agreement.

“Completion Date” means the earlier to occur of (A) July 1, 2011 or (B) such date as shall becertified by the Company to the Agency as the date of completion of the Project pursuant to Section 4.2 ofthe Lease Agreement, or (C) such earlier date as shall be designated by written communication from theCompany to the Agency as the date of completion of the Project.

“Condemnation” means the taking of title to, or the use of, Property under the exercise of thepower of eminent domain by any Governmental Authority.


“Default Interest Rate” means a per annum rate of interest equal to twelve percent (12%) perannum, or the maximum rate of interest permitted by law, whichever is less.

“Equipment” means all equipment, fixtures, machines, building materials and items of personalproperty and all appurtenances intended to be acquired in connection with the completion of the Projectprior to the Completion Date with the proceeds of any payment made by the Company pursuant toSection 4.1(11) of the Lease Agreement, and such substitutions and replacements therefor as may be made

AppA-2012178/00069 Business 753 1616v2

from time to time pursuant to the Lease Agreement, including without limitation, all the Propertydescribed in Exhibit B attached to the Lease Agreement.

“Event of Default” means, with respect to any particular Basic Document, any event specified asan Event of Default pursuant to the provisions thereof.

“Facility” means all buildings (or portions thereof), improvements, structures and other relatedfacilities, and improvements thereto, (A) located on the Land, (B) financed with the proceeds of anypayment made by the Company pursuant to Section 4.1(H) of the Lease Agreement, and (C) notconstituting a part of the Equipment, all as they may exist from time to time.

“Financial Assistance” shall have the meaning assigned to such term in the fifth recital clause tothe Lease Agreement.

“Governmental Authority” means the United States of America, the State, any other state and anypolitical subdivision thereof, and any agency, department, commission, court, board, bureau orinstrumentality of any of them.

“Gross Proceeds” means one hundred percent (100%) of the proceeds of the transaction withrespect to which such term is used, including, but not limited to, the settlement of any insurance orCondemnation award.

“Hazardous Materials” shall mean all hazardous materials including, without limitation, anyflammable explosives, radioactive materials, radon, asbestos, urea formaldehyde foam insulation,polychlorinated byphenyls, petroleum, petroleum products, methane, hazardous materials, hazardouswastes, hazardous or toxic substances, or related materials as set forth in the ComprehensiveEnvironmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections9601, et seq.), the Hazardous Materials Transportation Act, as amended (49 U.S.C. Sections 1801, etseq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.),Articles 15 or 27 of the State Environmental Conservation Law, or in the regulations adopted andpublications promulgated pursuant thereto, or any other Federal, state or local environmental law,ordinance, rule or regulation.

“Indebtedness” means (1) the monetary obligations of the Company to the Agency and itsmembers, officers, agents, servants and employees under the Lease Agreement and the other BasicDocuments, (2) the monetary obligations of the Company to the Affected Tax Jurisdictions under thePayment in Lieu of Tax Agreement and the other Basic Documents, and (3) all interest accrued andaccruing on any of the foregoing.

“Independent Counsel” means an attorney or firm of attorneys duly admitted to practice lawbefore the highest court of any state and not a full-time employee of the Company or the Agency.

“Independent Engineer” means an engineer or architect or firm of engineers or architects dulyadmitted to practice engineering or architecture in the state and not a full-time employee of the Companyor the Agency.

“Land” means the Premises, constituting the leasehold and license interests in real propertycreated by the License to Agency and the Lease to Agency, respectively, as more particularly describedon Exhibit A attached to the Lease Agreement.

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“Leased Premises” means the Property leased to the Agency pursuant to the Lease to Agency.

“Lender” means RBS Citizens, N.A. and its successors and assigns as holder of the Mortgage.

“License to Agency” means the license agreement dated as of June 1, 2010 and delivered on theClosing Date from the Company to the Agency, pursuant to which the Company has authorized theAgency to enter upon the Land for the purpose of (A) undertaking and completing the Project and(B) enforcing the provisions of the Lease Agreement, as said license agreement may be amended orsupplemented from time to time.

“Licensed Premises” means the Property licensed to the Agency pursuant to the License toAgency.

“Lien” means any interest in Property securing an obligation owed to a Person, whether suchinterest is based on the common law, statute or contract, and including but not limited to a securityinterest arising from a mortgage, a security agreement, encumbrance, pledge, conditional sale or trustreceipt or a lease, consignment or bailment for security purposes or a judgment against the Company.The term “Lien” includes reservations, exceptions, encroachments, projections, easements, rights of way,covenants, conditions, restrictions, leases and other similar title exceptions and encumbrances, includingbut not limited to mechanics’, materialmen’s, warehousemen’s and carriers’ liens and other similarencumbrances affecting real property. For purposes of the Basic Documents, a Person shall be deemed tobe the owner of any Property which it has acquired or holds subject to a conditional sale agreement orother arrangement pursuant to which title to the Property has been retained by or vested in some otherPerson for security purposes.

“Loan” means a loan in the principal sum of up to $9,000,000 to be made by the Lender to theCompany and to be secured by, among other things, the Mortgage.

“Loan Documents” means, collectively, the Mortgage and any building loan and otheragreements reasonably requested by the Lender in connection with the Loans.

“Mortgage” means the mortgage dated as of July 7, 2010 from the Company and the Agency tothe Lender to secure advances of up to $8,363,843 under the Loan.

“Mortgaged Property” means all Property which may from time to time be subject to the Lien ofthe Mortgage.

“Net Proceeds” means so much of the Gross Proceeds with respect to which that term is used asremain after payment of all fees for services, expenses, costs and taxes (including attorneys’ fees andexpenses) incurred in obtaining such Gross Proceeds.

“Payment in Lieu of Tax Agreement” means the payment in lieu of tax agreement dated as ofJune 1, 2010 by and between the Agency and the Company, pursuant to which the Company has agreed tomake payments in lieu of taxes with respect to the Project Facility, as such agreement may be amended orsupplemented from time to time.

AppA-4012178/00069 Business 7531616v2

“Permitted Encumbrances” means (A) utility, access and other easements, rights of way,restrictions, encroachments and exceptions that exist on the Closing Date and benefit or do not materiallyimpair the utility or the value of the Property affected thereby for the purposes for which it is intended,(B) mechanics’, materialmen’s, warehousemen’s, carriers’ and other similar Liens, to the extent permittedby Section 8.8 of the Lease Agreement, (C) Liens for taxes, assessments and utility charges, to the extentpermitted by Section 6.2(B) of the Lease Agreement, (D) any Lien on the Project Facility obtainedthrough any Basic Document, (E) the Mortgage and (F) any Lien requested by the Company in writingand consented to by the Agency, which consent of the Agency shall not be unreasonably withheld ordelayed.

“Person” means an individual, partnership, corporation, trust, unincorporated organization orGovernmental Authority.

“Plans and Specifications” means the description of the Project appearing in the fifth recitalclause to the Lease Agreement.

“Premises” means, collectively, the Leased Premises and the Licensed Premises.

“Project” means shall have the meaning set forth in the fifth recital clause to the LeaseAgreement.

“Project Benefits Agreement” means the project benefits agreement dated as of June 1, 2010 byand between the Agency and the Company, pursuant to which, among other things, the Agency and theCompany have agreed to certain conditions relating to the granting of the Financial Assistance, as saidproject benefits agreement may be amended or supplemented from time to time.


“Property” means any interest in any kind of property or asset, whether real, personal or mixed,or tangible or intangible.

“Real Property Tax Exemption Form” means a New York State Board of Real Property ServicesForm RP-4 12-a relating to the Project Facility.

“Sales Tax Exemption Letter” shall have the meaning assigned to such term in Section 8.12 of theLease Agreement.

“SEQRA” means Article Eight of the Environmental Conservation Law of the State and thestatewide regulations adopted pursuant thereto by the Department of Environmental Conservation of theState of New York.

“State” means the State of New York.

“Term” means the term of the Underlying Lease.

“Termination of Lease Agreement” means a termination of lease agreement by and between theCompany, as tenant, and the Agency, as landlord, intended to evidence the termination of the leaseagreement, substantially in the form attached as Exhibit E to the Lease Agreement.

“Termination of Lease to Agency” means the termination of the Lease to Agency from theAgency to the Company, evidencing termination of the Lease to Agency, substantially in the form

AppA-5012178/00069 Business 7531616v2

attached as Exhibit C to the Lease Agreement, which termination is intended, upon certain terminations ofthe Lease Agreement, to terminate the leasehold interest of the Agency created pursuant to the Lease toAgency.

“Termination of License to Agency” means the termination of the License to Agency from theAgency to the Company, evidencing termination of the License to Agency, substantially in the formattached as Exhibit F to the Lease Agreement.

“Unassigned Rights” means (A) the rights of the Agency granted pursuant to Sections 2.2, 3.2,3.3, 4.1(B), 4.J(D), 4.1(E)(2), 4.1(F), 4.1(G), 5.2(A), 5.3(B), 5.4(B), 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 7.1, 7.2,8.1, 8.2, 8.3, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 9.1, 9.3, 11.1, 12.4, 12.8 and 12.10 of the Lease Agreement, (B)the moneys due and to become due to the Agency for its own account or the members, officers, agents(other than the Company) and employees of the Agency for their own account pursuant to Sections2.2(F), 3.3, 4.1, 5.3(B)(2), 5.3(C), 6.4(B), 8.2, 10.2 and 10.4 of the Lease Agreement, (C) the moneys dueas payments in lieu of taxes pursuant to Section 6.6 of the Lease Agreement and the Payment in Lieu ofTax Agreement, and (D) the right to enforce the foregoing pursuant to Article X of the Lease Agreement.

“Underlying Lease” or “Lease to Agency” means the lease to agency dated as of June 1, 2010 byand between the Company, as landlord, and the Agency, as tenant, pursuant to which the Company hasconveyed a leasehold interest in the Premises to the Agency, as said lease to agency may be amended orsupplemented from time to time.

AppA-6O1278/OOO69 Business 7531616v2

EXHIBIT A


- SEE ATTACHED -

A-i012178/00069 Business7531616v2

SCHEDULE A






3.) South 63°-I 1,-i 8” East, a distance of 198.52 feet to a point;


5.) South 58°-4l’-37” East, a distance of 78.05 feet to a point;




I.) South 71° 13’ 00” East, a distance of 675.85 feet to a point on the westerly boundary oflands now or formerly Alpine Haus Ski Shop, Inc. on the east and the lands herein described on thewest; thence along said division line the following course and distance:





A-2012178/00069 Business 7531616v2

I.) North 38°-I 9’29” West, a distance of 201.63 feet to a point at its intersection with thedivision line with Lot 2 on the west and the lands herein described on the east; thence along saiddivision line the following course and distance:


A-3012178/00069 Business 7531616v2

EXHIBIT B



(1) Pipes, screens, fixtures, heating, lighting, plumbing, ventilation, air conditioning, compacting andelevator plants, call systems, stoves, ranges, refrigerators and other lunch room facilities, rugs, movablepartitions, cleaning equipment, maintenance equipment, shelving, flagpoles, signs, waste containers,outdoor benches, drapes, blinds and accessories, security system, sprinkler systems and other fireprevention and extinguishing apparatus and materials, motors and machinery; and

(2) Together with any and all products of any of the above, all substitutions, replacements, additionsor accessions therefor and any and all cash proceeds or non-cash proceeds realized from the sale, transferor conversion of any of the above.

B-I012178100069 Business 7531616v2

EXHIBIT C

FORM OF TERMINATION OF LEASE TO AGENCY

THIS TERMINATION OF LEASE TO AGENCY (the “Termination of Lease to Agency”) datedas of

________

—, , by and between MONTGOMERY COUNTY INDUSTRIALDEVELOPMENT AGENCY, a public benefit corporation organized under the laws of the State of NewYork having an office for the transaction of business located at Old County Courthouse, Park Street,Fonda, New York (the “Agency”), and HILL & MARKES REALTY, LLC, a limited liability companyorganized and existing under the laws of the State of New York having an office for the transaction ofbusiness located at 120 Edson Street, Amsterdam, New York (the “Company”).

WITNESSETH:

WHEREAS, the Company and the Agency entered into a certain lease to agency dated as of June1, 2010 (the “Lease to Agency”) pursuant to which the Agency was granted a leasehold interest in theparcel of the land more particularly described in Exhibit A attached thereto (the “Land”) and in and to allthose buildings, improvements, structures and other related facilities affixed or attached to the Land nowor in the future; and

WHEREAS, pursuant to Section 11.3 of a lease agreement dated as of June 1, 2010 (the “LeaseAgreement”) between the Company and the Agency, the Company and the Agency further agreed that theLease to Agency would be terminated upon the satisfaction of the conditions set forth in Section 11.1 andSection 11.2 of the Lease Agreement, as appropriate; and

WHEREAS, the conditions set forth in Section 11.1 and Section 11.2 of the Lease Agreement, asappropriate, have been satisfied on or before the date hereof.

NOW, THEREFORE, it is hereby agreed that the Lease to Agency is terminated as of the dateddate hereof.

The Company hereby agrees to indemnify the Agency as to any claims that have arisen heretoforeor shall arise hereafter under the Lease to Agency and this Termination of Lease to Agency.

TN WITNESS WHEREOF, the Agency and the Company, for the purposes above set forth, havecaused this Termination of Lease to Agency to be executed and delivered by their duly authorizedofficers, all as of the day and year first above written.


BY:__________________________(Vice) Chairman


BY:___________________________Authorized Officer

C-i012178/00069 Business 753 1616v2

STATE OF )Ss.:

COUNTY OF )

On the

_____

day of

_____________,

in the year

_________,

before me, the undersigned,personally appeared

_____________________________,

personally known to me or proved to me on thebasis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the withininstrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), andthat by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of whichthe individual(s) acted, executed the instrument.

Notary Public

C-2012178/00069 Business 753 1616v2

STATE OF )Ss.:

COUNTY OF )

On the

_____

day of

_____________,

in the year

_________,


_____________________________,


Notary Public

C-3012178/00069 Business 7531616v2

EXHIBIT A


- SEE ATTACHED -

C-4012178/00069 Business 7531616v2

SCHEDULE A





2.) South 68°-41 ‘-07” East, a distance of376.96 feet to a point;

3.) South 63°-i 1,-I 8” East, a distance of 198.52 feet to a point;





1.) South 06°39’15” West, a distance of 200.00 feet to a point on the southerly boundary oflands now or formerly ItIa Agosta on the north and the lands herein described on the south; thence alongsaid division line the following course and distance:

1.) South 71° 13’ 00” East, a distance of 675.85 feet to a point on the westerly boundary oflands now or formerly Alpine 1-laus Ski Shop, Inc. on the east and the lands herein described on thewest; thence along said division line the following course and distance:



2.) North 82°-Si ‘-17” West, a distance of 763.31 feet to a point;


C-5012178/00069 Business 7531616v2


1.) North 23°-34’-09” East a distance of 1247.87 to the POINT OF BEGINNING, being4525 acres, more or less.

C-6012178/00069 Business 7531616v2

EXHIBIT D

FORM OF BILL OF SALE TO COMPANY

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY, a public benefitcorporation of the State of New York having an office for the transaction of business located at OldCounty Courthouse, Park Street, Fonda, New York (the “Grantor”), for the consideration of One Dollar($1 .00), cash in hand paid, and other good and valuable consideration received by the Grantor from HILL& MARKES REALTY, LLC, a limited liability company organized and existing under the laws of theState of New York having an office for the transaction of business located at 120 Edson Street,Amsterdam, New York (the “Grantee”), the receipt of which is hereby acknowledged by the Grantor,hereby sells, transfers and delivers unto the Grantee, and its successors and assigns, all those materials,machinery, equipment, fixtures or furnishings which are described in Exhibit B attached hereto (the“Equipment”) now owned or hereafter acquired by the Grantor, which Equipment is located or intendedto be located on a parcel of land (the “Land”) located on State Route 5S in the Town of Florida,Montgomery County, New York, which Land is more particularly described on Exhibit A attached hereto.

TO HAVE AND TO HOLD the same unto the Grantee, and its successors and assigns, forever.

THE GRANTOR MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THECONDITION, TITLE, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS OF THEEQUIPMENT OR ANY PART THEREOF OR AS TO THE SUITABILITY OF THE EQUIPMENT ORANY PART THEREOF FOR THE GRANTEE’S PURPOSES OR NEEDS. THE GRANTEE SHALLACCEPT TITLE TO THE EQUIPMENT “AS IS”, WITHOUT RECOURSE OF ANY NATUREAGAINST THE GRANTOR FOR ANY CONDITION NOW OR HEREAFTER EXISTING. NOWARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY IS MADE.IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY NATURE, WHETHER PATENT ORLATENT, THE GRANTOR SHALL HAVE NO RESPONSIBILITY OR LIABILITY WITH RESPECTTHERETO.

TN WITNESS WHEREOF, the Grantor has caused this bill of sale to be executed in its name bythe officer described below and dated as of the day of ,

_______


BY:____________(Vice) Chairman

D-1012178/00069 Business 7531616v2

STATE OF )Ss.:

COUNTY OF )

On the

_____

day of

_____________,

in the year

_________,


_____________________________,


Notary Public

D-2012178/00069 Business 7531616v2

EXHIBIT A


- SEE ATTACHED -

D-3012178/00069 Business 7531616v2

SCHEDULE A





2.) South 68°-41 ‘-07” East, a distance of376.96 feet to a point;

3.) South 63°-i i’-18” East, a distance of 198.52 feet to a point;




7.) South 70°-18’-l5” East, a distance of 163.75 feet to a point located on the westerlybounds of land now or formerly of Itla Agosta on the east and lands herein described on the west; thencealong said division line the following course and distance:





2.) North 82°-5 1,-i 7” West, a distance of 763.31 feet to a point;

3.) North 86°-42’28” West, a distance of3lO.17 feet to a point on the northerly boundary ofthe land now or formerly of Gilbert & Raymond Soodol on the south and the lands herein described onthe north; thence along said division line the following course and distance:

D-4012178/00069 Business 7531616v2



D-5012178/00069 Business 7531616v2

EXHIBIT B



(1) Pipes, screens, fixtures, heating, lighting, plumbing, ventilation, air conditioning, compacting andelevator plants, call systems, stoves, ranges, refrigerators and other lunch room facilities, rugs, movablepartitions, cleaning equipment, maintenance equipment, shelving, flagpoles, signs, waste containers,outdoor benches, drapes, blinds and accessories, security system, sprinkler systems and other fireprevention and extinguishing apparatus and materials, motors and machinery; and


D-6012178/00069 Business 7531616v2

EXHIBIT E

FORM OF TERMINATION OF LEASE AGREEMENT

WHEREAS, Hill & Markes Realty, LLC (the “Company”), as tenant, and Montgomery CountyIndustrial Development Agency (the “Agency”), as landlord, entered into a lease agreement dated as ofJune 1, 2010 (the “Lease Agreement”) pursuant to which, among other things, the Agency leased theProject (as defined in the Lease Agreement) to the Company; and

WHEREAS, pursuant to the Lease Agreement, the Company and the Agency agreed that theLease Agreement would terminate on the earlier to occur of (1) December 3 1, 2022 or (2) the date of theLease Agreement shall be terminated pursuant to Article X or Article XI of the Lease Agreement; and

WHEREAS, the Company and the Agency now desires to evidence the termination of the LeaseAgreement;

NOW, THEREFORE, it is hereby agreed that the Lease Agreement has terminated as of the dateddate hereof, provided, however, that, as provided in Section 12.8 of the Lease Agreement, certainobligations of the Company shall survive the termination of the Lease Agreement, and the execution ofthis termination of lease agreement by the Agency is not intended, and shall not be construed, as a waiveror alteration by the Agency or the Company of the provisions of Section 12.8 of the Lease Agreement.

IN WITNESS WHEREOF, the Company and the Agency have signed this termination of leaseagreement and caused to be dated as of the day of______________

______


BY:_______________________Authorized Officer


BY:____________(Vice) Chairman

E- I012178/00069 Business 7531616v2

STATE OF ))Ss.:

COUNTY OF )

On the

_____

day of

_____________,

in the year

_________,


_____________________________,


Notary Public

E-2012178/00069 Business 7531616v2

STATE OF ))Ss.:

COUNTY OF )

On the

_____

day of

_____________,

in the year

_________,


_____________________________,


Notary Public

E-3012178/00069 Business 75316I6v2

EXHIBIT F

FORM OF TERMINATION OF LICENSE TO AGENCY

THIS TERMINATION OF LICENSE TO AGENCY (the “Termination of License to Agency”)dated as of

________

—, , by and between MONTGOMERY COUNTY INDUSTRIALDEVELOPMENT AGENCY, a public benefit corporation organized under the laws of the State of NewYork having an office for the transaction of business located at Old County Courthouse, Fonda, NewYork (the “Agency”), and HILL & MARKES REALTY, LLC, a limited liability company organized andexisting under the laws of the State of New York having an office for the transaction of business locatedat 120 Edson Street, Amsterdam, New York (the “Company”).

WITNESSETH:

WHEREAS, the Company, as licensor, and the Agency, as licensee, entered into a licenseagreement dated as of June 1, 2010 (the “License to Agency”) pursuant to which the Agency was grantedthe right to enter into certain real property of the Company for the purpose of undertaking and completingthe Project (as defined in the License to Agency); and

WHEREAS, pursuant to Section 11.3 of a certain lease agreement dated as of June 1, 2010 (the“Lease Agreement”) between the Agency, as landlord, and the Company, as tenant, the Company and theAgency further agreed that the License to Agency would be terminated upon the satisfaction of theconditions set forth in Section 11.1 and Section 11.2 of the Lease Agreement, as appropriate; and

WHEREAS, the conditions set forth in Section 11.1 and Section 11.2 of the Lease Agreement, asappropriate, have been satisfied on or before the date hereof.

NOW, THEREFORE, it is hereby agreed that the License to Agency is terminated as of the dateddate hereof.

IN WITNESS WHEREOF, the Company and the Agency have caused this Termination ofLicense to Agency to be executed and delivered by their respective duly authorized officers, and to bedated as of the

_____

day of , 20.


BY:________________________Authorized Officer


BY:___________________________(Vice) Chairman

F-i012178/00069 Business 7531616v2


COUNTY OF )

On the

_____

day of

_____________,

in the year , before me, the undersigned, a notarypublic in and for said state, personally appeared

_______________________________,

personally known tome or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed tothe within instrument and acknowledged to me that he/she executed the same in his/her capacity, and thatby his/her signature on the instrument, the person upon behalf of which the individual acted executed theinstrument.

Notary Public

F-.2012178/00069 Business 753166v2

STATE OF )) ss.

COUNTY OF )

On the

_____

day of

_____________,

in the year

_________,

before me, the undersigned, a notarypublic in and for said state, personally appeared

_______________________________,

personally known tome or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are)subscribed to the within instrument and acknowledged to me that he/she/they executed the same inhis/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or theperson upon behalf of which the individual(s) acted, executed the instrument.

Notary Public

F-3012178/00069 Business 7531616v2

EXHIBIT G

INITIAL EMPLOYMENT PLAN

COMPANY NAME:___________________________

ADDRESS:___________________________________

TYPE OF BUSINESS:_______________________________

CONTACT PERSON:_____________________________

TELEPHONE NUMBER:___________________________

Please complete the following chart describing your projected employment plan following receiptof financial assistance (the “Financial Assistance”) from [AgencyName] Industrial Development Agency(the “Agency”):

Current and Current Number Estimated Number ofPlanning Full Time Full Time Jobs Full Time Jobs AfterOccupations in Per Occupation Completion of theCompany Project1 year 2 year 3 year

Please indicate the estimated hiring dates for the new jobs shown above and any specialrecruitment or training that will be required.

Are the employees of your firm currently covered by a collective bargaining agreement?Yes

_____No

If yes, Name and Local

___________________

G-1012178/00069 Business 7531616v2

In the event that this application for financing is accepted, we agree to schedule a meeting with

_____________(insert

name of Local New York State Job Service Superintendent) and

______________(insert

name of representative of IDA’s area under the Federal Job Training PartnershipAct) prior to the closing of the financing for the purpose of supplying such information as may berequested in connection with this Employment Plan and to notify the regional office of the Department ofEconomic Development, in advance, of the time and place of such meeting.

Prepared by:

Title:______________________________________________

Signature:

Date:___________________________________________

G-2012178/00069 Business 7531616v2

EXHIBIT H

FORM OF ANNUAL EMPLOYMENT REPORT

EMPLOYMENT PLAN STATUS REPORT

COMPANY NAME:

ADDRESS:

TYPE OF BUSINESS:

CONTACT PERSON:

TELEPHONE NUMBER:______________________________

NumberFilled

Job Service Job TrainingNumber of Number Division Partnership Act

Occupation New Jobs Listed” Applicants eligible persons

‘With local Jobs Service Division and local service delivery office created pursuant to the Job TrainingPartnership Act.

H-i012178/00069 Business 7531616v2

EXHIBIT I

FORM OF SALES TAX EXEMPTION LETTER

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCYOld County Courthouse, Park Street

Fonda, New York 12068

June , 2010

To Whom It May Concern:

Re: New York State Sales or Use Tax ExemptionMontgomery County Industrial Development AgencyHill & Markes Realty, LLC Project

Pursuant to TSB-M-87(7) issued by the New York State Department of Taxation and Finance on April 1,1987 (the “Policy Statement”), [Company] (the “Company”) has requested a letter from MontgomeryCounty Industrial Development Agency (the “Agency”), a public benefit corporation created pursuant toChapter 1030 of 1969 Laws of New York, constituting Title I of Article 18-A of the General MunicipalLaw, Chapter 24 of the Consolidated Laws of New York, as amended (the “Enabling Act”) and Chapter666 of the 1970 Laws of New York, as amended, constituting Section 895-d of said General MunicipalLaw (said Chapter and the Enabling Act being hereinafter collectively referred to as the “Act”),containing the information required by the Policy Statement regarding the sales tax exemption withrespect to the captioned project (the “Project”) located on State Route 5S in the Town of Florida,Montgomery County, New York (the “Project Site”).

The Company has applied to and been approved for financial assistance from the Agency in the matter ofcompletion of the Project on the Project Site. The Project includes the following: (A) (1) the acquisitionof an interest in a 45.3+!- acre parcel of land (tax map parcel identification number 54-2-2.1) and locatedon Highway 5S in the City of Amsterdam, Town of Florida, Montgomery County, New York (the“Land”), (2) the construction of two facilities on the Land: (a) an approximately 100,000 square footwarehouse, and (b) an approximately 15,000 square foot office building (both facilities being collectivelyreferred to as the “Facility”), (3) the acquisition and installation of certain machinery and equipmenttherein and thereon (the “Equipment”) (the Land, the Facility and the Equipment hereinafter collectivelyreferred to as the “Project Facility”), all of the foregoing to constitute new warehousing and officefacilities to support the growth of the Company’s supply business and related activities; (B) the grantingof certain “financial assistance” (within the meaning of Section 854(14) of the Act) with respect to theforegoing, including potential exemptions from sales and use taxes, real property transfer taxes, mortgagerecording taxes and real estate taxes (collectively, the “Financial Assistance”); and (C) the lease of theProject Facility to the Company pursuant to the terms of a lease agreement dated as of June 1, 2010 (the“Lease Agreement”) by and between the Agency and the Company. Please be advised that on or aboutJune 30, 2010, the Agency executed and delivered the Lease Agreement, pursuant to which the Agencyappointed the Company as agent of the Agency to acquire, construct and install the Project Facility.

The Company, as agent of the Agency, is authorized to make purchases of materials to be incorporated inthe Project and machinery and equipment constituting a part of the Project, and purchases or rentals ofsupplies, tools, equipment, or services necessary to acquire, construct, reconstruct or install the Project.

I—i012178/00069 Business 7531616v2

To ensure that the above purchases or rentals are exempt from any sales or use tax imposed by the Stateof New York or any governmental instrumentality located within the State of New York, the vendor mustidentify the Project on each bill and invoice for such purchases and indicate on the bill or invoice that theCompany as agent for the Agency was the purchaser (e.g., “Hill & Markes Realty, LLC, as agent forMontgomery County Industrial Development Agency”). In addition, the following procedures should beobserved:

1. Each bill and invoice should identify the date of delivery and indicate the place ofdelivery.

2. Payment should be made by the Company acting as agent, directly to the vendor fromeither a requisition from a special project fund of the payor.

3. Deliveries should be made to the Project Site, or under certain circumstances (such aswhere the materials require additional fabrication before installation on the Project Site or for storage toprotect materials from theft or vandalism prior to installation at the Project Site) deliveries may be madeto a site other than the Project Site, providing the ultimate delivery of the materials is made to the ProjectSite. Where delivery is made to a site other than the Project Site, the purchases should be billed orinvoiced by the vendor to the Company as agent of the Agency, identify the date and place of delivery,the Agency’s full name and address and the Project Site where the materials will ultimately be deliveredfor installation.

Pursuant to Section 874(8) of the Act, the Company, as agent of the Agency, must annually file astatement with the New York State Department of Taxation and Finance, on a form and in such a manneras is prescribed by the Commissioner of Taxation and Finance, of the value of all sales tax exemptionsclaimed by the Company under the authority granted by the Agency. The penalty for failure to file such astatement under Section 874(8) of the Act shall be the removal of authority to act as an agent for theAgency.

Pursuant to Section 874(9) of the Act, the Company, as agent of the Agency, must file within thirty (30)days of the date the Agency designates the Company as agent of the Agency, a statement with the NewYork State Department of Taxation and Finance, on a form and in such manner as prescribed by theCommissioner of Taxation and Finance, identifying the Company as agent of the Agency.

This letter shall serve as proof of the existence of an agency contract between the Agency and theCompany for the SOLE EXPRESS PURPOSE OF SECURING EXEMPTION FROM NEW YORKSTATE SALES TAXES FOR THE PROJECT ONLY. NO OTHER PRINCIPAL/AGENTRELATIONSHIP BETWEEN THE AGENCY AND THE COMPANY IS INTENDED OR MAY BEIMPLIED OR INFERRED BY THIS LETTER.

It is hereby further certified that, under the Policy Statement, since the Agency is a public benefitcorporation, neither the Agency nor the Company as its agent, is required to furnish an “ExemptOrganization Certificate” in order to secure exemption from any sales or use tax for such items orservices.

Under the Policy Statement, a copy of this letter received by any vendor or seller to the Company as agentfor the Agency, may be accepted by such vendor or seller as a “statement and additional documentaryevidence of such exemption” as provided by New York State Tax Law Section 1 132(c)(2), therebyrelieving such vendor or seller from the obligation to collect sales and use tax on purchases or rentals ofsuch materials, supplies, tools, equipment, or services by the Agency through its agent, the Company.

1-2012178/00069 Business 7531616v2

THIS LETTER SHALL BE IN EFFECT UNTIL JULY 1,2011.

In the event you have any questions with respect to the above, please do not hesitate to call Kenneth Rose,Executive Director of the Agency, at 518-853-8334.

Very truly yours,


By:______________(Vice) Chairman

1-3012178/00069 Business 753 1616v2

NewYork State Department otTanation and Finance

Annual Report of Sales and Use Tax ExemptionsClaimed by Agent/Project Operator ofIndustrial Development Agency/Authority (IDA)

For Period Ending December 31, (enter year)

Project informationName of IDA agent/prn1ectnperator Federal employer identification number (FEIN)

Street address Telephone number

City State ZIP code

Name ot IDA agent/prolect operators authorized representative, it any Title

Street address Telephone number

(City State ZIP code

Name of IDA

Street address

City State ZIP code

Name of project

Street address of project site

City State ZIP code

1 Project purpose: LI ServiCes LI Construction LI Agriculture, forestry, fishing

LI Wholesale trade LI Retail trade LI Finance, insurance or real estale

LI Transportation, communication, electric, gas, or sanitary services

LI Manufacturing LI Other (specify)

2

3

Date project began:MM DO YYYY

Beginning date of construction or installation (actual or expected):MM DO YYYY

4 Completion date of construction phase of project (actual or expected):MM DO YYYY

5

6

7

Completion date of project (actual or expected): I /MM DO YYYY

Duration of project (years/months; actual or expected):Years Months

Total sales and use tax exemptions (actual tax savings; NOT total purchases) 7 $Print name of officer, employee, or authorized repreoentative signing for the IDA agent/project operator Title of person signing

Signature Date

Failure to annually file a complete report may result in the removal of authority to act as an IDA agentlproject operator.

Mail completed report to: NYS Tax Department, IDA Unit, Bldg 8 Rm 738, WA Harriman Campus, Albany NV 12227.

J- 1

EXHIBIT J

FORM OF ANNUAL SALES TAX REPORT

4 ST-340(7/02)

012178/00069 Business 7531616v2

General information

Instructions

Who must tile?The General Municipal Law (GML) and the Public Authorities Law requirethe agent/project operator (also known as project occupano) of an IndustrialDevelopment Agency or Authority (IDA) to fIle an annual report with the TaxDepartment. The agent/project operator required to file this report Is theperson directly appointed by the IDA to act for and to represent the IDA forthe project. The agent/project operator is Ordinarily the one br whom theIDA project was crested.

There is usually only one agent/project operator directly appointed by theIDA for an IDA project. However, if the IDA directly appoints multipleagents/project operators, each agent/project operator must tile this form(unless they are related corporations).

Only the agent/project operator(s) directly appointed by the IDA must tileForm ST-340. Contractors, subcontractors, consultants, or agentsappointed by the agent/project operator(s) should not themselves fileForm ST-340. However, the agent/project operator(s) must include onForm ST-340 information obtained from such contractors, subcontractors,consultants, and agents, as described below.

What must be reported?The report must show the total value of all state and local sales and usetaxes exempted during the calendar year, as a result of the project’sdesignation as an IDA project. This includes:

— the value of the esemptions obtained by the agent/project operator; and

— the value of the exemptions obtained by your contractors,subcontractors, consultants, and others, whether or not appointed asagents of the IDA.

The report requires only the total combined exemptions obtained by theabove people. A break down of the total is not required. However, since thereport must include the value of the exemptions they obtained, theagent/project operator must keep records of the amounts others report tothe agent/project operator.

It is important that the agent/project operator make it clear to thecontractors, subcontractors, consultants, and others that they must keepaccurate tax information and have it available so that the agent/projectoperator can comply with the annual reporting requirements.

Do not include in this report the amount of any sales and use taxesemptiona arising out of other provisions of the Tax Law (for example,manufacturer’s production equipment exemption, research anddevelopment exemption, or contractor’s exemption for tangible personalproperty incorporated into a project of an exempt organization).

See instructions below for additional information required.

When is the report due?You must file Form ST-340 on a calendar-year basis. Ills due by the lastday of February of the followixg year. The reporting requirement appliea toIDA projects started on or after July 21,1993.

Project informationAt the top of the form, identify the reporting period by entering the year inthe space provided. If an address is required, always include the ZIP code.

Name of IDA agent/project operatorEnter the name, address, federal employer identification number (FEIN),and telephone number of the IDA agent/project operator.

Name of IDA agent/project operator’s authorizedrepresentativeEnter the name, address, title (for example, attorney or accountant), andtelephone number of the individual authorized by the IDA agent/projectoperator to submit this report.

Name of IDAEnter the name and address of the IDA. If more than one IDA is involved ina particular project, the IDA agent/project operator must file a separatereport for the tax exemptions attributable to each IDA.

Name of projectEnter the name of the project and the address of the project site, If the IDAagent is involved in more than one project, a separate report must be filedby the IDA agent/project operator/or each project, even if authorized by thesame IDA.

Line instructionsLine 1 — Project purpose — Check Ihe box that Identifies the purpose ofthe project. tf you check Other, please be specific in identifying its purpose.

LIne 2 — Enter the date the project started (this means the earliest of thedate of any bond or inducement resolution, the execution of any lease, orany bond issuance). Include month, day, and year,

LIne 3—Enter the date on which you, or your general contractor orsubcontractor, actually began, or expect to begin, construction orinstallation on the project. If the project dons not involve any construction,enter Does not apply.

LIne 4— Enter the date the construction phase of the project wascompleted. If if has not been completed by the end of the reporting period,enter the date you expect to complete this phase of the project.

Line 5— Enter the date on which installation, lease, or rental of property(for example, machinery or computers) on the project ended, lIthe projectwas not completed by the end of the reporting period, enter the date theproject is expected to be completed.

Line 6— Enter the total number of years and months from the project’sinception to its completion or expected completion.

Line 7 — Enter the total amount of New York State and local sales andcompensating use taxes exempted during the reporting period (if none,enter “0”) as a result of the project’s receipt of IDA financial assistance. Thisincludes exemptions obtained at the time of purchase as well as through arefund or credit of fax paid. Include the sales and use taxes exempted onpurchases of property or services incorporated into or used on the exemptproject. This includes the taxes exempted on purchases made by or onbehalf of the agent/project operator, the generat contractor for the project,and any subcontractors, consultants, or others. Do not enter totalpurchases on line 7.

Signature areaEnter the name and title of the person signing on behalf of the IDAagent/project operator (for example, the IDA agent/project operator’s officer,employee, or other authorized representative). The IDA agent/projectoperator’s officer, employee, or authorized representative must sign thereport. Enter the date signed.

Mail completed report to: NYS Tax Department, IDA Unit, Bldg 8Rm 738, WA Harriman Campus, Albany NV 12227.

ST-340 (7/02) (back)

Need help?Telephone assistance is available from 8 am, to 5:55 p.m.(eastern time), Monday through Friday.

Business tax information: 1 800 972-1233Forms and publications: 1 800 462-8100From areas outside the U.S. and outside Canada: (518) 485-6800Fax-on-demand forms: 1 800 748-3676Hearing and speech impaired (telecommunications device for the

deaf (TUD) callers only): 1 800 634-2110(8 am. 105:55p.m.,eastern time),

Internet access: wwwtarcstate.ny.us

Persona with disabilities: In compliance with theC’ Americans with Disabilities Ad, me will ensure that our lobbies,offices, meeting rooms, and other facilities are accessible to personswith disabilities. If you have questions about special accommodationsfor persons with disabilities, please call 1 800 225-5829.

il-n If you need to write, address your letter to: NYS-‘-4J Tax Department, Taxpayer Contact Center, W A Harriman

Campus, Albany NY 12227.

Privacy notificationThe Commissioner of Taxation and Finance may collect and maintain personal informationpursuant to the New York State Too Law, including bat not limited to. sections 171, 171-a.257, 355, 429. 47u, 505, 697, 1596. Ii 42. and 1415 of that Law; and may require disclosurexl naclal security nurheers pursoaot 1042 USC 4051c11211C1c1.Thin intnrmauos will be used to determine and odminister tao fobiliaen and, when authorizedby law, tot certain tan offset and exchange of tax Irrfurmadon programs as well as fur anyother lewfal purpose.

Intormatlon concerning quarterly waves paid to employees Is prooided to certain stateagencies tnt purposes of fraud prenentian. support enforcement. evaluation of theeffectiveness ci certa,n employment and training programo oral other purposes authorIzedbylaw.

Failure to prnorde the required information may subiect you to clod or crirrrinol penalten, orboth, under the Tao Law.

This informuuun is maintained by the Oirectur xl Records Murrugement and Dota Entry, NYSTax Depurtnrer.t, WA Hurrimos Campus, Albany NY 12227; telaphone 1 605 225-5629.Front areas outside the United States and outside Canada. call 15181 4n5-saxu.

J-2012178/00069 Business 7531616v2

4

EXHIBIT K

FORM OF THIRTY-DAY SALES TAX REPORT

New York State Deparnmcnt of Taxation and Finance S 1’ 6ciIDA Appointment of Project Operator or AgentFor Sales Tax Purposes (7/02)

Filing RequiremenlsAn IDA must ftlc this form within 30 days of the date the IDA designates aproject operator of appoints a person as agent of the IDA, for purposes ofextending a sales and compensating use tax exemption.

The IDA must file a separate form for each project operator or agentappointed, whether directly or iuditectly. and regartliess of whether it is theprimary operator or agent. If the IDA authorizes an operator or agent toappoint other agents, the operator or agent making such an appointmentwihin 30 days of the new agent’s appointrrtentt. The IDA need not tile thinagents of the IDA, The II)A need not file this form if there are no sales errUSC tax exemptson benefits authorized for a project asa result of sheproject’s designation as an IDA precl.

Purpose of project

For Purpose ofproject, enter one of the following:- Services - Construction- Agriculture, forestry, fishing - Wholesale trade— Finance, insurance, real estate — Retail trade- Transportation, comrnunicstion - Manufacturing

electric, gas, sanitary services - Other (specify)

Mailing instructions

Mail completed form to: NYS Tax Department, IDA Unit, Building 8Room 738, WA Harriman Campus, Albany NV 12227

InstructionsPrwucy notificationTh.crme . ,,ukr,d Fuerneayeoltue .,rme prnw,.t 6tor,raioua oaon, 5w Yan Sw,

acme SI, 171’.fl7.t0L4t9.475.50&697, wv Lt4Ld tttscfthatsda,,,mwOutrwer(,,turo,6yemeUenmeueua5 USC *nStcXaXCXi)

Isulelmarler *,O berardCdamed aue tut5te,O rUo .,Obvtaw. k,c,nae votTarmoca owU ruOu a,yetak.l,Ie,onow

Ouragoorefe, p,,,o(Oe,,àpIoo,k.an9ona6,mao,S ow a’ ,(Oc,tte,Soe,ueo( sale swtene,eu 4 oe,legpoe,ue. au one, gopolatdunodb t

6aSoospoataruow,wo4o,re. o le,te, tpaot:hee,t,d,. ,.-.

ooty 0, suo,w rrnao,d, samerme, .ut tsar err,. nm is, Oq.meol,.W * H.4e, Corpu, AThrry, NV 1222?,Idqtue,I 1001245109 Fmezmueledctctk,,dtaaand&

art Sir: 1154am

Need help?Telephone uontltnocr is avuilaht from 8 a,r,v to 3:55 p.55 (CastCrlime), Mendoy through Friday.

Business tax tnformatio,r t 800972-233Fnmmandpuhtieutinns: t 800462.8100From areas outside the U.S. and outside Couadu: IntO) 485.6300Ero.on.stemurds forms: 1 800 748.3676

Hearing and speech inrpaired (telecornetunientioun decice for thedeaf (TDD) cutters only): I 800 634-St tO n am, to S:55 p.m.,

eastern tine,).

Internet unrest: wr.w.tox.strw.ny.us

Persons with dt,nbiUrtes: In compliance witS the Anserieuns withDisabitities Act, we wilt ensure that nor lobbies, ottlees, ne,n’ing

rooms, and usher facilities are acccssibtn Lu persons with disahitities. If youhave questions about special oeeonnssodatiuns for persons with disabilities,please cult I 800 225-5029.

IF you wed to wrily, oddrss yew letter to: NYS Tto Dn5narrocnt,TaxPayer Contact Center, WA t4arnrnan Campus. Albany NY 12222.

‘Ibe induslrial development agency or anthority (IDA) most submit this form within 30 days of the appointment of a project operator or agent, whetherappointed directly by the IDA or indirectly by the operator or another agent. For IDA use onlyName of IDA 1IDA prect number (ose OSC numbering system for projects afler 1998)

Street address eIcphooc number

City talc — IP cede

Noose of IDA project operator or agent Dheck box ifdircctty l5mploycr identification or social security numberppointed by the IDA:

Street address Telephone Number emory operator or agent?

k ) Yes QNoCity plate Zip cede

Name of ProjectrurPose

of project (see itsstreactions)

Street address of project site

Cityrtate [ZiP Cede

Description of goods and services intended lube exempted from sales and one taxes

, mm dd yyyy mm dd yyy

(tote project operator Date project operator oror agent appointed sgml Status endsEstimated value of goods and services to be exempted from sales and use larsen as a result of the project’s designation axon IDA project:

Print Isame of oflicer or employee signing on behalf of the IDA [Zrint Title

Signature bate elephone Number

K-i012178/00069 Business 7531616v2



AND

1-IILL & MARKES REALTY, LLC

MEMORANDUM OF LEASE AGREEMENT

DATEDAS OF JUNE 1, 2010

THIS DOCUMENT IS INTENDED TO CONSTITUTE AMEMORANDUM OF LEASE OF REAL ESTATE, AND IS INTENDEDTO BE RECORDED IN LIEU OF SUCH LEASE, IN ACCORDANCEWITH THE PROVISIONS OF SECTION 294 OF THE NEW YORKREAL PROPERTY LAW.

012178/00069 Business 7532393v1

MEMORANDUM OF LEASE AGREEMENT

The undersigned, MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY, apublic benefit corporation organized and existing under the laws of the State of New York having anoffice for the transaction of business located at Old County Courthouse, Park Street, Fonda, New York(the “Agency”), and HILL & MARKES REALTY, LLC, a business corporation organized and existingunder the laws of the State of New York having an office for the transaction of business located at 120Edson Street, Amsterdam, New York (the “Company”), have entered into a certain lease agreement datedas of June 1, 2010 (the “Lease Agreement”).

The Lease Agreement covers a leasehold interest affecting the real property (the “Land”)described on Exhibit A attached hereto and made a part hereof, certain improvements on the Land (the“Facility”), and the machinery, equipment and other personal property described on Exhibit B attachedhereto and made a part hereof (the “Equipment”) (the Land, the Facility and the Equipment beingcollectively referred to in the Lease Agreement as the “Project Facility”).

The Lease Agreement provides for the lease (with an obligation to purchase) of the ProjectFacility by the Agency to the Company for a term commencing on the date of execution and delivery ofthe Lease Agreement and terminating on the earlier to occur of (A) December 31, 2022 or (B) the datethat the Lease Agreement shall be terminated pursuant to Article X thereof (entitled “Events of Defaultand Remedies”) or Article XI thereof (entitled “Options and Obligation to Purchase”).

The Lease Agreement obligates the Company (A) to pay, on the date of execution and delivery ofthe Lease Agreement, a single lump sum basic rental payment equal to the Agency’s administrative feefor the project which is the subject of the Lease Agreement (the “Project”), (B) throughout the term of theLease Agreement, to provide indemnity to the Agency, (C) to make payments in lieu of taxes with respectto the Project Facility, and (D) to make certain other payments to the Agency.

Subject to the provisions of the Lease Agreement, the Lease Agreement (A) obligates theCompany to purchase the Project Facility at the end of the lease term, or under certain circumstancesupon the sooner termination of the Lease Agreement, and (B) grants to the Company the option, at anytime the Company so elects, to purchase the Project Facility, in each case for a purchase price equal to thesum of One Dollar ($1.00) plus certain other amounts payable to the Agency pursuant to the LeaseAgreement.

The Company, as tenant, is entitled to possession of the Project Facility from the date hereof.The Company, as tenant, has the right to enter into leases affecting all or a portion of the Project Facilityas landlord, subject to the conditions set forth in the Lease Agreement.

The Company has granted the Agency a security interest in the Project Facility as security for therental payments and all other obligations of the Company under the Lease Agreement.

The Lease Agreement is available for inspection during normal business hours at the office of theAgency, currently located as indicated above.

012178/00069 Business 7532393v1

IN WITNESS WHEREOF, the Agency and the Company have caused this Memorandum ofLease Agreement to be executed in their respective names by their duly authorized officers and to bedated as of the 1st day of June, 2010.


BY:(J,l4,,i4ViEe) Chairman



-2-000161/01178 Business 7532393v1

IN WITNLSS WHEREOF, the Agency and the Company have caused this Memorandum ofLease Agreement to be executed in their respective names by their duly authorized officers and to bedated as of the 1st day of June, 2010.


BY(Vice) Chairman

HILL & MARKES REALT, LLC

B////

/ ‘Authorized’MemberI,

012178/00069 Business 7532393v1-2-

STATE OF NEW YORK )) ss:


On the 30tl day of June, in the year 2010, before me, the undersigned, personally appearedWILLIAM HISERT, personally known to me or proved to me on the basis of satisfactory evidence to bethe individual whose name is subscribed to the within instrument and acknowledged to me that heexecuted the same in his capacity, and that by his signature on the instrument, the individual, or theperson upon behalf of which the individual acted, executed the instrument.

Notary Public

PAUL WVLLMi I

NO7AfY PURL FC SIAH uQUALIFtED N A(JN(GIM UJ1JFU

REG #O2JOU73OiQ5MYCOMQi EX-’ ULY3 2Q40

012178/00069 Business 7532393v1-3-


COUNTY OF FF)N

On the7 day of July. in the year 2010, before me, the undersigned, personally appeared NEALPACKER, personally known to me or proved to me on the basis of satisfactory evidence to be theindividual whose name is subscribed to the within instrument and acknowledged to me that he executedthe same in his capacity, and that by his signature on the instrument, the individual, or the person uponbehalf of which the individual acted, executed the instrument.

/ Notary Public

MArio 1. PAPANntry PuL, titc O Ne Yor

FuILn Co ntyMy COrn!T zon Lxpires I( ‘ 1

-4-012178/00069 Business7532393v]

EXHIBIT A


- SEE ATTACHED -

A-i012178/00069 Business 7532393v1

SCHEDULE A






3.) South 63°-I 1’-i 8” East, a distance of 198.52 feet to a point;




7.) South 70°-18’-lS” East, a distance of 163.75 feet to a point located on the westerlybounds of land now or formerly of Itla Agosta on the east and lands herein described on the west; thencealong said division line the following course and distance:







A-2012178/00069 Business 7532393v1



A-3012178/00069 Business 7532393v1

EXHIBIT B



(1) Pipes, screens, fixtures, heating, lighting, plumbing, ventilation, air conditioning,compacting and elevator plants, call systems, stoves, ranges, refrigerators and other lunch room facilities,rugs, movable partitions, cleaning equipment, maintenance equipment, shelving, flagpoles, signs, wastecontainers, outdoor benches, drapes, blinds and accessories, security system, sprinkler systems and otherfire prevention and extinguishing apparatus and materials, motors and machinery; and


B-i012178/00069 Business 7532393v1

‘LoSING I’I’LZVI NO.: A-S

MONI’(IOMERY COUNTY INDUSTRIAL I)LV[•:IA)Prv1EN’r A( LNCY

A NI)

hILL & MARKES REALFY, LLC

PAYMENT IN LIEU OF TAX AGREEMENT

DATED AS OF JUNE I, 2010

RELATING TO THE PREMISES LOCATED ON STATE ROUTE 5S INTHE TOWN OF FLORIDA, MONTGOMERY COUNTY, NEW YORK.

012178/00069 Business 7535194v1

IA I I .I ( )F ( ( )N lEN I’S

Ibis lahie ui (‘ojitents is not part oi the Payment in I .icu ot Fax\reeiiiciit and is br conveilience ut retrence only.)

I’ARflFSRFCl’FiLS

i\RI’1C’[E I

REPRESENTiVflONS AND WARRANTIES

Section I .01. Representations ol and Warranties by the Agency 1Section 1.02. Representations oland Warranties by the Company 4

ARTICLE II

COVENANTS AND AGREEMENTS

Section 2.01. lax-Exempt Status of the Project Facility 6Section 2.02. Payments in Lieu of Taxes 6Section 2.03. Credit for Faxes Paid IISection 2.04. Late Payment12

ARTICLE Ill

LIMITED OBLIGATION

Section 3.01. No Recourse; Limited Obligation of the Agency 13

ARTICLE IV

EVENTS OF DEFAULT

Section 4.01. Events of Default14Section 4.02. Remedies on Default 14Section 4.03. Payment of Attorney’s Fees and Expenses 15Section 4.04. Remedies; Waiver and Notice 15

ARTICLE V

MISCELLANEOUS

Section 5.01. Term16Section 5.02. Form of Payments[6Section 5.03. Company Acts16Section 5.04. Amendments16Section 5.05. Notices16Section 5.06. Binding Effect18Section 5.07. Severability18

)!217%100069 Business 7535 jQ4vI

‘ectI()n 5 OX. ( uiiiitcrparts. I

cctioi1 5.09. AppI icable I .aw.

IESI1MONItJv1.9SIGNAIUR1S.I 91\CKNOW1D(ilMFNI’S.

IX[IIBI’F A -Dcscripion of the Lcased Land.A— I

)12178100069 Business 7535194v1

PAYM1Nl’ IN HLIJ ( )F lAX A( iRELMENI’

II US PAYv1ENI’ IN IJLLJ ( )F FAX A(REEMEN’F dated as of June I, 2010 (the ‘Payment inI icu L Fax \greemeul”) by and between MONTGOMERY COIJN1Y INDLJSIRIALI)EVEI .OPMENT AGENCY, a public benefit corporation organized and existing under the laws of theState of New York having an olhce br the transaction of business located at Old County Courthouse,Park Street. londa. New York (the “Agency”), and HILL & MARKES REALTY, [IC. a limited liabilitycompany organized and existing under the laws of the State of New York having au olhce for thetransaction ol business located at I 20 Edson Street, Amsterdam, New York (the “Company”);

W I ‘F N E S S E T H:

WI IFREAS, I’itle I of Article 18-A of the General Municipal Law of the State of New York (the‘i’nabling Act”) was duly enacted into law as Chapter 1030 of the Laws of 1969 of the Slate of NewYork; and

WHEREAS, the Enabling Act authorizes and provides for the creation of industrial developmentagencies fbr the benefit of the several counties, cities, villages and towns in the State of New York (the‘State”) and empowers such agencies. among other things, to acquire, construct, reconstruct, lease,improve, maintain, equip and dispose of land and any building or other improvement, and all real andpersonal properties, including, but not limited to, machinery and equipment deemed necessary inconnection therewith, whether or not now in existence or under construction, which shall be suitable formanufacturing, warehousing, research, commercial or industrial purposes, in order to advance the jobopportunities, health, general prosperity and economic welfare of the people of’ the State and to improvetheir standard of living; and

WHEREAS, the Enabling Act further authorizes each such agency, for the purpose of carrying outany of its corporate purposes, to lease or sell any or all of its facilities, whether then owned or thereafteracquired; and


WHEREAS, in September, 2008, the Company presented an application (the “Application”) tothe Agency, which Application requested that the Agency consider undertaking a project (the ‘Project”)for the benefit of the Company, said Project to include the following: (A) (1) the acquisition of an interestin a 45.3+!- acre parcel of land (tax map parcel identification number 54-2-2.1) and located on Highway5S in the City of Amsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) theconstruction of two facilities on the Land: (a) an approximately 100.000 square foot warehouse, and (b)an approximately 15,000 square foot office building (both facilities being collectively referred to as the“Facility”), (3) the acquisition and installation of certain machinery and equipment therein and thereon(the “Equipment”) (the Land, the Facility and the Equipment hereinafter collectively referred to as the“Project Facility”), all of the foregoing to constitute new warehousing and office facilities to support thegrowth of the Company’s supply business and related activities; (B) the granting of certain ‘financia1assistance” (within the meaning of Section 854(14) of the Act) with respect to the foregoing, includingpotential exemptions from certain sales and use taxes, real property taxes, real property transfer taxes andmortgage recording taxes (collectively, the “Financial Assistance”); and (C) the lease (with an obligation

01217S/00fl69 Business 7535194v1

to l)tircl1se) r sale 1 the l>rojcct Fac ity to I he ( oiii paily )r such i her person as may he lesi Lwate(l byhe Company and agreed upon by the i\gency; .iiid

WI I FREAS, Pursuant to the authori,ation contained in a rCSL)ItitiOIl adopted by the members ofthe Agency on April 9, 2009 (the “Public I fearing Resolution”), the Chief Fxecutive ( )t}icer of’ theAgency (A) caused notice of a public hearing of the Agency pursuant to Section 859—a of the Act (the“Public I learing”) to hear all persons interested in the Prolect and the Financial Assistance beingcontemplated by the Agency with respect to the Project, to be mailed on April 20, 2009 to the chief’executive officers of the county and of each city, town, village and school district in which the Project isto he located. (B) caused notice of the Public I fearing to he posted on April 20, 2009 on a public bulletinhoard located at the Old C’ounty Courthouse, Fonda, New York, (C) caused notice of the Public I fearingto be published on April 22, 2009 in [he Recorder, a newspaper of general circulation available to theresidents of the [own of Florida, New York, (D) conducted the Public I fearing on May 21, 2009 at 9:30a.mn,, local time at the Town of Florida lown I [all, located at 214 Fort 1 lunter Road, in the Town of’Florida. Montgomery County, New York. and (F) prepared a report of’ the Public [fearing (the “PublicI fearing Report”) thirty summarizing the views presented at such Public Hearing and caused copies of’said Public Hearing Report to be made available to the members of the Agency; and

WHEREAS, pursuant to Article 8 of’ the Environmental Conservation Law. Chapter 43-B of theConsolidated Laws of New York, as amended (the “SEQR Act”) and the regulations (the “Regulations”)adopted pursuant thereto by the Department of’ Environmental Conservation of’ the State of’ New York,being 6NYCRR Part 617. as amended (collectively with the SEQR Act, “SEQRA”), by resolutionadopted by the members of the Agency on May 20, 2010 (the “SEQR Resolution”), the Agency(A) ratified the determination by the Town of’ Florida Planning Board (the “Planning Board”) to act as“lead agency” with respect to the Project, (B) acknowledged receipt of a copy of a negative declarationissued by the Planning Board on March 30, 2009 (the “Negative Declaration”), and (C) indicated that theAgency had no information to suggest that the Planning Board was incorrect in authorizing the issuanceof’ the Negative Declaration; and


WHEREAS, pursuant to the terms of the Lease Agreement, (A) the Company will agree (1) tocause the Project to be undertaken and completed, and (2) as agent of the Agency, to undertake andcomplete the Project and (B) the Agency has leased the Project Facility to the Company for a lease termending on the earlier to occur of (I) December 31, 2022 or (2) the date on which the Lease Agreement isterminated pursuant to the optional termination provisions thereof; and


WHEREAS, simultaneously with the execution and delivery of the Lease Agreement (the“Closing”), (A) the Company will execute and deliver to the Agency (1) a certain lease to agency dated asof June 1, 2010 (the “Lease to Agency”) by and between the Company, as landlord, and the Agency, astenant, pursuant to which the Company will lease to the Agency a portion of the Land and allimprovements now or hereafter located on said portion of the Land (collectively, the “Leased Premises”)t’or a lease term ending on December 31, 2022; (2) a certain license agreement dated as of June 1, 2010(the “License to Agency”) by and between the Company, as licensor, and the Agency, as licensee,

-2-)I2I7/OOO69 ntsness 75151’)4v1

j)tirsLIant to w Ii ich the ( ‘oiiipany will grant to I he Agency (a) a icense to enter upon the balance of (lieI and ((lie “I iceiised l’rein ises’’) flr (lie )uI’po of elii(lertaking and completing the Project and (b), in theevent of an occurrence of’ an Lvciit of I)efliult by the Company, an additional license to enter upon thelicensed Premises for the purpose ot pursuing its remedies under the Lease Agreemeiit; and (3) a bill of‘,ale dated as of June I, 21)10 (the 1ill of’ Sale to Agency”), which conveys to the Agency all right, titlemd interest ol the Company in the Equipment, (B) the Company and the Agency will execute and delivera payment in I icu ot tax agreement dated as of’ June I 2() 10 (the “Payment in Lieu of ‘Fax i\greemdnt”) byand between the Agency and the Company, pursuant to which the Company will agree to pay certainpayments in lieu of taxes with respect to the Project Facility, (C) the Agency will tile with the assessorand mail to the chief’ executive officer of each “a1’ficted tax jurisdiction” (within the meaning of suchquoted term in Section 854(16) of the Act) a copy of a New York State Board of Real Property ServicesForm 4 12-a (the tbrm required to he tiled by the Agency in order for the Agency to obtain a real propertytax exemption with respect to the Project Facility under Section 412-a of the Real Property ‘I’ax Law) (the“Real Property Tax Exemption Form”) relating to the Project Facility and the Payment in Lieu of TaxAgreement, (1)) the Agency vill execute and deliver to the Company a sales tax exemption letter (the“Sales Fax Exemption Letter”) to ensure the granting of the sales tax exemption which forms a part of theFinancial Assistance and (E) the Agency will file with the New York State Department of Taxation andFinance the form entitled “IDA Appointment of Project Operator or Agent for Sales Tax Purposes” (thelhrm required to he filed pursuant to Section 874(9) of the Act) (the “Thirty-Day Sales Fax Report”); and

WhEREAS, under the present provisions of the Act and Section 412-a of the Real Property ‘FaxLaw of the State of New York (the “Real Property Tax Law”), the Agency is required to pay no taxes orassessments upon any of the property acquired by it or under its jurisdiction or supervision or control; and

WHEREAS, pursuant to the provisions of Section 6.6 of the Lease Agreement, the Company hasagreed to make payments in lieu of taxes with respect to the Project Facility in an amount equivalent tonormal taxes, provided that, so long as this Payment in Lieu of Tax Agreement shall be in effect, theCompany shall during the term of this Payment in Lieu of Tax Agreement make payments in lieu of taxesin the amounts and in the manner provided in this Payment in Lieu of Tax Agreement, and during suchperiod the provisions of Section 6.6 of the Lease Agreement shall not control the amounts due as paymentin lieu of taxes with respect to that portion of the Project Facility which is covered by this Payment inLieu of Tax Agreement; and

WHEREAS, all things necessary to constitute this Payment in Lieu of Tax Agreement a valid andbinding agreement by and between the parties hereto in accordance with the terms hereof have been doneand performed, and the creation, execution and delivery of this Payment in Lieu of Tax Agreement havein all respects been duly authorized by the Agency and the Company;

NOW, THEREFORE, in consideration of the matters above recited, the parties hereto formallycovenant, agree and bind themselves as follows, to wit:

-3-)1217X/00069 Business 7535194v1

A It. [l(.’l .E I

REPRESEN’I’AFIONS ANI) WARRANTIES

SECTION 1.01. REPREsEN’rAnoNS OF AN[) WARRANTIES BY (‘lIE A(ENCY. (‘he Atencydoes hereby represent, warrant and covenant as follows:

(A) [he Agency is a public benetit corporation of the State. has been duly establishedunder the provisions of the Act, is validly existing under the provisions of the Act and has the powerunder the laws of the State of New York to enter into the transactions contemplated by this Payment inLieu of Tax Agreement and to carry out the transactions contemplated hereby and to pertbrm and carryout all covenants and obligations on its part to he performed tinder and pursuant to this Payment in Lieuof Tax Agreement hereunder.

(B) Authorization. The Agency is authorized and has the corporate power tinder the Act, itsby-laws and the laws of the State to enter into this Payment in Lieu of Tax Agreement and thetransactions contemplated hereby and to perform and carry out all the covenants and obligations on itspart to be performed under and pursuant to this Payment in Lieu of Tax Agreement. By proper corporateaction on the part of its members, the Agency has duly authorized the execution, delivery andperformance of this Payment in Lieu of’ Tax Agreement and the consummation of the transactions hereincontemplated.

(C) Conflicts. The Agency is not prohibited from entering into this Payment in Lieu of TaxAgreement and discharging and performing all covenants and obligations on its part to be performedtinder and pursuant to this Payment in Lieu of Tax Agreement by the terms, conditions or provisions ofany order, judgment, decree, law, ordinance, rule or regulation of any court or other agency or authorityof government, or any agreement or instrument to which the Agency is a party or by which the Agency isbound.

SECTION 1.02. REPRESENTATIONS OF AND WARRANTIES BY THE COMPANY. TheCompany does hereby represent, warrant and covenant as follows:

(A) Power. The Company is a limited liability company duly organized and validly existingunder the laws of the State of New York, is duly authorized to do business in the State of New York andhas the power under the laws of the State to enter into this Payment in Lieu of Tax Agreement and thetransactions contemplated hereby and to perform and carry out all covenants and obligations on its part tobe performed under and pursuant to this Payment in Lieu of Tax Agreement, and by proper action of itsboard of directors has been duly authorized to execute, deliver and perform this Payment in Lieu of TaxAgreement.

(B) Authorization. The Company is authorized and has the power under its Articles ofOrganization, Operating Agreement and the laws of the State to enter into this Payment in Lieu of TaxAgreement and the transactions contemplated hereby and to perform and carry out all covenants andobligations on its part to be performed under and pursuant to this Payment in Lieu of Tax Agreement. Byproper action of its board of directors, the Company has duly authorized the execution, delivery andperformance of this Payment in Lieu of Tax Agreement and the consummation of the transactions hereincontemplated.

(C) Conflicts. The Company is not prohibited from entering into this Payment in Lieu of TaxAgreement and discharging and performing all covenants and obligations on its part to be performed

-4-01217S/00069 Business 7535194v1

I Hider and piiriai to iii is l’aymcnt in I acu of Fax Agreement by (and the execilt ion, delivery andperformance of ibis l’aymeiit iii I acu of Fax Agreement. t lie consummation of the transactionscoiitemplated hereby and the tLIlfillmelit ol and compliance with the provisions of this Payment in Lieu ofFax Agree,ne,it will not conflict with or violate or constitute a breach of’ or a detiult under) the terms,conditions or provisions ol its (‘ertiticate of Incorporation or By—laws or any other restriction, law, rule,regulation or order of any court or other agency or authority of government, or any contractual limitation,restriction or outstanding indenture, deed ot trust, mortgage, loan agreement, other evidence ofindebtedness or any other agreement or instrument to which the Company is a party or by which it or any‘)t its PrPCrtY is hound, and neither the Company’s entering into this Payment in Lieu ot Fax Agreementior the (‘ompany’s discharging and performing all covenants and obligations on its part to he performedunder and pursuant to this Payment in Lieu of Fax Agreement will be in conflict with or result in a breachof or constitute (with due notice and/or lapse of time) a default under any of the foregoing, or result in thecreation or imposition of any lien of any nature upon any of the property of the Company under the termsot any of the foregoing, and this Payment in Lieu of Tax Agreement is the legal, valid and bindingobligation of’ the Company enforceable in accordance with its terms, except as enforceability may belimited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws relating to oraffecting creditors’ rights generally and by general principles of equity (regardless of whetherenforcement is sought in a proceeding in equity or at law).

(I)) (iovernmental Consent. No consent, approval or authorization of, or filing, registrationor qualification with, any governmental or public authority on the part of the Company is required as acondition to the execution, delivery or performance of this Payment in Lieu of Tax Agreement by theCompany or as a condition to the validity of this Payment in Lieu of Tax Agreement.

‘1217800069 Business 7535194vi

\lII(’Il II

COVENANTS ANI) AGREEMEN [S

SECTION 2.01. FAX-EXEMPT STiV[Us OF Fl IF PROJECT FACILElY. (A) Assessment of’ theProject Facility. Pursuant to Section 874 of’ the Act and Section 412—a of the Real Property [ax Law, theparties hereto understand that. upon acquisition of the Project Facility by the Agency and the tiling by theAgency of a New York State Board of Real Property Services Form RP-41 2-a (a ‘Real Property l’axExemption Form”) with respect to the Project Facility, and for So long thereafter as the Agency shall ownthe Project Facility, the Project Facility shall be assessed by the various taxing entities having jurisdictionover the Project Facility, including, without limitation, any county, city, school district, town, village ortither political unit or units wherein the Project Facility is located (such taxing entities being sometimescollectively hereinafter referred to as the Taxing Entities,” and each of such Taxing Entities beingsometimes individually hereinafter referred to as a Faxing Entity”) as exempt upon the assessment rollsof the respective Taxing Entities prepared subsequent to the acquisition by the Agency of the leaseholdiuterest to the Project Facility created by the Underlying Lease and the tiling of the Real Property TaxExemption Forms. [he Company shall, promptly following acquisition by the Agency of the leaseholdinterest to the Project Facility created by the Underlying Lease, take such action as may he necessary toensure that the Project Facility shall be assessed as exempt upon the assessment rolls of the respectiveFaxing Entities prepared subsequent to such acquisition by the Agency, including ensuring that a RealProperty Tax Exemption Form shall be tiled with the appropriate officer or officers of each respectiveFaxing Entity responsible for assessing properties on behalf of each such Taxing Entity (each such officerbeing hereinafter referred to as an “Assessor”). For so long thereafter as the Agency shall own suchleasehold interest in the Project Facility, the Company shall take such further action as may be necessaryto maintain such exempt assessment with respect to each Taxing Entity. The parties hereto understandthat the Project Facility shall not be entitled to such tax-exempt status on the tax rolls of any TaxingEntity until the first tax year of such Taxing Entity following the tax status date of such Taxing Entityoccurring subsequent to the date upon which the Agency becomes the owner of record of such leaseholdinterest in the Project Facility and the Real Property Tax Exemption Forms are filed with the Assessors.Pursuant to the provisions of the Lease Agreement, the Company will be required to pay all taxes andassessments lawfully levied and/or assessed against the Project Facility, including taxes and assessmentslevied for the current tax year and all subsequent tax years until the Project Facility shall be entitled toexempt status on the tax rolls of the respective Taxing Entities. The Agency will cooperate with theCompany to obtain and preserve the tax-exempt status of the Project Facility.

(B) Special Assessments. The parties hereto understand that the tax exemption extended tothe Agency by Section 874 of the Act and Section 412-a of the Real Property Tax Law does not entitle theAgency to exemption from special assessments and special ad valorem levies. Pursuant to the LeaseAgreement, the Company will be required to pay all special assessments and special ad valorem levieslawfully levied and/or assessed against the Project Facility.

SECTION 2.02. PAYMENTS [N LIEU OF TAXES. (A) Agreement to Make Payments. TheCompany agrees that it shall make annual payments in lieu of property taxes in the amounts hereinafterprovided to the respective Taxing Entities entitled to receive same pursuant to the provisions hereof. TheCompany also agrees to give the Assessor a copy of this Payment in Lieu of Tax Agreement. Thepayments due hereunder shall be paid by the Company to the respective appropriate officer or officers ofthe respective Taxing Entities charged with receiving payments of taxes for such Taxing Entities (suchofficers being collectively hereinafter referred to as the “Receivers of Taxes”) for distribution by theReceivers of Taxes to the appropriate l’axing Entities entitled to receive same pursuant to the provisionshereof

i12178m0069 Bnsiness 7535194i

B) (I) lhe value of the Project I.tctlity br purposes ofdetermining payments in lieu of taxes due hereunder (hereinafter referred to as the Assessed Value”)‘haLl he determined by the appropriate Assessors. [lie Company agrees to give the Assessors a copy 0this Payment in Lieu of lax Agreement. [he parties hereto agree that the Assessors shall (a) appraise theI.and in the same manner as other similar propemlies in the general area of the Land, (b) place an AssessedValue upon the Land, equalized if necessary by using the appropriate equalization rates as apply in theassessment and levy ot real property taxes, (c) appraise the Facility and any portion of the Equipmentassessable as real Property i irsuant to the New York Real Property Fax Law (collectively with theLacility, the Improvements”) in the same manner as other similar properties in the general area of theImprovements, and (b) place an Assessed Value upon the Improvements, equalized if necessary by usingthe appropriate equalization rates as apply in the assessment and levy of real property taxes. [heCompany shall he entitled to written notice of’ the initial determination of the Assessed Value of theImprovements and of any change in the Assessed Value of’ the Land or the Improvements.

(2) If the Company is dissatisfied with the amount of the Assessed Value of theImprovements as initially established or with the amount of the Assessed Value of the Land or theImprovements as changed, and if the Company shall have given written notice of suchdissatisfaction to the appropriate Assessor and the Agency within thirty (30) days of receipt bythe Company of written notice of the initial establishment of such Assessed Value of theImprovements, or of a change in such Assessed Value of the Land or the Improvements, then theCompany shall be entitled to protest before, and to be heard by, the appropriate Assessor and theAgency. If the Agency, the Company and any Assessor shall fail to reach agreement as to theproper Assessed Value of the Project Facility for purposes of determining payments in lieu oftaxes due under this Payment in Lieu of Tax Agreement, then such Assessor, the Company andthe Agency shall each select one arbitrator in accordance with the rules of the AmericanArbitration Association, each of whom shall be a qualified real estate appraiser, experienced invaluation for the purposes of tax assessment in the general area of the Project Facility, whicharbitrators shall, at the sole cost and expense of the Company, determine whether the AssessedValue has been properly established by the Assessor. It is understood that the arbitrators areempowered to confirm the Assessed Value or to determine a higher or a lower Assessed Value.Any payments in lieu of taxes due upon the Project Facility may not be withheld by the Companypending determination of the Assessed Value by the arbitrators.

(C) Amount of Payments in Lieu of Taxes. The payments in lieu of taxes to be paid by theCompany to the Receivers of Taxes annually on behalf of each Taxing Entity pursuant to the terms of thisPayment in Lieu of Tax Agreement shall be computed separately for each Taxing Entity as follows:

(I) First, determine the amount of general taxes and general assessments (hereinafterreferred to as the Normal Tax”) which would be payable to each Taxing Entity if the Land wasowned by the Company and not the Agency by multiplying (a) the Assessed Value of the Landdetermined pursuant to Subsection (B) of this Section 2.02, by (b) the tax rate or rates of suchTaxing Entity that would be applicable to the Land if the Land was owned by the Company andnot the Agency.

(2) In each tax year during the term of this Payment in Lieu of Tax Agreement,commencing on the lirst tax year following the date on which the Land shall be assessed asexempt on the assessment roll of any Taxing Entity, the amount payable by the Company to theReceivers of Taxes on behalf of each Taxing Entity as a payment in lieu of property tax pursuantto this Payment iii Lieu of Tax Agreement with respect to the Land shall be an amount equal to

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)IIC hundred percent (I 00%) ol’ I he Normal Fax due each l’axiig l.ut ity w 1111 respect to the I andbr such tax year.

(3) Next, determine the Normal ‘Fax which would he payable 10 each l’axiiig Entityif the Facility and any portion ot the Equipment assessable as real property pursurnt to Uie NewYork Real Property [‘ax Law (collectively with the Facility, the “Improvements”) were owned bythe Company and not the Agency by multiplying (a) the Assessed Value o the Improvementsdetermined pursuant to Subsection (13) ot this Section 2.02, by (b) (he tax rate or rates ol suchFaxing Entity that would he applicable to the Improvements if the Improvements were owned bythe Company and not the Agency.

(4) In each tax year during the term of this Payment in Lieu o Fax Agreement.commencing on the tirst tax year following the date on which the Improvements shall he assessedas exempt on the assessment roll of any Faxing Entity, the amount payable by the Company tothe Receivers of ‘Faxes on behalf ot’ each Faxing Entity as a payment in lieu of property taxpursuant to this Payment in Lieu of ‘Fax Agreement with respect to the Improvements shall be anamount equal to the applicable percentage of the Normal Tax due each ‘Faxing Entity with respectto the Improvements for such tax year, as shown in the following table:

County Fax City Tax School Tax‘Fax Year Existing Percentage of Percentage of Percentage ofCommencing Assessed Value Assessed Value Assessed Value Assessed Valuein Calendar Year of the Land of the Project of the Project of the ProjectFacility Facility Facility

2010 100% N/A N/A N/A2011 100% N/A N/A N/A2012 100% 0% 0% 0%2013 100% 10% 10% 10%2014 100% 20% 20% 20%2015 100% 30% 30% 30%2016 100% 40% 40% 40%2017 100% 50% 50% 50%2018 100% 60% 60% 60%2019 100% 70% 70% 70%2020 100% 80% 80% 80%2021 100% 90% 90% 90%2022 100% 100% 100% 100%

Thereafter 100% 100% 100% 100%

(5) In each tax year during the term of this Payment in Lieu of Tax Agreement,commencing on the first tax year following the date on which any portion of the Project Facilityshall be assessed as exempt on the assessment roll of any Taxing Entity, the amount payable bythe Company to the Receivers of Taxes on behalf of each Taxing Entity as a payment in lieu ofproperty tax pursuant to this Payment in Lieu of Tax Agreement with respect to the ProjectFacility shall be the sum of (a) the amount due each Taxing Entity with respect to the Land forsuch tax year, as determined pursuant to Subsection (C)(2) hereof, plus (b) the amount due each

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laxing Liitity wili respect to the Improvements for such tax year, as dcteriniiied plirsualit toSubsection (C)(l) hereof.

I)) Addition ii_ \mc mtsLu..u ot I o Coiiim..n.ing on the lust tax yc ir following thedate o)n which any structural addition shall be made to the Project Facility or any portion thereof or anyadditional building or other sIrucwre shall be constructed on the Land (such structural additions andadditional buildings and other structures being hereinafter rcfrred to as “Additional Facilities”) theCompany agrees to make additional annual payments in lieu of property taxes with respect to suchAdditional Facilities (such additional payments being hereinafter collectively referred to as “AdditionalPayments”) to the Receivers ol Faxes with respect to such Additional Facilities, such AdditionalPayments to be computed separately fbr each l’axing Entity as flillows:

I ) l)etermiiie the amount of general taxes and general assessments (hereinafteri’efirred to as the Additional Normal Fax”) which would he payable to each faxing Entity withrespect to such Additional Facilities if such Additional Facilities were owned by the Companyand not the Agency as fiallows: (a) multiply the Additional Assessed Value (as hereinafterdefined) of such Additional Facilities determined pursuant to subsection (E) of this Section 2.02by (b) the tax rate or rates of such Faxing Entity that would be applicable to such AdditionalFacilities if such Additional Facilities were owned by the Company and not the Agency, and (c)reduce the amount so determined by the amounts of any tax exemptions that would be afforded tothe Company by such ‘Faxing Entity if such Additional Facilities were owned by the Companyand not the Agency.

(2) In each fiscal tax year during the term of this Payment in Lieu of Tax Agreement(commencing in the fiscal tax year when such Additional Facilities would first appear on theassessment roll of any Faxing Entity) if such Additional Facilities were owned by the Companyand not the Agency, the amount payable by the Company to the Receivers of Taxes on behalf ofeach Taxing Entity as a payment in lieu of property tax with respect to such Additional Facilitiespursuant to this Payment in Lieu of Tax Agreement shall be an amount equal to one hundredpercent (100%) of the Normal Tax due each Taxing Entity with respect to such AdditionalFacilities for such fiscal tax year (unless the Agency and the Company shall enter into a separatewritten agreement regarding payments in lieu of property taxes with respect to such AdditionalFacilities, in which case the provisions of such separate written agreement shall control).

(E) Valuation of Additional Facilities. (I) The value of Additional Facilities for purposes ofdetermining payments in lieu of taxes due under Section 2.02(D) hereof shall be determined by theAssessors of each respective Taxing Entity. The parties hereto agree that the Assessors shall (a) appraisethe Additional Facilities in the same manner as other similar properties in the general area of the ProjectFacility, and (b) place a value for assessment purposes (hereinafter referred to as the ‘AdditionalAssessed Value”) upon the Additional Facilities, equalized if necessary by using the appropriateequalization rates as apply in the assessment and levy of real property taxes. The Company shall beentitled to written notice of the initial establishment of such Additional Assessed Value and of any changein such Additional Assessed Value.

(2) If the Company is dissatisfied with the amount of the Additional Assessed Valueof the Additional Facilities as initially established or as changed, and if the Company shall havegiven written notice of such dissatisfaction to the appropriate Assessor and the Agency withinthirty (30) days of receipt by the Company of written notice of the initial establishment of suchAdditional Assessed Value, or of a change in such Additional Assessed Value, then the Companyshall be entitled to protest before, and to be heard by, the appropriate Assessor and the Agency.If the Agency, the Company and any Assessor shall fail to reach agreement as to the proper

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Additional i\sscssed Value of the i\dditional Facilities br UfOSCS determining payments iiilieu of taxes due under this Payment in Lieu of Fax Agreement, then such i\ssessor, the (.oiup,inymd the Amency shall each select one arbitrator in accordance with the rules of the AmericanArbitration Association, each of whom shall he a qualified real estate appraiser, experienced invaluation tor the purposes of tax assessment in the general area of the Project Facility, whicharbitrators shall, at the sole cost and expense of the Company, determine whether the AdditionalAssessed Value ot the Additional Facilities has been properly established by the Assessor. It isunderstood that the arbitrators are empowered to confirm the Additional Assessed Value or todetermine a higher or lower Additional Assessed Value. Any payments in lieu of taxes due uponsuch Additional Facilities pursuant to Section 2.02(D) hereof may not be withheld by thecompany pending determination of the Additional Assessed Value by the arbitrators.

(F) Statements. Pursuant to Section 858(15) of the Act, the Agency agrees to give eachFaxing Entity a copy ot this Payment in Lieu of Tax Agreement within fifteen (15) days of the executionand delivery hereot together with a request that a copy hereof be given to the appropriate officer orollicers of the respective Taxing Entities responsible for preparing the tax rolls for said Fax Entities(each, a Tax Billing Officer”) and a request that said Tax Billing Officers submit to the Company and tothe appropriate Receiver of Taxes periodic statements specifying the amount and due date or dates of thepayments due each Taxing Entity hereunder, such periodic statements to be submitted to the Company atapproximately the times that tax bills are mailed by such Faxing Entities.

(G) Fime of Payments. The Company agrees to pay the amounts due hereunder to theReceivers of Taxes for the benefit of each particular Taxing Entity in any fiscal tax year to the appropriateReceiver of Taxes within the period that such Taxing Entity allows payment of taxes levied in such fiscaltax year without penalty. The Company shall be entitled to receive receipts for such payments.

(H) Method of Payment. All payments by the Company hereunder shall be paid to theReceivers of Taxes in lawful money of the United States of America. The Receivers of Taxes shall inturn distribute the amounts so paid to the various Taxing Entities entitled to same.

SECTION 2.03. CREDIT FOR TAXES PAID. (A) Amount of Credit. The parties heretoacknowledge and agree that the obligation of the Company to make the payments provided in Section2.02 of this Payment in Lieu of Tax Agreement shall be in addition to any and all other taxes andgovernmental charges of any kind whatsoever which the Company may be required to pay under theLease Agreement. It is understood and agreed, however, that, should the Company pay in any fiscal taxyear to any Faxing Entity any amounts in the nature of general property taxes, general assessments,service charges or other governmental charges of a similar nature levied and/or assessed upon the ProjectFacility or the interest therein of the Company or the occupancy thereof by the Company (but notincluding, by way of example, (1) sales and use taxes, and (2) special assessments, special ad valoremlevies or governmental charges in the nature of utility charges, including but not limited to water, solidwaste, sewage treatment or sewer or other rents, rates or charges), then the Company’s obligation to makepayments in lieu of property taxes attributed to such tiscal tax year to such Taxing Entity hereunder shallbe reduced by the amounts which the Company shall have so paid to such Taxing Entity in such fiscal taxyear, but there shall be no cumulative or retroactive credit as to any payment in lieu of property taxes dueto any other Taxing Entity or as to any payment in lieu of property taxes due to such Taxing Entity in anyother fiscal tax year.

(B) Method of Claiming Credits. If the Company desires to claim a credit against anyparticular payment in lieu of tax due hereunder, the Company shall give the governing body of theaffected Taxing Entity and the Agency prior written notice of its intention to claim any credit pursuant tothe provision of this Section 2.03, said notice to be given by the Company at least thirty (30) days prior to

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I he date ii which such pay illeilt Iii I icii of tax is Inc piirsiiaiit to the prow iSIOflS Of Sectiofl 2.02( (1) herco I.In the event that the i.ovcrn iiig body if the appropriate [‘axing Futity desires to contest the Company’sright to claim such Qredit. I lien said zoverniiig body, the Agency and the Company shall each select anirhitrator in accordance wiih the rules 4)1 the Ainericaii Arbitration i\ssociation, each of whom shall meetthe qualifications set forth in Section 2M2( B) hereof which arbitrators shall, at (he sole cost and expenseoithe Company, determine whether the Company is entitled to claim any credit pursuant to the provisionso[ this Section 2)3 and, ii so, the ainouiit of the credit to which the Company is entitled. It is understoodthat the arbitrators are empowered to cotifirin the amount of the credit claimed by the Company or todetermine a lower or higher credit. When the Company shall have given notice, as provided herein, that itclaims a credit, the amount of any payment in lieu of property taxes due hereunder against which thecredit may be claimed may he withheld (to the extent of the credit claimed by the Company, but only tothe extent that such credit may be claimed against said payment in lieu of’ taxes pursuant to the provisionsof this Section 2.03) unil the decision of the arbitrators is rendered. Al’ter the decision of the arbitratorsis rendered, the payment in lieu of taxes due with respect to any reduction or disallowance by thearbitrators in the amount of the credit claimed by the Company shall, to the extent withheld as afbresaid,he immediately due and payable and shall he paid by the Company within thirty (30) days of said(ICC ision.

SECTION 2.04. LA FE PAYMENTS. (A) First Month. Pursuant to Section 874(5) of the Act, if theCompany shall fail to make any payment required by this Payment in Lieu of Tax Agreement when due,the Company shall pay the same, together with a late payment penalty equal to five percent (5%) of theamount due.

(B) Thereafter. It’ the Company shall fail to make any payment required by this Payment inLieu of Tax Agreement when due and such delinquency shall continue beyond the first month, theCompany’s obligation to make the payment so in default shall continue as an obligation of the Companyto the affected Taxing Entity until such payment in default shall have been made in full, and the Companyshall pay the same to the affected [axing Entity together with (1) a late payment penalty of one percent(1%) per month for each month, or part thereof, that the payment due hereunder is delinquent beyond thefirst month, plus (2) interest thereon, to the extent permitted by law, at the greater of(a) one percent (1%)per month, or (b) the rate per annum which would be payable if such amount were delinquent taxes, untilso paid in full.

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01217X/000h9 Business 7535194v1

AI’’ 11(1 .E III

Ii MI [ED ( )IU i( A [I( )N

SECTION 3.01. NO RECOURSE; LIMITED OBLI(IA’FION OF ‘[I IE A( HiNCY. (A) No Recourse.All obligations, covenants, and agreements of the Agency contained in this Payment in l.ieu of FaxAgreement shall he deemed to be the obligations, covenants, and agreements of the Agency and not ofmy member, ()lhcer, agent, seriant or employee of the Agency in his individual capacity, and 110 recoursenuder or ilOfl any obligation, covenant or agreement contained in this Payment in I .icti of laxAgreement, or otherwise based upon or in respect of this Payment in Lieu of Tax Agreement, or for anyclaim based thereon or otherwise in respect thereof, shall he had against any past, present or futureimiember, officer, agent (other than the Company), servant or employee, as such, of the Agency or anymiccessor public benefit corporation or political subdivision or any person executing this Payment in LieuiFax Agreement on behalf of the Agency, either directly or through the Agency or any successor publicbenefit corporation or political subdivision or any person so executing this Payment in Lieu of ‘FaxAgreement, it being expressly understood that this Payment in Lieu of Tax Agreement is a corporateobligation, and that no such personal liability whatever shall attach to, or is or shaH he incurred by, anysuch member, officer, agent (other than the Company), servant or employee of the igency or of anysuccessor public benefit corporation or political subdivision or any person so executing this Payment inLieu of Fax Agreement under or by reason of the obligations, covenants or agreements contained in thisPayment in Lieu of ‘Fax Agreement or implied therefrom; and that any and all such personal liability of,and any and all such rights and claims against, every such member, officer, agent (other than theCompany), servant or employee under or by reason of the obligations, covenants or agreements containedin this Payment in Lieu of Tax Agreement or implied therefrom are, to the extent permitted by law,expressly waived and released as a condition of, and as a consideration for, the execution of this Paymentin Lieu of Tax Agreement by the Agency.

(B) Limited Obligation. The obligations, covenants and agreements of the Agency containedherein shall not constitute or give rise to an obligation of the State of New York or Montgomery County,New York, and neither the State of New York nor Montgomery County, New York shall be liablethereon, and further such obligations, covenants and agreements shall not constitute or give rise to ageneral obligation of the Agency, but rather shall constitute limited obligations of the Agency payablesolely from the revenues of the Agency derived and to be derived from the lease, sale or other dispositionof the Project Facility (except for revenues derived by the Agency with respect to the Unassigned Rights,as defined in the Lease Agreement).

(C) Further Limitation. Notwithstanding any provision of this Payment in Lieu of TaxAgreement to the contrary, the Agency shall not be obligated to take any action pursuant to any provisionhereof unless (I) the Agency shall have been requested to do so in writing by the Company, and (2) ifcompliance with such request is reasonably expected to result in the incurrence by the Agency (or any ofits members, officers, agents, servants or employees) of any liability, fees, expenses or other costs, theAgency shall have received from the Company security or indemnity and an agreement from theCompany to defend and hold harmless the Agency satisfactory to the Agency for protection against allsuch liability, however remote, and for the reimbursement of all such fees, expenses and other costs.

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\I{lI(1 .l l\f

IVLN’I’S OF DFFALJI;F

SECTION 4.01. LVEN’F.S ( )F l)EFAi ii.!’. Any one or more of the following events shall constitutean event of default under this Payment in Lieu of Fax Agreement, and the terms 1vent of [)efault” or“default” shall mean, whenever they are used in this Payment in Lieu of Tax Agreement, any one or moreof the following events:

(A) Failure of the Conipany to pay when due any amount due and payable by the Companypursuant to this Payment in Lieu of Fax Agreement and continuance of said failure for a period of fifteen(I 5) days after written notice to the Company stating that such payment is due and payable;

(B) Failure of ihe Company to observe and perform any other covenant, condition oragreement on its part to be observed and performed hereunder (other than as referred to in paragraph (A)above) and continuance of such failure for a period of thirty (JO) days after written notice to the Companyspecil/ing the nature of such failure and requesting that it be remedied; provided that if such defaultcannot reasonably he cured within such thirty (30) day period and if the Company shall have commencedaction to cure the breach of covenant, condition or agreement within said thirty (30) day period andthereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall beextended for so long as the Company shall require in the exercise of due diligence to cure such default, itbeing agreed that no such extension shall be for a period in excess of ninety (90) days in the aggregatefrom the date of default; or

(C) Any warranty, representation or other statement by or on behalf of the Companycontained in this Payment in Lieu of Tax Agreement shall prove to have been false or incorrect in anymaterial respect on the date when made or on the effective date of this Payment in Lieu of Tax Agreementand (1) shall be materially adverse to the Agency at the time when the notice referred to below shall havebeen given to the Company and (2) if curable, shall not have been cured within thirty (30) days afterwritten notice of such incorrectness shall have been given to a responsible officer of the Company,provided that if such incorrectness cannot reasonably be cured within said thirty-day period and theCompany shall have commenced action to cure the incorrectness within said thirty-day period and,thereafter, diligently and expeditiously proceeds to cure the same, such thirty-day period shall beextended for so long as the Company shall require, in the exercise of due diligence, to cure such default.

SECTION 4.02. REMEDIES ON DEFAuL’r. (A) General. Whenever any Event of Default shallhave occurred with respect to this Payment in Lieu of Tax Agreement, the Agency (or if such Event ofDefault concerns a payment required to be made hereunder to any Taxing Entity, then with respect tosuch Event of Default such Taxing Entity) may take whatever action at law or in equity as may appearnecessary or desirable to collect the amount then in default or to enforce the performance and observanceof the obligations, agreements and covenants of the Company under this Payment in Lieu of TaxAgreement.

(B) Cross-Default. In addition, an Event of Default hereunder shall constitute an event ofdefault under Article X of the Lease Agreement. Upon the occurrence of an Event of Default hereunderresulting from a failure of the Company to make any payment required hereunder, the Agency shall have,as a remedy therefor under the Lease Agreement, among other remedies, the right to terminate the LeaseAgreement and convey the Project Facility to the Company, thus subjecting the Project Facility toimmediate full taxation pursuant to Section 520 of the Real Property Tax Law of the State.

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0121Th)00069 Business 7535194v1

(( ) Rich such Event of l)efliult shall give risc to a separate aiise of IcIi(mhereunder and separate suits may be brought hereunder as each cause of action arises.

I)) Va tie. Ihe Company irrevocably agrees that any suit, action or other legal proceedingirising out of this Payment in Lieu of lax Agreement may he brought in the courts of record of the State,consents to the jurisdiction of each such court in any such suit, action or proceeding, and waives anyobjection which it nay have to the laying of the venue ot any such suit, action or proceeding in any ofsuch courts.

SECIYON 4.03. IAYMEN’F OF ATFORNEY’S FEES AND EXPENSES. Pursuant to Section74(6) of the Act. if the Company should deihult in pertbrming any of its obligations, covenants oragreements under this Payment in Lieu of’ Tax Agreement and the Agency or any ‘Faxing Entity shouldemploy attorneys or incur other expenses flr the collection of any amounts payable hereunder or for theeiitbrcement of perthrmance or observance of any obligation, covenant or agreement Ofl the part of the(‘omnpany herein contained, the Company agrees that it will, on demand therefor, pay to the Agency orsuch Taxing Entity, as the case may be, not only the amounts adjudicated due hereunder, together with thelate payment penalty and interest due thereon, but also the reasonable fees and disbursements of suchattorneys and all other expenses, costs and disbursements so incurred, whether or not an action iscommenced.

SECTION 3.04. REMEDIES; WAIVER AND NOTICE. (A) No Remedy Exclusive. No remedyherein conferred upon or reserved to the Agency or any Taxing Entity is intended to be exclusive of anyother available remedy or remedies, but each and every such remedy shall be cumulative and shall be inaddition to every other remedy given under this Payment in Lieu of Tax Agreement or now or hereafterexisting at law or in equity or by statute.

(B) Delay. No delay or omission in exercising any right or power accruing upon theoccurrence of any Event of Default hereunder shall impair any such right or power or shall be construedto be a waiver thereof but any such right or power may be exercised from time to time and as often asmay be deemed expedient.

(C) Notice Not Required. In order to entitle the Agency or any Taxing Entity to exercise anyremedy reserved to it in this Payment in Lieu of Tax Agreement, it shall not be necessary to give anynotice, other than such notice as may be expressly required in this Payment in Lieu of Tax Agreement.

(D) No Waiver. In the event any provision contained in this Payment in Lieu of TaxAgreement should be breached by any party and thereafter duly waived by the other party so empoweredto act, such waiver shall be limited to the particular breach so waived and shall not be deemed to be awaiver of any other breach hereunder. No waiver, amendment, release or modification of this Payment inLieu of Tax Agreement shall be established by conduct, custom or course of dealing.

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AR II(’I.L V

M ISCFT .1 .A N F( )l iS

SECI’ION 5.01 . l’FRM. (A) ( cneral. I his l’aymcnt in Lieu of Fax tgreement shall becomeeffective and the obligations of the Company shall arise absolutely amid [mncOIlditiOflally (IOfl the approvalof this Payment in Lieu of Fax Agreement by resolution of the i\gency and the execution and delivery ofthis Payment in Lieu of Fax Agreement by the Company and the Agency. Unless otherwise provided byamendment hereof, this Payment in Lieu of Fax Agreement shall continue to remain in cl’fect until theearlier to occur of’ (I) December 3 I. 2022 or (2) the date on which the Project Facility is reconveyed bythe Agency to the Company pursuant to Article X or Xl of the l.ease Agreement.

(B) Extended ‘Ferm. In the event that (I) the Project Facility shall he reconveyed to theCompany, (2) on the date on which the Company obtains the Agency’s interest in the Project Facility, theProject Facility shall be assessed as exempt upon the assessment roll of any one or more of the FaxingEntities, and (3) the thct of’ obtaining title to the Agency’s interest in the Project Facility shall notimmediately obligate the Company to make pro-rata tax payments pursuant to legislation similar toChapter 635 of the 1978 Laws of the State (codified as subsection 3 of Section 302 of’ the Real PropertyFax Law and Section 520 of the Real Property Fax Law), this Payment in Lieu of Tax Agreement shallremain in full force and effect and the Company shall he obligated to make payments to the Receiver of‘Faxes in amounts equal to those amounts which would be due from the Company to the respective ‘FaxingEntities if the Project Facility were owned by the Company and not the Agency until the first tax year inwhich the Company shall appear on the tax rolls of the various ‘Faxing Entities having jurisdiction overthe Project Facility as the legal owner of record of the Project Facility.

SECTION 5.02. FORM OF PAYMENTS. The amounts payable under this Payment in Lieu of TaxAgreement shall be payable in such coin and currency of the United States of America as at the time ofpayment shall be legal tender for the payment of public and private debts.

SECTION 5.03. COMPANY ACTS. Where the Company is required to do or accomplish any act orthing hereunder, the Company may cause the same to be done or accomplished with the same force andeffect as if done or accomplished by the Company.

SECTION 5.04. AMENDMENTS. This Payment in Lieu of Tax Agreement may not be effectivelyamended, changed, modified, altered or terminated except by an instrument in writing executed by theparties hereto.

SECTION 5.05. NOTICES. (A) General. All notices, certificates or other communications hereundershall be in writing and may be personally served, telecopied or sent by courier service or United Statesmail and shall be sufficiently given and shall be deemed given when (1) delivered in person or by courierto the applicable address stated below, (2) when received by telecopy or (3) three business days afterdeposit in the United States, by United States mail (registered or certified mail, postage prepaid, returnreceipt requested, property addressed), or (4) when delivered by such other means as shall provide thesender with documentary evidence of such delivery, or when delivery is refused by the addressee, asevidenced by the affidavit of the Person who attempted to effect such delivery.

(B) Notices Given by Taxing Entities. Notwithstanding the foregoing, notices of assessmentor reassessment of the Project Facility and other notices given by a Taxing Entity under Article II hereofshall be sufficiently given and shall be deemed given when given by the Taxing Entity in the samemanner in which similar notices are given to owners of taxable properties by such Taxing Entity.

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( ) Addresses. I lie addresses to which (kit ices, certi kcates and uther columullicatsollshereunder -Jial I be dcl ivered are as tol lows:

II: fl) II l[ COMPANY:

I lill Markes Realty, LLCI 2() Fdson StreetAmsterdam, New York 12011)\ttecution: Neal Packer, COo

W[FI1 (‘()PIES I’O:

I lodgson Russ LLP55 East Main Street, Suite 100Johnstown, New York I 2095Attention: Mario J. Papa, Esq.

MacKenzie & Fallent12 Church StreetCanajoharie, New York 133 17Attention: Charles l’allent. Esq.

IF TO THE AGENCY:


WITH A COPY TO:

Law Offices of Paul L. Woilman41 Market StreetAmsterdam, New York 12010Attention: Paul L. Woilman, Esq.

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(I)) (oaLc. A copy of any notice given hereunder by (lie Compaity which at kcts in any waya taxing Entity shall also he given to the chief executive at fleer of such Faxing Entity.

E) Change of Address. I’he Agency and the Coiiipany may, by iiotice giveii hereunder,designate any flirther or different addresses to which subsequent notices, certificates and othercommunications shall he sent.

SEC’flON 5.06. BINDING EFFFCF. Ihis Payment in Lieu of Fax Areemnent shall inure to thebenefit ot and shall he binding upon, the Agency, the Company and their respective successors andassigns. the provisions ot this Payment in Lieu of Fax Agreement are intended to he for the benefit ofthe Agency and the respective Faxing Entities.

SECTION 5.07. SEVERABILITY. If any article, section, subdivision, paragraph, sentence, clause,phrase, provision or portion of this Payment in Lieu of Tax Agreement shall for any reason be held oradjudged to he invalid or illegal or unenforceable by any court of competent jurisdiction, such article,section, subdivision, paragraph, sentence, clause, phrase, provision or portion so adjudged invalid, illegalor unenforceable shall be deemed separate, distinct and independent and the remainder of this Payment inLieu of Tax Agreement shall be and remain in full force and effect and shall not be invalidated orrendered illegal or unenforceable or otherwise affected by such holding or adjudication.

SECTION 5.08. COUNTERPARTS. This Payment in Lieu of Tax Agreement may be simultaneouslyexecuted in several counterparts, each of which shall be an original and all of which shall constitute butone and the same instrument.

SECTION 5.09. APPLICABLE LAW. This Payment in Lieu of Tax Agreement shall be governed byand construed in accordance with the laws of the State of New York.

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IN W [IN ISS W I IR I( )F. lie •\cncy nid the ( ‘olilpany have caused this Piyincnt iii I ieii‘ix A reemeiiL In be cxcciilcd ii (heir respective tianics by duly iiilhori.’cd ul licers hercot, all beingis ot the (late Ii rst above written.

\1( )NI’( ( )MFRY COLJN’l’Y INDUSTRIAl.I )lVIEA)Prv1FN’I’ A( ENCY

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IlIIL& MARKES REALTY, LLC

BY:

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Authorized Officer

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(OUNFY OF MONFG()MFRY )

)n the 0’ day oL June, in the year 20 10, hcflre me, the undersigned, Persormi ly appearedWlLLliM I IISER’F. personally known to me or proved to me oii the basis of satisfactory evidence to hethe individual whose name is subscribed to the within instrument and acknowledged to me that heexecuted the same in his capacity, and that by his signature on the instrument, the individual, or theperson upon behalf of which the individual acted, executed the iiistruineiit.

Notary Public

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)n the day 1 July. in the car 20 10. hekire me. the undersigned, personally appeared NEALPACKER. personally kiloWli to tie or proved It) tie on the basis of satistctory evidence to be theindividual yhose itanie is ‘iibscribcd to the within ilistruinent and acknowledged to me that he executedthe same in his capacity, atid that by his signature on the instrument, the individual, or I son uponbehall ol’ which the iiidiv idual acted. executed the instrument.

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012178,00069 Bitinss 753SI94vi

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I)FSCRIPTU)N OF [I IF. LiNI)

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A- II2178/OOO69 3usiness 7535194v1

SCIIELMJIF A

ALL I1IAf ‘rRACT OR PARCEL OF LND situate in the Fown of Florida, County ofMontgomery and State of New York, being more particularly described as follows:Being Lot I as shown on the map entitled “Map Showing Proposed Subdivision lands now orlormerly of Carl E. (;ottier L. 663, P. 277 & Lands now or formerly of Montgomery County IndustrialDevelopment Agency [.. 1655, P.75” prepared by ABI) Engineers & Surveyors, dated 3/23/09, moreparticularly bounded and described as follows:

Beginning at a point located on the southerly boundary OtNYS Route 5S at its intersection withthe division line between Lot I on the east and Lot 2 on the west and proceeding in a clockwise directionthe following seven (7) courses and distances:

I.) South 67°-03’ -52” East, a distance of 40.53 feet to a point;

2.) South 68°-41’-07” East, a distance of 376.96 fet to a point;

3.) South 63°-Il ‘-I 8” Fast, a distance of 198.52 feet to a point;

.1.) South 59°-22’-36” East, a distance of 287.23 feet to a point;



7.) South 70°-I 8’- 15” East, a distance of 163.75 feet to a point located on the westerlybounds of land now or formerly of Itla Agosta on the east and lands herein described on the west; thencealong said division line the following course and distance:


1.) South 71° 13’ 00” East, a distance of 675.85 feet to a point on the westerly boundary oflands now or formerly Alpine Haus Ski Shop, Inc. on the east and the lands herein described on thewest; thence along said division line the following course arid distance:

1.) South 570 38’ 30” West, a distance of 796.64 feet to a point on the northerly boundary ofthe NYS Thruway on the south and the lands herein described on the north; thence along said divisionline the following three (3) courses and distances:




A-2fl12175/00069 Business 7535t94vi

.) North West, a distance oi 20)63 flet to a point at its intersection with thelivision line with Lot 2 on the West and the lands herein described on the cast; thence along saidlivision line the thllowing course and distance:

I.) North 23°-34’-09” [ast a distance of 1247.X7 to the POINT OF IIEGINNINC. being15 25 acres. more or Icss.

A-3)!2178/00069 Business 7535194v1

MORTGAGE AND SECURITY AGREEMENT

THIS MORTGAGE AND SECURITY AGREEMENT (“Mortgage”) made as of June

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2010, among MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENTAGENCY (the “Agency”), a public benefit corporation with offices at Old County Courthouse,9 Park Street, P.O. Box 1560, Fonda, New York 12068, and HILL & MARKES REALTY,LLC (the “Mortgagor”), a New York limited liability company having a mailing address of P.O.Box 7, 120 Edson Street, Amsterdam, New York 12010, in favor of RBS CITIZENS, N.A. (the“Mortgagee”), a national association having an address at 833 Broadway, Albany, New York12207:

WITNES SETH:

WHEREAS, Mortgagor is the owner in fee simple of certain real property (the“Premises”) located at 1975 NYS Route 5 S in the Town of Florida, Montgomery County, NewYork, as more particularly described on Schedule A attached, as improved on the date hereof,and

WHEREAS, Mortgagor has leased the Premises to Agency pursuant to Lease to Agency

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dated on even date herewith and Agency has leased the Premisesback to Mortgagor pursuant to Lease Agreement dated on even dateherewith; and

WHEREAS, Mortgagor has applied to Mortgagee for a loan (the “Loan”) in the amountof Eight Million Three Hundred Fifty-Eight Thousand One Hundred Thirty-Three and 00/100Dollars U.S. ($8,358,133.00) (the “Loan Amount”) and, in accordance with a LoanCommitment (hereinafter defined) Mortgagor has executed and delivered a certain BuildingLoan Promissory Note of even date herewith, in the principal sum of Eight Million ThreeHundred Fifty-Eight Thousand One Hundred Thirty-Three and 00/100 Dollars U.S.($8,358,133.00) made payable to the order of Mortgagee (the “Note”); and

WHEREAS, pursuant to the provisions of that certain building loan agreement, dated ofeven date herewith, between the Mortgagor and the Mortgagee (as the same may besupplemented, amended or modified from time to time, the “Building Loan Agreement”), theproceeds of the loan will be advanced from time to time to Mortgagor; and

WHEREAS, Agency and Mortgagor are required to execute and deliver this Mortgage asa covenant and condition to obtaining the Loan.

NOW, THEREFORE, in order to secure the payment of an indebtedness in the principalsum of $8,358,133.00 or so much thereof as may be advanced from time to time pursuant to theBuilding Loan Agreement, together with all interest thereon, and all other sums, advances,expenses and charges that may or shall become due hereunder or under the Note or any of theother agreements between the Mortgagor and the Mortgagee relating to the Loan(includingwithout limitation any exit or breakage fees, costs or expenses in any interest rate hedging orswap agreements entered into in connection with the Loan), Agency and Mortgagor do hereby

grant, assign, convey, mortgage and pledge to Mortgagee, its successors and assigns, thePremises, and all of their respective estate, right, title and interest therein;

TOGETHER with all right, title and interest of Agency and Mortgagor, including anyafter-acquired title or reversion, in and to the ways, easements, streets, alleys, passages, water,water courses, riparian rights, oil, gas and other mineral rights, gaps, gores, rights, hereditaments,liberties and privileges thereof, if any, and in any way appertaining to the Premises;

TOGETHER with all leases, rents, royalties, issues, proceeds and profits accruing and toaccrue from the Premises as more particularly described in that certain Assignment of Leases andRents of even date herewith (the “Assignment”) from Mortgagor as Assignor and Agency toMortgagee as Assignee;

TOGETHER with all buildings and improvements of every kind and description now orhereafter erected or placed on the Premises including, without limitation, all materials intendedfor construction, reconstruction, alteration and repair of such improvements now or hereaftererected thereon, all of which materials shall be deemed to be included within the MortgagedProperty (as hereinafter defined) immediately upon the delivery thereof to the Premises, and allfixtures and articles of personal property now or hereafter owned by Mortgagor and attached toor contained in and used in connection with the Premises, including, without limitation, allapparatus, machinery, equipment, motors, elevators, fittings, radiators, furnaces, stoves,microwave ovens, awnings, shades, screens, blinds, trash and garbage removal equipment,carpeting and other furnishings, and all plumbing, heating, lighting, cooking, laundry,ventilating, refrigerating, incinerating, air-conditioning, conveyor, security, sprinkler and otherequipment, and all fixtures and appurtenances thereof; and all renewals or replacements thereofor articles in substitution therefor, whether or not the same are or shall be attached to suchimprovements in any manner; it being intended that all the above-described property owned byMortgagor and placed by Mortgagor on the Premises shall, so far as permitted by law, be deemedto be fixtures and a part of the realty, and security for the indebtedness of Mortgagor toMortgagee hereinafter described and secured by this Mortgage, and as to the balance of theabove-described property, this Mortgage is hereby deemed to be as well a Security Agreementfor the purpose of creating hereby a security interest in such property, securing suchindebtedness, for the benefit of Mortgagee; all of the property described in this paragraph ishereinafter sometimes collectively called the “Improvements”;

TOGETHER with any and all warranty claims, maintenance contracts and other contractrights, instruments, documents, chattel papers and general intangibles with respect to or arisingfrom the Premises, the Improvements and the balance of the Mortgaged Property, and all cashand non-cash proceeds and products thereof, and

TOGETHER with all proceeds of and any unearned premiums on any insurance policiescovering the Mortgaged Property, including without limitation the right to receive and apply theproceeds of any insurance, judgments or settlements made in lieu thereof, for damage to theMortgaged Property; and

TOGETHER with all awards and other compensation heretofore or hereafter to be madeto the present and all subsequent owners of the Mortgaged Property for any taking by eminentdomain, either permanent or temporary (a “Taking”), of all or any part of the MortgagedProperty or any easement or other appurtenance thereof, including severance and consequential

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damage and change in grade of streets (collectively, “Taking Proceeds”), and any and all refundsof impositions or other charges relating to the Mortgaged Property or the indebtedness securedby this Mortgage.

The property described above is hereafter called the “Premises” to the extent that suchproperty is realty, and the “Collateral” to the extent that such property is personalty. ThePremises and the Collateral are hereafter collectively called the “Mortgaged Property.”

TO HAVE AND TO HOLD, all and singular, the Mortgaged Property, whether nowowned or held or hereafter acquired by Mortgagor, with the appurtenances thereunto belonging,unto Mortgagee, its successors and assigns, forever. Mortgagor does hereby warrant toMortgagee, its successors and assigns, that Mortgagor has good and indefeasible estate in feesimple and is the sole owner of the Collateral, and has good right to mortgage, assign and grant asecurity interest in the Mortgaged Property in manner and form as above written; that title to theMortgaged Property is free and clear of all defects, liens and encumbrances except for real estatetaxes and assessments and rights of way of record approved by the Mortgagee in writing (the“Permitted Exceptions”) and that Mortgagor will warrant and defend the Premises, with theappurtenances thereunto belonging, and the Collateral to Mortgagee, its successors and assigns,forever, against all liens, security interests, encumbrances, defects, claims and demandswhatsoever.

Mortgagor has executed and delivered this Mortgage to secure the following:

(a) Payment of principal, interest and all other charges under the Note, as the samemay be amended, extended, supplemented, modified and/or renewed, and all replacements andsubstitutions therefor, together with interest thereon at a rate or rates which may vary from timeto time as specified in the Note, with principal and interest payable in accordance with the termsof the Note, and all accrued but unpaid interest and the entire unpaid principal amount being dueand payable, in accordance with the terms of the Note;

(b) Payment of any and all amounts or charges required to be paid by Mortgagorpursuant to this Mortgage or any of the other Loan Documents (as hereinafter defined);

(c) Payment by Mortgagor to Mortgagee of all sums expended or advanced byMortgagee pursuant to this Mortgage or any of the other Loan Documents;

(d) Payment of any and all amounts advanced by Mortgagee with respect to theMortgaged Property for the payment of taxes, assessments, insurance premiums or costs incurredin the protection of the Mortgaged Property;

(e) Performance and observance of each covenant and agreement of Mortgagorcontained herein or in any of the other Loan Documents; and

(f) Payment by Mortgagor to Mortgagee of any and all other liabilities andindebtedness of Mortgagor to Mortgagee, direct or contingent, now or hereafter owing byMortgagor to Mortgagee, other than as provided in subparagraphs (a) through (e) above.

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PROVIDED, HOWEVER, that if Mortgagor shall pay or cause to be paid to Mortgageethe principal, interest and all other charges under the Note on or before the date on which theoutstanding principal balance of the Note is due and payable in full in accordance with the termsof the Note, and in the manner stipulated therein and herein, all without deduction or credit fortaxes or other charges paid by Mortgagor, and if Mortgagor shall have kept, performed andobserved all of the covenants and conditions contained in this Mortgage and all of the other LoanDocuments, then this Mortgage shall cease, determine and be void, but otherwise shall remain infull force and effect.

Mortgagor further covenants and agrees as follows:

1. Payment of Indebtedness. Mortgagor shall pay promptly the indebtednessevidenced by the Note at the time and in the manner provided herein and in the Note, and allother sums and charges payable when due by Mortgagor and pursuant to the Note, this Mortgageand any of the other Loan Documents.

2. Tax and Insurance Escrows.

a. Subject to the terms and conditions of subsection 2(d) below, Mortgagor shallpay to Mortgagee, in addition to the monthly payments under the Note and concurrentlytherewith in a single payment monthly until the Note is flilly paid, a sum equal to annual realestate taxes or annual payment in lieu of tax (“PILOT”) payments, general and specialassessments and premiums for insurance required hereunder (all as estimated by Mortgagee) lessall sums previously paid therefor, divided by the number of full calendar months to elapse beforethe date which is one (1) month prior to the date when such taxes and assessments and insurancepremiums will become due. Such sums shall be held by Mortgagee for payment of such taxes orPILOT payments and assessments and insurance premiums as and when due. Mortgagee shallhave the right to commingle and hold such sums with its general funds, and no interest shallaccrue thereon in favor of Mortgagor.

b. Mortgagee shall have the right to make any and all payments notwithstandingthat at that time any such tax or PILOT payments, assessment or premium is then being protestedor contested by Mortgagor, unless Mortgagor shall have notified Mortgagee in writing not lessthan thirty (30) days prior to the due date of such protest or contest of such tax or PILOTpayments, assessment or premium, in which event, Mortgagee shall make such payment underprotest in the manner prescribed by law or shall withhold such payment, but only if (a) suchcontest precludes enforcement of collection and the foreclosure or sale of the MortgagedProperty in satisfaction of such tax or PILOT payments, assessment, or premium; (b) Mortgagorshall first pay to Mortgagee such amount as Mortgagee may request as security for the paymentof the amount withheld; and (c) the withholding of such payment shall not result in any criminalor civil penalty being imposed against Mortgagor, Mortgagee or any of the Mortgaged Property.In the event such protest or contest shall or might result in a penalty or other charges, Mortgagorshall likewise deposit with Mortgagee monthly pro-rata the amount of any such penalty oradditional charge. If, upon receipt by Mortgagee of any refunds of impositions or other chargesrelating to the Mortgaged Property or the indebtedness secured hereby, Mortgagor is not indefault hereunder, then Mortgagee shall promptly pay such refund to Mortgagor; if Mortgagor is

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in default hereunder beyond any applicable grace period, Mortgagee shall have the right to applysuch refund to reduce the indebtedness secured hereby.

c. Without limiting the rights of Mortgagee hereunder, including, withoutlimitation, those provided in Paragraph 18 hereof, in the event of a sale of the Premises or anyother part of the Mortgaged Property, any funds then on deposit with the Mortgagee shall, atMortgagee’s option, and thereupon automatically and without the necessity of further notice orwritten assignment, be transferred to and held thereafter for the account of the new owner, to beapplied in accordance with the foregoing. If the Premises or any other part of the MortgagedProperty is purchased by Mortgagee at foreclosure sale or is otherwise acquired by Mortgageeafter an Event of Default, the remaining balance, if any, of the funds deposited with Mortgageepursuant to subsection 2(a) above shall continue to be applied, subject to the security interesthereunder, first to Mortgagee’s unreimbursed costs and expenses in such purchase or acquisition,then to reduce the indebtedness secured by this Mortgage, and the balance, if any, shall be paidto Mortgagor, subject to the order of the court having jurisdiction in any such proceeding.

d. Mortgagee hereby waives the requirement for deposit by Mortgagor of thesums described in subsection 2(a) above, for so long as (i) there is no default in the obligations ofMortgagor or any other person under this Mortgage or any of the Loan Documents, and no eventwhich, with the giving of notice, passage of time or both, would constitute such a default, and(ii) Mortgagor delivers to Mortgagee, no later than five (5) days prior to the last day for paymentof such sums without penalty or interest, evidence satisfactory to Mortgagee in Mortgagee’s soleand absolute discretion, that all sums described in subsection 2(a) above have been paid in full.Upon failure of either of the foregoing conditions, the waiver set forth in this subsection 2(d)shall immediately and automatically become null and void, without notice from Mortgagee toMortgagor.

3. Protection Against Charges. Except for the Permitted Exceptions, Mortgagorshall keep the Mortgaged Property free from liens of every kind, except only for real estate taxesor PILOT payments and general and special assessments which are not yet due and payable, andspecial taxes, if any, as provided in Paragraph 7 hereof, and shall pay, before delinquency andbefore any penalty for non-payment attaches thereto, all taxes or PILOT payments, assessments,and other governmental or municipal or public dues, charges, fines or impositions which are orhereafter may be levied against the Mortgaged Property or any part thereof. Mortgagor shallpromptly deliver to Mortgagee receipted bills evidencing each such payment, together with anyother evidence of payment required by Mortgagee in its sole and absolute discretion, no laterthan five (5) days prior to the last day upon which such payment can be made without penalty orinterest. Mortgagor shall also pay, in full, under protest or otherwise in the manner provided bylaw, any tax, assessment, charge, fine or imposition described above which Mortgagor contestsin accordance with the provisions of law and this Mortgage.

4. Insurance and Casualty Damage.

a. Mortgagor shall keep, or cause to be kept, all of the following insurancepolicies with respect to the Mortgaged Property in companies, forms, amounts and coveragesatisfactory to Mortgagee, containing waiver of subrogation and standard New York mortgageeendorsements in favor of Mortgagee and providing for thirty (30) days’ written notice to

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Mortgagee in advance of cancellation of said policies for non-payment of premiums or any otherreason or for material modification of said policies, and ten (10) days’ written notice toMortgagee in advance of payment of any insurance claims under said policies to any person:

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i. Insurance against loss or damage by fire and such other hazards,casualties and contingencies (including, without limitation, so-called all risk coverages) asMortgagee reasonably may require, in an amount equal to the greater of(l) the Loan Amount, or(2) the replacement cost of the Mortgaged Property, with a replacement cost endorsement and insuch amounts so as to avoid the operation of any coinsurance clause, for such periods andotherwise as Mortgagee reasonably may require from time to time. Prior to completion of theImprovements, casualty or hazard insurance shall be in the form of a “builder’s risk completedvalue non-reporting form” insurance policy.

ii. Commercial general liability insurance, including, withoutlimitation, so-called assumed and contractual liability coverage and claims for bodily injury,death or property damage, naming Mortgagee as an additional insured, in such amounts asMortgagee reasonably may from time to time require.

iii. Following completion of any Improvements, insurance againstbusiness interruption, rent loss or abatement of rent, covering payment of rent and like chargesfrom the Mortgaged Property over a term of not less than twelve (12) months, in an amount atleast equal to the aggregate annual amount payable from time to time under the Note.

iv. if the Mortgaged Property is located in a flood hazard zone asdesignated pursuant to the Flood Disaster Protection Act of 1973, the Mortgagor will maintainflood insurance for the Loan Amount or the maximum amount of flood insurance satisfactory toMortgagee.

Mortgagor shall deliver renewal certificates of all insurance required above, together withwritten evidence of full payment of the annual premiums therefor at least thirty (30) days prior tothe expiration of the existing insurance. Any such insurance may be provided under so-called“blanket” policies, so long as the amounts and coverages thereunder will, in Mortgagee’s solejudgment, provide protection equivalent to that provided under a single policy meeting therequirements hereinabove. All policies of insurance shall be issued by financially sound andgenerally recognized insurer lawfully doing business in New York and acceptable to Mortgageehaving an A.M. Best Company rating of A-VIII or better. If at any time, Mortgagee is not inreceipt of written evidence that all insurance required hereunder is in full force and effect,Mortgagee shall have the right with reasonable notice to Mortgagor to take such action asMortgagee deems necessary to protect its interest in the Mortgaged Property, including withoutlimitation, the obtaining of such insurance coverage as Mortgagee in Mortgagee’s sole discretiondeems appropriate, and all expenses incurred by Mortgagee in connection with such action or inobtaining such insurance and keeping it in effect shall be paid by Mortgagor to Mortgagee upondemand.

b. Notice. In case of any damage or destruction of the Mortgaged Property, orany part thereof, or any interest therein or right accruing thereto, Mortgagor shall promptly giveto Mortgagee written notice generally describing the nature and extent of such damage ordestruction which has resulted or which may result therefrom. Mortgagee may appear in anysuch proceedings and negotiations and Mortgagor shall promptly deliver to Mortgagee copies ofall notices and pleadings in any such proceedings. Mortgagor will in good faith, file andprosecute all claims necessary for any award or payment resulting from such damage ordestruction. All costs and expenses incurred by Mortgagee in exercising its rights under thissection shall constitute indebtedness secured by this Mortgage.

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c. Application of Insurance Proceeds. Upon occurrence of any loss or damage toall or any portion of the Mortgaged Property resulting from fire, vandalism, malicious mischiefor any other casualty or physical harm (a “Casualty”), Mortgagee may elect subject to theprovisions set forth below to collect, retain and apply as a Loan prepayment all proceeds (the“Proceeds”) of any insurance policies collected or claimed as a result of such Casualty afterdeduction of all expenses of collection and settlement, including attorney’s and adjusters’ feesand charges. Mortgagor hereby authorizes Mortgagee, at Mortgagee’s option, to collect, adjustand compromise any losses under any insurance with respect to the Mortgaged Property which iskept, or caused to be kept, by Mortgagor, and hereby irrevocably appoints Mortgagee as itsattorney-in-fact, coupled with an interest, for such purposes. Any Proceeds remaining afterpayment in full of the Loan and all other sums due Mortgagee hereunder shall be paid byMortgagee to Mortgagor without any allowance for interest thereon.

If the Mortgagee shall receive and retain insurance proceeds, the lien of this Mortgageshall be reduced only by the amount thereof received and retained by Mortgagee and actuallyapplied by Mortgagee in reduction of the Loan. The provisions of subsection 4 of section 254 ofthe Real Property Law of New York covering the insurance of buildings against loss by fire shallnot apply to this Mortgage.

5. Maintenance of Improvements.

a. Except as permitted under the Building Loan Agreement, none of theImprovements shall be structurally or otherwise materially altered, removed or demolished, norshall any fixtures or any portion of the Collateral on, in or about the Premises be severed,removed, sold, mortgaged or otherwise encumbered, without the prior written consent ofMortgagee in each case; except, however, that Mortgagor shall have the right, without suchconsent, to remove and dispose of, free from the lien of this Mortgage such Collateral as fromtime to time may become worn out or obsolete, provided that simultaneously with or prior tosuch removal, such Collateral shall be replaced with other new Collateral of like kind andquality, and by such removal, the Mortgagor shall be deemed to have subjected the replacementCollateral to the lien of this Mortgage. Any Improvements or any of the Collateral which aredemolished or destroyed in whole or in part shall be replaced promptly by similar Improvementsand articles of personal property of comparable quality, condition and value as those demolishedor destroyed, thereupon becoming part of the Mortgaged Property free from any other lien orsecurity interest or encumbrance on or reservation of title to such property. Mortgagor shall notpermit, commit or suffer any waste, impairment or deterioration of the Mortgaged Property orany part thereof and shall keep and maintain (or cause to be kept and maintained) the same ingood repair and condition. Mortgagor shall make (or cause to be made) all necessary and properrepairs and replacements so that all components of the Mortgaged Property will, at all times, bein good condition, fit and proper for the respective purposes for which they were erected orinstalled, other than for matters of health and safety prior to the demolition thereof.

b. Mortgagor hereby grants to Mortgagee and its agents the right in theirreasonable discretion, but Mortgagee shall have no obligation, to enter upon the Premises at anytime for the purpose of inspecting and appraising the Mortgaged Property and conducting testsand surveys thereof. In the event that Mortgagor shall fail fully to comply with any of therequirements of this Paragraph 5, without prejudice to any other right or remedy that may be

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available to Mortgagee in such event, Mortgagee shall have the right to recover, as damages forsuch failure, an amount equivalent to the cost required to restore the Mortgaged Property to thecondition hereby required.

c. Mortgagor hereby covenants and agrees to comply with, and to cause alloccupants of all or any portion of the Mortgaged Property to comply with, all applicable zoning,building, use and environmental restrictions and all laws, rules, statutes, ordinances, regulations,orders and requirements, including, without limitation, environmental matters and notices ofviolation of all governmental authorities having jurisdiction over the Mortgaged Property or themaintenance, use and operation thereof, and all applicable restrictions, agreements andrequirements, whether or not of record (collectively, “Laws”). Mortgagor will deliver toMortgagee within ten (10) days after receipt thereof any additional permits or renewals, issuedand approved or disapproved with respect to the Mortgaged Property. Mortgagor herebyindemnifies Mortgagee and its officers, directors, shareholders, employees, agents and partnersand their respective heirs, successors and assigns (collectively, “Indemnified Parties”) and agreesto defend and hold the Indemnified Parties harmless from and against any and all claims,demands, loss, cost, damage, liability or expense incurred or suffered by the Indemnified Partiesarising from any failure of the Mortgaged Property to comply with Laws, or from any failure ofMortgagor to obtain, maintain or renew, or to have obtained, maintained or renewed, any permitor approval required with respect to the Mortgaged Property. The foregoing indemnification andagreement shall survive the release of this Mortgage and the payment or other satisfaction of theindebtedness secured hereby.

Upon any default by the Mortgagor in satisfying its obligations under this paragraph 5after thirty (30) days notice from Mortgagee, Mortgagee at its option may put the MortgagedProperty into reasonable condition and repair, and all sums paid by Mortgagee for such purposesshall, together with interest thereon, be added to the amount secured hereunder and be payableon demand. Mortgagor will not, without obtaining the prior written consent of the Mortgagee,initiate, join in or consent to any private restrictive covenant, zoning ordinance, or other public orprivate restrictions, limiting or defining the uses that may be made of the Mortgaged Property orany part thereof.

6. Hazardous Materials and Wetlands.

a. Without limiting the generality of any provision herein or in any of the LoanDocuments, Mortgagor hereby represents and warrants to Mortgagee that, [except as may bedisclosed in the Environmental Report of

____________________

dated

________________(the

“Environmental Report”),I neither Mortgagor nor, to the best knowledge and belief ofMortgagor, any previous owner or user of the Premises or any adjacent properties, has used,generated, stored or disposed of in, on, under, around or above the Premises, any RegulatedMaterial (defined herein as flammable explosives, radioactive materials, solid waste, hazardoussubstances, hazardous waste, hazardous materials, asbestos containing materials, petroleum orany fraction thereof, pollutants, irritants, contaminants, toxic substances, or any other materialsrespectively defined as such in, or regulated by, any applicable Environmental Law(ashereinafter defined)), that, to the best knowledge and belief of Mortgagor, or any of them, thePremises is not currently in violation of any Environmental Law (defined herein as any federal,state or local law, regulation or ordinance, as each may be validly interpreted and applied by the

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appropriate governmental entity, governing any Regulated Material for the protection of humanhealth, safety or the environment, including but not limited to the Comprehensive EnvironmentalResponse, Compensation and Liability Act of 1980, as amended by the Superfund Amendmentsand Reauthorization Act of 1986 and the Emergency Planning and Community Right-to-KnowAct of 1986, the Resource Conservation and Recovery Act, the Toxic Substances Control Act,the Clean Air Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act and theOil Pollution Act of 1990. Mortgagor shall keep and maintain, and shall cause all tenants andany other persons present on or occupying the Premises (“Tenants”), employees, agents,contractors and subcontractors of Mortgagor and Tenants, to keep and maintain the Premises,including, without limitation, the soil and ground water thereof, in compliance with, and notcause or knowingly permit the Premises, including the soil and ground water thereof, to be inviolation of any federal, state or local laws, ordinances or regulations relating to industrialhygiene or to the environmental conditions thereon (including but not limited to anyEnvironmental Law). Neither Mortgagor nor Tenants nor any employees, agents, contractorsand subcontractors of Mortgagor or Tenants or any other persons occupying or present on thePremises shall (i) use, generate, manufacture, store or dispose of in violation of EnvironmentalLaw on, under or about the Premises or transport to or from the Premises any RegulatedMaterial, except as such may be required to be used, stored, or transported in connection with thepermitted uses of the Premises and then only to the extent permitted by law after obtaining allnecessary permits and licenses therefor; or (ii) perform, cause to be performed or permit any fillactivities or other acts which would in any way destroy, eliminate, alter, obstruct, interfere with,or otherwise affect any Wetlands, as defined in 33 C.F.R. Section 328.3 and in any comparablestate and local law, statute, ordinances, rule or regulation (“Wetlands”), in violation of anyfederal, state or local laws, statutes, ordinances, rules or regulations pertaining to such Wetlands(“Wetlands Law”).

Mortgagor further represents and warrants to Mortgagee that, to the best of its knowledge(except as may be disclosed in the Environmental Report]:

i. Underground storage tanks are not and have not been located onthe Premises.

ii. All permits required under any applicable Environmental Lawapplicable to the Premises have been obtained and are in full force and effect.

iii. No event has occurred with respect to the Premises which, with thepassage of time or the giving of notice, or both, would constitute a violation of any applicableEnvironmental Law or non-compliance with any Environmental Permit.

iv. There are no agreements, consent orders, decrees, judgments,license or permit conditions or other orders or directives of any federal, state or local court,governmental agency or authority relating to the past, present or future ownership, use,operation, sale, transfer or conveyance of the Premises which require any change in the presentcondition of the Premises or any work, repairs, construction, containment, clean up,investigations, studies, removal or other remedial action or capital expenditures with respect tothe Premises.

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v. There are no actions, suits, claims or proceedings, pending orthreatened, which could cause the incurrence of expenses or costs of any name or description orwhich seek money damages, injunctive relief, remedial action or any other remedy that arise outof, relate to or result from (i) a violation or alleged violation of any applicable EnvironmentalLaw or non-compliance or alleged non-compliance with any Environmental Permit, (ii) thepresence of any Regulated Material or a Release or the threat of a Release of any RegulatedMaterial on, at or from the Premises or any property adjacent to or within the immediate vicinityof the Premises or (iii) human exposure to any Regulated Material, noises, vibrations ornuisances of whatever kind to the extent the same arise from the condition of the Premises or theownership, use, operation, sale, transfer or conveyance thereof.

b. Mortgagor shall immediately advise Mortgagee in writing of: (i) any notices(whether such notices are received from the Environmental Protection Agency, or any otherfederal, state or local governmental agency or regional office thereof) of violation or potentialviolation which are received by Mortgagor of any applicable federal, state or local laws,ordinances, or regulations relating to any Environmental Law or any Wetlands Law; (ii) any andall enforcement, cleanup, removal or other governmental or regulatory actions instituted,completed or threatened pursuant to any Environmental Law or Wetlands Law; (iii) all claimsmade or threatened by any third party against Mortgagor or the Premises relating to damage,contribution, cost recovery compensation, loss or injury resulting from any Environmental Lawor Wetlands Law (the matters set forth in clauses (i), (ii) and (iii) above are hereinafter referredto as “Environmental or Wetlands Claims”); and (iv) discovery by Mortgagor of any occurrenceor condition on any real property adjoining or in the vicinity of the Premises that could cause thePremises or any part thereof to be classified as in violation of any Environmental Law orWetlands Law or any regulation adopted in accordance therewith, or to be otherwise subject toany restrictions on the ownership, occupancy, transferability or use of the Premises under anyEnvironmental Law or Wetlands Law.

c. Mortgagee shall have the right but not the obligation to join and participate in,as a party if it so elects, any legal proceedings or actions initiated in connection with anyEnvironmental or Wetlands Claims, and to have its reasonable attorneys’ and consultants’ fees inconnection therewith paid by Mortgagor upon demand.

d. Mortgagor shall be solely responsible for, and each hereby jointly andseverally indemnifies and agrees to defend and hold harmless Mortgagee, its directors, officers,employees, agents, successors and assigns and any other person or entity claiming by, through,or under Mortgagee, from and against, any loss, damage, cost, expense or liability directly orindirectly arising out of or attributable to the use, generation, storage, release, threatened release,discharge, disposal, or presence (whether prior to or during the term of the loan secured by thisMortgage) of Regulated Materials on, under or about the Premises (whether by Mortgagor or apredecessor in title or any Tenants, employees, agents, contractors or subcontractors ofMortgagor or any predecessor in title or any third persons at any time occupying or present onthe Premises), including, without limitation: (i) all foreseeable consequential damages; (ii) thecost of any required or necessary repair, cleanup or detoxification of the Premises, including thesoil and ground water thereof, and the preparation and implementation of any closure, remedialor other required plans; (iii) damage to any Wetlands or natural resources; and (iv) all reasonablecosts and expenses incurred by Mortgagee in connection with clauses (i), (ii), and (iii), including

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but not limited to reasonable attorneys’ and consultants’ fees; provided, however, that nothingcontained in this paragraph shall be deemed to create or give any rights to any person other thanMortgagee and its successors and assigns, it being intended that there shall be no third partybeneficiary of such provisions, or preclude Mortgagor from seeking indemnification from, orotherwise proceeding against, any third party including, without limitation, any tenant orpredecessor entitled to the Premises.

e. Any costs or expenses reasonably incurred by Mortgagee for whichMortgagor is responsible or for which Mortgagor has indemnified Mortgagee shall be paid toMortgagee on demand, and failing prompt reimbursement, shall earn interest at the default rateof interest set forth in the Loan Documents (the “Default Rate”).

f. Mortgagor shall take any and all remedial action in response to the presenceof any Regulated Materials or Wetlands on, under, or about the Premises, required pursuant toany settlement agreement, consent decree or other governmental proceeding; furthermore,Mortgagor shall take such additional steps as may be necessary to preserve the value ofMortgagee’s security under the Loan Documents.

g. Upon Mortgagee’s request, Mortgagor shall retain, at Mortgagor’s sole costand expense, a licensed geologist, industrial hygienist or an environmental consultant (referred tohereinafter as the “Consultant”) acceptable to Mortgagee to conduct a baseline investigation ofthe Premises for the presence of Regulated Materials or Wetlands (“Environmental Audit”). TheEnvironmental Audit shall be performed in a manner reasonably calculated to discover thepresence of Regulated Materials contamination or Wetlands; provided, however, suchinvestigation shall be of a scope and intensity no greater than a baseline investigation conductedin accordance with the general standards of persons providing such services taking intoconsideration the known uses of the Premises and Premises in the vicinity of the Premises andany factors unique to the Premises. The Consultant shall concurrently deliver the results of itsinvestigation in writing directly to Mortgagor and Mortgagee. Such results shall be keptconfidential by both Mortgagor and Mortgagee unless legally compelled or required to disclosesuch results or disclosure is reasonably required in order to pursue rights or remedies providedherein or at law.

h. If Mortgagor fails to pay for or obtain an Environmental Audit as provided forherein, Mortgagee may, but shall not be obligated to, obtain the Environmental Audit,whereupon Mortgagor shall immediately reimburse Mortgagee all its costs and expenses in sodoing, together with interest on such sums at the Default Rate.

i. Mortgagor covenants to reasonably cooperate with the Consultant and toallow entry and reasonable access to all portions of the Premises for the purpose of Consultant’sinvestigation. Mortgagor covenants to comply, at its sole cost and expense, with allrecommendations contained in the Environmental Audit reasonably required to bring thePremises into compliance with all Environmental Laws and Wetlands Laws, including anyrecommendation for additional testing and studies to detect the quantity and types of RegulatedMaterials or Wetlands present, if Mortgagee requires the implementation of the same.

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7. Changes in Tax Laws. If at any time any governmental authority, whetherfederal, state or municipal, or any agency or subdivision of any of them, shall require InternalRevenue or other documentary stamps on the Note, this Mortgage or any of the other LoanDocuments, or upon the passage of any law of the State of New York deducting from the valueof land for the purposes of real estate taxation the amount of any lien thereon, or changing in anyway the laws for the taxation of mortgages or debts secured by mortgages for federal, state orlocal purposes, or the manner of the collection of any such taxes so as to impose, in any suchevent, a tax (other than an income tax) upon or otherwise to substantially and adversely affect thevalue of this Mortgage, then all indebtedness secured hereby shall become due and payable at theelection of Mortgagee thirty (30) days after the mailing of notice of such election to Mortgagor;provided, however, this Mortgage, the Note and the other Loan Documents shall be and remainin effect if Mortgagor lawfully may pay, and does in fact pay, when payable, for such stamps andtaxes, including interest and penalties thereon, to or for Mortgagee. Mortgagor further agrees todeliver to Mortgagee, at any time, upon demand, such evidence as may be required by anygovernment agency having jurisdiction in order to determine whether the obligation securedhereby is subject to or exempt from any such tax.

8. Indemnification for Costs. Mortgagor hereby indemnifies Mortgagee and agreesto defend and hold Mortgagee harmless from and against all costs, liabilities and expenses,including but not limited to attorneys’ fees and expenses to the fullest extent not then prohibitedby applicable law, and costs of any Environmental Audit, title search, continuation of abstractand preparation of survey, incurred by reason of any action, suit, proceeding, hearing, motion orapplication before any court or administrative body, including an action to foreclose or to collectany indebtedness or obligation secured hereby, or incurred in connection with any extra-judicialcollection procedure, in and to which Mortgagee may be or become a party by reason hereof,including, without limitation, any Taking, bankruptcy, probate and administration proceedings,as well as any other proceeding wherein proof of claims required to be filed by law or in which itbecomes necessary to defend or uphold the terms of and the lien created by this Mortgage.

9. Taking.

a. In the event all or any part of the Mortgaged Property shall be damaged ortaken as a result of a Taking, either temporarily or permanently, Mortgagor shall assign, transferand set over unto Mortgagee the Taking Proceeds or any claim for damages for any of thePremises taken or damaged under the power of eminent domain, and agrees that in the event thewhole or any part of the Premises is taken by eminent domain proceedings, then all sumsawarded as damages for the Taking shall be applied in reduction of the indebtedness secured bythis Mortgage, but without imposition of the prepayment premium to such application. Any andall costs and expenses, including, without limitation, reasonable attorneys’ fees and expenses tothe fullest extent not then prohibited by applicable law, incurred by Mortgagee by reason of anycondemnation, threatened condemnation or proceedings thereunder shall be secured hereby andMortgagor shall reimburse Mortgagee therefor immediately, or Mortgagee shall have the right, atits option, to deduct such costs and expenses from any Taking Proceeds paid to Mortgageehereunder. In the event that the Premises is wholly condemned, Mortgagee shall receive fromMortgagor and/or from the Taking Proceeds payment of the entire amount of the indebtednesssecured by this Mortgage.

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b. Subject to paragraph (a) of this Section, Mortgagor will immediately notifyMortgagee of the actual or threatened commencement of any Taking proceedings affecting all orany part of the Premises, including any easement therein or appurtenance thereof, includingseverance and consequential damage and change in grade of streets, and will deliver toMortgagee copies of any and all papers served in connection with any such proceedings.Mortgagor further covenants and agrees to make, execute and deliver to Mortgagee, from time totime upon request, free, clear and discharged of any encumbrances of any kind whatsoever, anyand all further assignments or other instruments deemed necessary by Mortgagee for the purposeof validly and sufficiently assigning the Taking Proceeds and all other awards and compensationheretofore and hereafter to be made to Mortgagor, including the assignment of any award fromthe United States Government at any time after the allowance of the claim therefor, theascertainment of the amount thereof and the issuance of the warrant for payment thereof, for anyTaking, either permanent or temporary, under any such proceedings. In the event of a Taking,Mortgagee shall not be limited to the rate of interest paid on the award by the condemningauthority but shall be entitled to receive out of the Taking Proceeds interest on the entire unpaidprincipal sum under the Note and the other Loan Documents at the applicable rate(s) providedtherein. Mortgagor hereby assigns to Mortgagee so much of the balance of the Taking Proceedspayable by the condemning authority as is required to pay such interest.

c. Subject to paragraph (a) of this Section, Mortgagor hereby irrevocablyauthorizes and appoints Mortgagee its attorney-in-fact, coupled with an interest, to collect andreceive any such Taking Proceeds from the authorities making the same, to appear in anyproceeding therefor, to give receipts and acquittances therefor, and to apply the same to paymenton account of the indebtedness secured hereby whether then matured or not. Mortgagor shallexecute and deliver to Mortgagee on demand such assignments and other instruments asMortgagee may require for such purposes.

10. Estoppel Certificate. Within ten (10) days after request by Mortgagee, Mortgagorshall furnish to Mortgagee a written statement, duly acknowledged, of the aggregate amount ofindebtedness secured by this Mortgage, confirming (to the extent true) that no right of offsetexists under the Loan Documents or otherwise, and stating either that no defenses exist againstthe indebtedness secured hereby, or, if such defenses are alleged to exist, the nature thereof andany other information which Mortgagee may reasonably request.

11. Title Warranty; Title Evidence. Mortgagor hereby confirms the warranties andrepresentations as to title to the Mortgaged Property made in the granting clause of thisMortgage, and agrees to pay the costs of title evidence satisfactory to Mortgagee showing title tothe Mortgaged Property to be as herein warranted. In the event of any subsequent change in titleto the Mortgaged Property, other than a change expressly permitted by the Loan Documents,Mortgagor agrees to pay the cost of (i) an extension or endorsement to such title evidenceshowing such change in title, and (ii) changing any and all insurance and other records inconnection with the servicing of the loan secured hereby made necessary by such change in title.

12. Mortgagee’s Reliance. Mortgagee, in advancing any payment relating to taxes,assessments and other governmental or municipal charges, fines, impositions or liens assertedagainst the Mortgaged Property, shall have the right to do so according to any bill, statement orestimate procured from the appropriate public office without inquiry into the accuracy or validity

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thereof. Mortgagee shall have the right to make any such payment whenever Mortgagee, in itssole discretion, shall deem such payment to be necessary or desirable to protect the securityintended to be created by this Mortgage. In connection with any such advance, Mortgagee, at itsoption, shall have the right to and is hereby authorized to obtain, at Mortgagor’s sole cost andexpense, a continuation report of title prepared by a title insurance company of Mortgagor’schoice.

13. Default. Each of the following events shall be deemed to be an “Event ofDefault” hereunder:

a. Mortgagor shall fail to make payment of any sum of money due and payableunder this Mortgage within thirty (30) days after the date such payment is due as hereinprovided, or of the indebtedness evidenced by the Note, or any sum of money due and payableunder any of the other Loan Documents on the date when the same is due and payable or withinany applicable grace period; or

b. Mortgagor or any guarantor shall file a voluntary petition in bankruptcy orunder any bankruptcy act or similar law, state or federal, whether now or hereafter existing, ormake an assignment for the benefit of creditors or file an answer admitting insolvency orinability to pay its or their debts generally as they become due, or shall fail to obtain a vacationor stay of any such proceedings which are involuntary within sixty (60) days after the institutionof such proceedings, as hereinafter provided; or

c. Any plan of liquidation or reorganization is filed by or on behalf of Mortgagoror any guarantor or either in any bankruptcy, insolvency or other judicial proceeding, or a trusteeor a receiver shall be appointed for the Mortgaged Property in any involuntary proceeding andsuch trustee or receiver shall not be discharged or such jurisdiction relinquished, vacated orstayed on appeal or otherwise within sixty (60) days after the appointment thereof, or

d. Failure of Mortgagor to commence, diligently pursue and/or complete actionsas and when provided in Paragraphs 5 or 6 above; or

e. Any sale or transfer of the Mortgaged Property in violation of Paragraph 21 ofthis Mortgage; or

f. The occurrence of an involuntary transfer under subsection 29(d) of thisMortgage; or

g. Any violation of the representations and warranties, or the filing of formalcharges or commencement of proceedings as contemplated by Paragraph 34 of this Mortgage; or

h. Default shall be made in the due observance or performance of any of theother covenants, agreements or conditions required to be kept, performed or observed byMortgagor under this Mortgage, and such default is not cured within thirty (30) days after writtennotice thereof has been delivered to Mortgagor by Mortgagee; provided, however if such defaultcannot reasonably be cured within the thirty (30) day period, and Mortgagor promptlycommences such cure within the thirty (30) day period, then within such additional period duringwhich Mortgagor diligently pursues and prosecutes such cure to completion and so long as thevalue of the Mortgaged Property is not impaired; or

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i. Default shall be made in the due observance or performance of any of thecovenants, agreements or conditions required to be kept, performed or observed by Mortgagor orany other party under the Note, or any of the other Loan Documents, and such default is notcured within the applicable grace period, if any, expressly provided for therein;

j. If Mortgagor or any guarantor of the indebtedness hereby secured, for anyreason ceases to exist, or the death of Mortgagor or any guarantor; or

k. If any judgment is entered against Mortgagor or any guarantor, the payment ofwhich is not fully covered by insurance, and such judgment is not bonded or satisfied of recordwithin thirty (30) days;

then and upon any such Event of Default, the entire amount of the indebtedness hereby secured,shall, at the option of Mortgagee (except with respect to Events of Default under Subsections 13(b) and (e) above in which case the indebtedness shall automatically) become immediately dueand payable, without execution or other process and without further notice or demand, all ofwhich are hereby expressly waived. Thereafter, the indebtedness hereby secured shall, at theoption of Mortgagee, bear interest at the Default Rate (as defined in the Note), payable ondemand. Acceleration of maturity, once claimed hereunder by Mortgagee, may, at the option ofMortgagee, be rescinded by written acknowledgment to that effect by Mortgagee, but the tenderand acceptance of partial payments alone shall not in any way affect or rescind such accelerationof maturity, nor extend or affect the grace period, if any.

14. Rights and Remedies Upon Default: Upon the occurrence of any Event ofDefault hereunder, the Mortgagee may, at its option, exercise any one or more of the followingrights and remedies:

a. Right to Take Possession of Mortgaged Property. The Mortgagor agrees tosurrender possession of the Mortgaged Property to the Mortgagee upon demand, and theMortgagee shall thereupon have the right to enter and take possession of the MortgagedProperty, to lease the Premises, the Improvements, the Collateral, or any part thereof, to collectall Rents, rental insurance proceeds and business interruption insurance proceeds and to applythe same on account of the Debt, whether then matured or not, after payment of all proper costs,charges and expenses, including, but not limited to, (1) Taxes and other impositions, (2) anypremiums for fire, public liability and other insurance coverage affecting the Premises, theImprovements, the Collateral or any part thereof and (3) any and all other costs, charges andexpenses which it may be necessary or advisable for the Mortgagee to pay in the management,operation and maintenance of the Premises, the Improvements, the Collateral or any part thereof,including, but not limited to, the cost of making repairs, alterations, and tenant improvements,commissions for renting the Premises, the Improvements, the Collateral, or any part thereof andlegal expenses incurred in enforcing claims, preparing papers or any other services that may berequired, or otherwise as a court of competent jurisdiction may direct. After taking possession ofthe Mortgaged Property, the Mortgagee may dispossess, by summary proceedings or otherwise,any tenants, subtenants or occupants of the Land, the Improvements or any part thereof then orthereafter in default in the payment of any Rent, and the Mortgagor hereby irrevocably appointsthe Mortgagee as the Mortgagee’s agent and attorney-in-fact (which agency shall be deemed tobe coupled with an interest), with full power of substitution, for such purpose. In the event that

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the Mortgagor is then an occupant of the Premises, the Improvements or any part thereof,Mortgagor agrees to surrender possession thereof to the Mortgagee upon demand, and if theMortgagor remains in possession thereof after such demand, such possession shall be as tenant ofthe Mortgagee, and the Mortgagor agrees to pay monthly in advance to the Mortgagee such rentfor the Premises, the Improvements or any part thereof so occupied as the Mortgagee mayreasonably demand, and in default of so doing, the Mortgagor may also be dispossessed bysummary proceedings or otherwise.

b. Right to Foreclose Mortgage. The Mortgagee may foreclose this Mortgageand sell, if permitted by law, or petition to be sold, the Premises in one parcel or in such parcels,manner or order as a court of competent jurisdiction may direct. If permitted by law, Mortgageemay foreclose this Mortgage for any portion of the Indebtedness hereby secured or any othersums secured hereby which are then due and payable, subject to the continuing lien of thisMortgage for the balance of the indebtedness hereby secured not then due. If any real propertytransfer tax or real property transfer gains tax shall be due and payable upon the conveyance ofthe Premises pursuant to a judicial sale in any action, suit or proceeding brought to foreclose thisMortgage or by deed in lieu of foreclosure, the Mortgagor will pay or cause the same to be paid.In the event that the Mortgagor fails to pay any such tax within twenty (20) days after notice anddemand for payment is given by the Mortgagee, the Mortgagee is hereby authorized to pay thesame, and any amount thereof so paid by the Mortgagee, together with all costs and expensesincurred by the Mortgagee in connection with such payment, including, but not limited to,reasonable attorneys’ fees and disbursements, and interest on all such amounts, costs andexpenses at the Default Interest Rate (as defined in the Note) shall be paid by the Mortgagor tothe Mortgagee on demand. Until paid by the Mortgagor, all such amounts, costs and expenses,together with interest thereon, shall be secured by this Mortgage and may be added to thejudgment in any suit brought by the Mortgagee against the Mortgagor hereon.

c. Mortgagee’s Right to Non-Judicial Foreclosure. Upon the occurrence of anEvent of Default under this Mortgage, the Note, bond, or other obligation secured hereby,Mortgagee shall have the right to sell the Mortgaged Property. In particular and withoutlimitation, Mortgagee shall have all of the rights and remedies provided by Article 14 of the RealProperty Actions and Proceedings Law of the State of New York.

d. Right to Appointment of Receiver. In any action to foreclose this Mortgage,the Mortgagee shall be entitled, without notice, without regard to the adequacy of any securityfor the indebtedness secured hereby and without regard to the solvency of any person, firm orcorporation who is or may become liable for the payment of all or any part of the indebtednesssecured hereby, to have a receiver appointed with all the rights and powers permitted under thelaws of the State of New York. In addition, the receiver shall be entitled to take any and allaction necessary or deemed advisable to lease the Mortgaged Property, including, withoutlimitation, making reasonable improvements or tenant improvements and adding the cost ofsame to the Indebtedness secured hereby. In the event that a receiver of the Mortgaged Propertyis appointed hereunder, such receiver shall also have and may enforce all of the rights andremedies of the Mortgagee under subparagraph (a) hereof.

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e. Additional Rights and Remedies. The rights and remedies of the Mortgageehereunder shall be in addition to Mortgagee’s rights and remedies under the laws of the State ofNew York, including without limitation Mortgagee’s rights and remedies under Section 254 ofthe New York Real Property Law. Nothing contained in this Mortgage shall be construed asrequiring the Mortgagee to pursue any particular right or remedy for the purpose of procuring thesatisfaction of the obligations and indebtedness secured hereby, and the Mortgagee may exerciseany or all of Mortgagee’s rights and remedies under this Mortgage, the instruments evidencingthe indebtedness, or otherwise provided by law, in Mortgagee’s sole discretion. No failure of theMortgagee to insist upon strict performance by the Mortgagor of any of Mortgagor’s covenantsor obligations under this Mortgage, the Note, the Loan Documents, and no delay by theMortgagee in exercising any of Mortgagee’s rights or remedies hereunder, thereunder orotherwise provided by law, shall be deemed to be a waiver of such covenants or obligations or topreclude the exercise of such rights or remedies, and the Mortgagee, notwithstanding any suchfailure or delay, shall have the right thereafter to insist upon the strict performance by theMortgagor of any and all of its covenants and obligations under this Mortgage and theinstruments evidencing the indebtedness hereby secured, and to exercise any and all of its rightsand remedies hereunder, thereunder or otherwise provided by law.

15. Right to Cure Defaults/Costs of Collection. If an Event of Default occurs, theMortgagee may, at its discretion, remedy the same and for such purpose shall have the right toenter upon the Mortgaged Property or any portion thereof without thereby becoming liable toMortgagor, any tenant or any other person in possession thereof holding under Mortgagor. IfMortgagee shall remedy such a default or appear in, defend, or bring any action or proceeding toprotect Mortgagee’s interest in the Mortgaged Property or to foreclose this Mortgage or collectthe indebtedness hereby secured, or take any other action of any kind to protect its interest in theMortgaged Property or collect the indebtedness hereby secured (including without limitationtaking possession, monitoring, appointing a receiver, or collecting rents), the costs and expensesthereof (including reasonable attorneys’ fees to the extent permitted by law), with interest asprovided in this Section 15, shall be paid by Mortgagor to Mortgagee upon demand. All suchcosts and expenses incurred by Mortgagee in remedying such default or in appearing in,defending, or bringing any such action or proceeding, or in taking any other action shall be paidby Mortgagor to Mortgagee upon demand, with interest at the Default Interest Rate for the periodafter notice from Mortgagee that such costs or expenses were incurred to the date of payment toMortgagee. All such costs and expenses incurred by Mortgagee pursuant to the terms of thisMortgage, with interest, shall be secured by this Mortgage.

16. Late Payment Charge. If any portion of the indebtedness hereby secured is notpaid within fourteen (14) days after the date on which it is due, Mortgagor shall pay toMortgagee upon demand a late payment charge equal to the greater of $35.00 or five percent(5%) of such unpaid portion of the indebtedness hereby secured to defray the expense incurredby Mortgagee in handling and processing such delinquent payment, and such amount shall besecured by this Mortgage.

17. Non-Waiver. The failure of Mortgagee to insist upon strict performance of anyterm of this Mortgage shall not be deemed to be a waiver of any term of this Mortgage.Mortgagor shall not be relieved of Mortgagor’s obligation to pay the indebtedness herebysecured at the time and in the manner required by reason of (a) failure of Mortgagee to comply

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with any request of Mortgagor to take any action to foreclose this Mortgage or otherwise enforceany of the provisions hereof or of the Note, this Mortgage or any other Loan Documents, (b) therelease, regardless of consideration, of the whole or any part of the Mortgaged Property or anyother security for the indebtedness hereby secured, or (c) any agreement or stipulation betweenMortgagee and any subsequent owner or owners of the Mortgaged Property or other personextending the time of payment or otherwise modifying or supplementing the Note, this Mortgageor any other Loan Documents, without first having obtained the consent of Mortgagor; and in thelatter event, Mortgagor shall continue to be obligated to pay the indebtedness hereby secured atthe time and in the manner provided in the Note, this Mortgage or any other Loan Documents, asso extended, modified and supplemented, unless expressly released and discharged byMortgagee. Regardless of consideration, and without the necessity for any notice to or consentby the holder of any subordinate lien, encumbrance, right, title or interest in or to the MortgagedProperty, Mortgagee may release any person at any time liable for the payment of theindebtedness hereby secured or any portion thereof or any part of the security held for theindebtedness hereby secured and may extend the time of payment or otherwise modify the termsof any instrument evidencing the indebtedness hereby secured and/or this Mortgage, including,without limitation, a modification of the interest rate payable on the principal balance on theNote without in any manner impairing or affecting this Mortgage or the lien thereof or thepriority of this Mortgage, as so extended and modified, as security for the indebtedness herebysecured over any such subordinate lien, encumbrance, right, title or interest. Mortgagee mayresort for the payment of the indebtedness hereby secured to any of the other Loan Documents insuch order and manner as Mortgagee, in its discretion, may elect. Mortgagor’s obligations shallnot be impaired or altered by the taking of any other or additional security for or guarantee of theindebtedness hereby secured or any part thereof, or by the failure to hold, protect, or realize uponany other additional security or guarantee, or by the release of same. Mortgagee may take actionto recover the indebtedness hereby secured, or any portion thereof, or to enforce any covenanthereof without prejudice to the right of Mortgagee thereafter to foreclose this Mortgage.Mortgagee shall not be limited exclusively to the rights and remedies herein stated but shall beentitled to every additional right and remedy now or hereafter afforded by law. The rights ofMortgagee under this Mortgage shall be separate, distinct and cumulative and none shall begiven effect to the exclusion of the others. No act of Mortgagee shall be construed as an electionto proceed under any one provision herein to the exclusion of any other provision.

18. Waiver. Mortgagor shall not, and anyone claiming through or under Mortgagorshall not, set up, claim or seek to take advantage of any appraisement, valuation, stay, extensionor redemption laws now or hereafter in force, in order to prevent or hinder the enforcement orforeclosure of this Mortgage, or the final and absolute sale of the Mortgaged Property, or thefinal and absolute placing into possession thereof, immediately after such sale, of the purchaseror purchasers thereof, and Mortgagor, for itself and all who may claim through or under it,waive, if and to the fullest extent not prohibited by applicable law, all benefits and protectionsunder such appraisement, valuation, stay, extension and redemption laws.

19. Marshalling of Assets. Mortgagor hereby waives for itself and, to the fullestextent not prohibited by applicable law, for any subsequent lienor, any right to apply for anorder, decree, judgment, or ruling requiring or providing for a marshalling of assets which wouldrequire Mortgagee to proceed against certain of the Mortgaged Property before proceedingagainst any of the other Mortgaged Property. Mortgagee shall have the right to proceed, in its

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sole discretion, against the Mortgaged Property in such order and in such portions as Mortgageemay determine, without regard to the adequacy of value or other liens on any such MortgagedProperty. No such action shall in any way be considered as a waiver of any of the rights,benefits, liens or security interests created hereby or by any of the Loan Documents.

20. Subrogation. If the indebtedness hereby secured or any part thereof, includingany amounts advanced by Mortgagee, are used directly or indirectly to pay off, discharge orsatisfy, in whole or in part, any prior lien or encumbrance upon the Mortgaged Property or anypart thereof, then Mortgagee shall be subrogated to such other liens or encumbrances and to anyadditional security held by the holder thereof and shall have the benefit of the priority of all ofthe same, whether or not any such lien, encumbrance or additional security is canceled of recordupon such payment or advancement or otherwise, and in addition to the security afforded by thisMortgage and the other Loan Documents.

21. Sale or Transfer. Mortgagor, without the prior written consent of Mortgagee,shall not create, effect, consent to, attempt, contract for, agree to make, suffer or permit anyconveyance, sale, assignments, transfer, lien, pledge, encumbrance, mortgage, security interest oralienation of all or any portion of, or any ownership or beneficial interest in, the MortgagedProperty or the Mortgagor, whether effected directly, indirectly, voluntarily, involuntarily, byoperation of law or otherwise. If any of the foregoing shall occur without Mortgagee’s priorwritten consent, then the same shall conclusively be deemed to increase the risk to Mortgageeand immediately constitute an Event of Default hereunder.

22. Mortgagee’s Cost of Collection or Performance. If any action or proceeding iscommenced by or against Mortgagee, including, without limitation, condemnation proceedings,proceedings involving the foreclosure of this Mortgage or of any other liens or encumbrances,the enforcement or interpretation of contracts, leases or other documents relating to theMortgaged Property, or any other proceeding of any nature, legal or otherwise, affecting theMortgaged Property or any part thereof, or the title thereto, or the validity or priority of the lienof this Mortgage, Mortgagee shall have the right to appear, defend, prosecute, retain counsel, andtake such action as Mortgagee shall determine. In addition, upon an Event of Default hereunder,Mortgagee is authorized, but not obligated, to discharge Mortgagor’s obligations hereunder.Mortgagor shall pay to Mortgagee, promptly upon demand, all costs, including, withoutlimitation, “late charges” payable under the Note, out-of-pocket expenses and attorneys’ fees andexpenses, to the fullest extent not prohibited by applicable law, and the costs of anyenvironmental examination and analysis, title examination, supplemental examination of title ortitle insurance, that may be incurred by Mortgagee in connection with any proceedings affectingthe Mortgaged Property, or any part thereof, to cause the enforcement of the covenants oragreements of Mortgagor contained herein or in the any of other Loan Documents, or with orwithout the institution of an action or proceeding, or that may otherwise be incurred byMortgagee in the performance of any other action by Mortgagee authorized by this Mortgage.All such costs, expenses and attorneys’ fees and expenses, and any other moneys advanced byMortgagee to protect the Mortgaged Property shall, to the fullest extent not prohibited byapplicable law, bear interest from the date of payment thereof at the Default Rate until repaid byMortgagor, and shall be repaid by Mortgagor to Mortgagee immediately upon demand.Notwithstanding that the indebtedness secured hereby shall not have been declared due andpayable upon any Event of Default, Mortgagor hereby agrees that if an Event of Default has

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occurred, pursuant to the terms hereof, Mortgagee shall be entitled to receive interest thereon atthe Default Rate, to be computed from the due date through actual receipt and collection of theamount then in default. The preceding sentence shall not be construed as an agreement orprivilege to extend the time for performance of any obligation under the Mortgage or any of theother Loan Documents, nor as a waiver of any other right or remedy accruing to Mortgagee byreason of any such default.

23. Partial Release. Mortgagee, without notice, and without regard to anyconsideration paid therefor, and notwithstanding the existence at the time of any inferior liensthereon, shall have the right to release (a) any part of the security for the indebtedness securedhereby, including, without limitation, the interest under this Mortgage in and to any of theMortgaged Property, or (b) any person liable for any indebtedness secured hereby, withoutaffecting the priority of any part of the security and the obligations of any person not expresslyreleased, and shall have the right to agree with any party remaining liable for such indebtednessor having any interest therein to extend the time for payment of any part or all of theindebtedness secured hereby. Such agreement shall not in any way release or impair the lienhereof, but shall extend the lien hereof as against all parties having any interest in such security.

24. Non-Waiver. In the event Mortgagee (a) releases, as aforesaid, any part of suchsecurity or any person liable for any indebtedness secured hereby; (b) grants an extension of timefor any payments of the indebtedness secured hereby; (c) takes other or additional security forthe payment thereof (d) accepts partial payments; or (e) otherwise exercises or waives or fails toexercise any right granted herein or in any of the other Loan Documents, no such act or omissionshall constitute a waiver of any default, or extend or affect the grace period, if any, releaseMortgagor, subsequent owners of the Mortgaged Property or any part thereof, or makers orguarantors of the Note, this Mortgage, or any of the other Loan Documents, or precludeMortgagee from exercising any right, power or privilege herein granted or intended to be grantedfor any Event of Default.

25. No Merger of Estates. There shall be no merger of the lien, security interest orother estate or interest created by this Mortgage with the fee estate in the Mortgaged Property byreason that any such interest created by this Mortgage may be held, directly or indirectly, by orfor the account of any person who shall own the fee estate or any other interest in the MortgagedProperty. No such merger shall occur unless and until all persons at the time having suchconcurrent interests shall join in a written instrument effecting such merger, and such instrumentshall be duly recorded.

26. Further Assurances. Upon request of Mortgagee, Mortgagor shall execute,acknowledge and deliver to Mortgagee, in form satisfactory to Mortgagee, financing statementscovering as Collateral any personal property and fixtures owned by the Mortgagor, now orhereafter located on or which, in the sole opinion of Mortgagee, is essential to the operation ofany of the Mortgaged Property, and any supplemental mortgage, security agreement, financingstatement, assignment of leases, rents, income and profits from the Mortgaged Property,affidavit, continuation statement or certification as Mortgagee may request in order to protect,preserve, maintain, continue and extend the lien and security interest hereunder or the priorityhereof. Mortgagor hereby irrevocably appoints Mortgagee its attorney-in-fact, coupled with aninterest, and authorizes, directs and empowers such attorney, at its option, to execute,

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acknowledge and deliver on behalf of Mortgagor, its successors and assigns, any such documentsif Mortgagor shall fail so to do within five (5) days after request by Mortgagee. Mortgagor shallpay to Mortgagee on demand all costs and expenses incurred by Mortgagee in connection withthe preparation, execution, recording and filing of any such documents.

27. Application of Proceeds. All payments made by Mortgagor under the Note, thisMortgage or any of the other Loan Documents and received by Mortgagee shall be applied byMortgagee to the following items and in such order as Mortgagee may determine in its solediscretion: (a) advances by Mortgagee for payment of taxes, assessments, insurance premiumsand other costs and expenses, as set forth in this Mortgage, the Note or any of the other LoanDocuments; (b) any amounts which may be overdue under the Note, this Mortgage or any of theother Loan Documents; (c) interest on the indebtedness secured hereby; and (d) outstandingprincipal under the Note.

28. Mortgagee’s Subordination Right. At the option of Mortgagee, this Mortgageshall become subject and subordinate, but not with respect to the priority of entitlement toCasualty Proceeds or any Taking Proceeds, to any and all leases of all or any part of theMortgaged Property, upon the execution by Mortgagee and recording of a unilateral declarationto that effect at any time hereafter, in the Office of the Recorder or Clerk of the County in whichMortgaged Property is located.

29. UCC Security Agreement. This Mortgage is hereby deemed to be as well aSecurity Agreement and creates a security interest in and to the Collateral securing theindebtedness secured by this Mortgage. Without derogating any of the provisions of thisinstrument, Mortgagor to the extent permitted by law hereby:

a. grants to Mortgagee a security interest in and to all Collateral, includingwithout limitation the items referred to above, together with all additions, accessions andsubstitutions and all similar property hereafter acquired and used or obtained for use on or inconnection with the Mortgaged Property. The proceeds of the Collateral are intended to besecured hereby; however, such intent shall never constitute an expressed or implied consent onthe part of Mortgagee to the sale of any or all Collateral;

b. agrees that the security interest hereby granted shall secure the payment of theindebtedness specifically described herein together with payment of any future debt oradvancement owing by Mortgagor to Mortgagee with respect to the Mortgaged Property;

c. except as otherwise provided herein, agrees not to remove from theMortgaged Property, sell, convey, mortgage or grant a security interest in, or otherwise disposeof or encumber, any of the Collateral or any of the Mortgagor’s right, title or interest therein,without first obtaining Mortgagee’s written consent; Mortgagee shall have the right, at its soleoption, to require Mortgagor to apply the proceeds from the disposition of Collateral in reductionof the indebtedness secured hereby;

d. agrees that if Mortgagor’s rights in the Collateral are voluntarily orinvoluntarily transferred, whether by sale, creation of a security interest, attachment, levy,garnishment or other judicial process, without the prior written consent of Mortgagee, suchtransfer shall constitute an Event of Default hereunder;

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e. agrees that upon or after the occurrence of any Event of Default, Mortgageeshall have all rights and remedies contemplated hereunder, including, without limitation, theright to take possession of the Collateral, and for this purpose Mortgagee shall have the right toenter upon any premises on which any or all of the Collateral is situated without being deemedguilty of trespass and without liability for damages thereby occasioned, and take possession ofand operate the Collateral or remove it therefrom. Mortgagee shall have the further right, asMortgagee may determine, to repair, refurbish or otherwise prepare the Collateral for sale, leaseor other use or disposition, and to sell at public or private sale or otherwise dispose of, lease orutilize the Collateral and any part thereof in any manner authorized or permitted by law and toapply the proceeds thereof toward payment of any costs and expenses incurred by Mortgageeincluding, to the fullest extent not prohibited by applicable law, attorneys’ fees and expenses,and toward payment of the indebtedness secured hereby, in such order and manner as Mortgageemay determine. To the fullest extent not prohibited by applicable law, Mortgagor expresslywaives any notice of sale or other disposition of the Collateral and any other rights or remediesof a debtor or formalities prescribed by law relative to a sale or disposition of the Collateral or toexercise any other right or remedy existing after an Event of Default. To the extent any notice isrequired and cannot be waived, Mortgagor agrees that if such notice is deposited for mailing,postage prepaid, certified or registered mail, to the owner of record of the Mortgaged Property,directed to the such owner at the last address actually furnished to Mortgagee at least five (5)days before the time of sale or disposition, such notice shall be deemed reasonable and shall fullysatisf’ any requirements for giving of such notice;

f. agrees, to the extent not prohibited by law and without limiting any rights andprivileges herein granted to Mortgagee, that Mortgagee shall have the right to dispose of any orall of the Collateral at the same time and place upon giving the same notice, if any, provided forin this Mortgage, and in the same manner as the nonjudicial foreclosure sale provided under theterms and conditions of this Mortgage; and

g. authorizes Mortgagee to file without the Mortgagor’s signature, in thejurisdiction where this agreement will be given effect, financing statements covering theCollateral and the proceeds of the Collateral. At the request of Mortgagee, Mortgagor will joinMortgagee in executing one or more such financing statements pursuant to this Mortgage. Tothe extent permitted by law, a carbon, photographic or other reproduction of this instrument orany financing statement executed in accordance herewith shall be sufficient as a financingstatement.

30. Management. Mortgagee shall have the right to give or withhold its prior consentto any contract or other arrangement for the management of all or any part of the MortgagedProperty. Mortgagee shall have the right, exercisable at its option upon an Event of Default oran event which, with the passage of time, the giving of notice, or both, would constitute an Eventof Default, to terminate the rights of any party engaged to manage the Mortgaged Property andany and all other agreements or contracts relating to the operation or management of theMortgaged Property, if, in Mortgagee’s sole discretion, the management and/or operation of theMortgaged Property is unsatisfactory.

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31. Notices. Any notice, demand, request or other communication which any partyhereto may be required or may desire to give hereunder shall be in writing and shall be deemedto have been properly given (i) if hand delivered, or if sent by telecopy, effective upon receipt, or(ii) if delivered by overnight courier service, effective on the day following delivery to suchcourier service or (iii) if mailed by United States registered or certified mail, postage prepaid,return receipt requested, effective two (2) business days after deposit in the United States mailsaddressed as follows:

If to Mortgagor:

Hill & Markes Realty, LLCdo Hill & Markes, Inc.P.O. Box 7, 120 Edson StreetAmsterdam, NY 12010

If to Mortgagee:

RBS Citizens, N.A.Attn: Commercial Real Estate Department833 BroadwayAlbany, NY 12207

or at such other address or to such other addressee as the party to be served with notice may havefurnished in writing to the party seeking or desiring to serve notice as a place for the service ofnotice.

32. Loan Documents. The term “Loan Documents” as used herein collectively refersto (a) the Note, (b) this Mortgage, (c) the Assignment, (d) all Uniform Commercial CodeFinancing Statements of Mortgagor, as debtor, in favor of Mortgagee, as secured party, inconnection with the Mortgaged Property, (e) an Indemnity Agreement, (f) the Loan CommitmentLetter and Revised Term Sheet, each dated May 3, 2010 (collectively, the “Loan Commitment”),and (g) any and all other documents and/or agreements evidencing, securing or relating to theloan contemplated by the Loan Commitment.

33. Survival and Conflicts. The execution and delivery of this Mortgage and theother Loan Documents shall in no way merge or extinguish the Loan Commitment or the termsand conditions set forth therein, which shall survive the closing of the loan and delivery of thisMortgage. In the event of any inconsistency or conflict between any provisions of the LoanCommitment and the other Loan Documents, the provisions of the other Loan Documents shallprevail and apply.

34. Anti-Forfeiture. Mortgagor hereby further expressly represents and warrants toMortgagee that to the best of Mortgagor’s knowledge there has not been committed byMortgagor or any other person involved with the Mortgaged Property or the Mortgagor any actor omission affording the federal government or any state or local government the right and/orremedy of forfeiture as against the Mortgaged Property or any part thereof or any monies paid inperformance of its obligations under the Note or under any of the other Loan Documents, and

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Mortgagor hereby covenants and agrees not to commit, permit or suffer to exist any act oromission affording such right andlor remedy of forfeiture. In furtherance thereof, Mortgagorhereby indemnifies Mortgagee and agrees to defend and hold Mortgagee harmless from andagainst any loss, damage or other injury, including without limitation, attorneys’ fees andexpenses, to the fullest extent not prohibited by applicable law, and all other costs and expensesincurred by Mortgagee in preserving its lien, security interest and other rights and interests in theMortgaged Property and any additional collateral under any of the Loan Documents in anyproceeding or other governmental action asserting forfeiture thereof, by reason of, or in anymanner resulting from, the breach of the covenants and agreements or the warranties andrepresentations set forth in the preceding sentence. Without limiting the generality of theforegoing, the filing of formal charges or the commencement of proceedings against Mortgagor,Mortgagee, any guarantor, any additional collateral under any of the Loan Documents or all orany part of the Mortgaged Property under any federal or state law in respect of which forfeitureof the Mortgaged Property or any part thereof or of any monies paid in performance ofMortgagor’s obligations under the Loan Documents is a potential result shall, at the election ofthe Mortgagee in its absolute discretion, constitute an Event of Default hereunder without noticeor opportunity to cure.

35. Trust Fund. Pursuant to Section 13 of the Lien Law of New York, Mortgagorshall receive the advances secured hereby and shall hold the right to receive such advances as atrust fund to be applied first for the purpose of paying the cost of any improvement and shallapply such advances first to the payment of the cost of any such improvement on the MortgagedProperty before using any part of the total of the same for any other purpose.

36. Miscellaneous. The Mortgaged Property is located in the State of New York, andthis Mortgage and the rights and indebtedness secured hereby shall, without regard to the placeof contract or payment, be construed and enforced according to the laws of New York. Nothingherein contained nor any transaction related hereto shall be construed or so operate as to requireMortgagor to do any act contrary to law, and if any clauses or provisions herein containedoperate or would prospectively operate to invalidate this Mortgage, in whole or in part, or any ofthe Mortgagor’s obligations hereunder, such clauses and provisions only shall be held void andof no force or effect as though not herein contained, and the remainder of this Mortgage shallremain operative and in full force and effect. All of the obligations, rights and covenants hereincontained shall run with the land, and shall bind and inure to the benefit of Mortgagor, itssuccessors and permitted assigns, and Mortgagee and any subsequent holder of the Note.Whenever used, the singular number shall include the plural and the plural numbers shall includethe singular, and the use of any gender shall include all genders, all as the context mayreasonably require.

MORTGAGOR HEREBY, AND MORTGAGEE BY ITS ACCEPTANCE HEREOF,EACH WAIVES THE RIGHT OF A JURY TRIAL IN EACH AND EVERY ACTION ONTHIS MORTGAGE OR ANY OF THE OTHER LOAN DOCUMENTS, IT BEINGACKNOWLEDGED AND AGREED THAT ANY IS SUES OF FACT IN ANY SUCHACTION ARE MORE APPROPRIATELY DETERMINED BY A JUDGE SITTINGWITHOUT A JURY; FURTHER, MORTGAGOR HEREBY CONSENTS AND SUBJECTSITSELF TO THE JURISDICTION OF COURTS OF THE STATE OF NEW YORK AND,WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, TO THE VENUE OFSUCH COURTS TN THE COUNTY IN WHICH THE MORTGAGED PROPERTY ISLOCATED.

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37. Books and Records/Financial Statements. Mortgagor will keep and maintain orwill cause to be kept and maintained on a fiscal year basis in accordance with generally acceptedaccounting principles consistently applied, proper and accurate books, records and accountsreflecting all of the financial affairs of Mortgagor and all items of income and expense inconnection with the operation of the Mortgaged Property or in connection with any services,equipment or furnishings provided in connection with the operation of the Mortgaged Property,whether such income or expense be realized by Mortgagor or by any other person whatsoeverexcepting lessees unrelated to and unaffiliated with Mortgagor who have leased from Mortgagorportions of the Mortgaged Property for the purpose of occupying the same. Mortgagee shallhave the right from time to time at all times during normal business hours to examine suchbooks, records and accounts at the office of Mortgagor or other person maintaining such books,records and accounts and to make copies or extracts thereof as Mortgagee shall desire.

Mortgagor shall furnish to Mortgagee (a) annual audited financial statementsconsolidated per FASB §46 with the financial statements of Hill & Markes, Inc. (“HMI”) withinone hundred twenty (120) days after the end of the calendar year, (b) quarterly internallyprepared consolidated financial statements for Mortgagor and HMI within forty-five (45) daysafter the end of each fiscal quarter, (c) federal income tax returns for Mortgagor and HMI withinthirty (30) days after filing, (d) a rent roll for the Mortgaged Property within ten (10) days afterrequest and (e) such further detailed information covering the operation of the MortgagedProperty and the financial affairs of the Mortgagor or HMI as may be requested by Mortgageewithin ten (10) days after request.

38. Leases and Rents.

a. Subject to the terms of this Section 38, Mortgagee shall not exercise any rightto enter the Mortgaged Property for the purpose of collecting the Rents, and grants Mortgagor alicense to collect the Rents. Mortgagor shall hold the Rents in trust for use in payment of theindebtedness hereby secured. The license of Mortgagor to collect the Rents shall beautomatically terminated and revoked, without the necessity of notice or other action by theMortgagee, both of which are expressly waived, upon the occurrence of an Event of Default byMortgagor under the terms of any instrument evidencing the indebtedness hereby secured or thisMortgage by giving notice of such revocation to Mortgagor. Following such termination,Mortgagee may collect, retain, and apply the Rents toward payment of the indebtedness herebysecured in such priority and proportions as Mortgagee, in its discretion, shall deem proper, or tothe operation, maintenance and repair of the Mortgaged Property, and in either case, whether ornot Mortgagee shall have commenced a foreclosure of this Mortgage or shall have applied orarranged for the appointment of a receiver.

b. In furtherance of such right, Mortgagor shall, promptly upon request ofMortgagee, execute and deliver notices to tenants at the Mortgaged Property directing that futurerent payments be made directly to Mortgagee, or to such other person as Mortgagee may direct.Mortgagor hereby constitutes and appoints Mortgagee its attorney-in-fact for the purpose ofsigning any such notice on behalf of Mortgagor (which power of attorney is coupled with aninterest and may not be revoked), and such notice shall be conclusive authority to the tenants thatthe payments referred to in the Leases are to be made to Mortgagee or as otherwise directed, andthe tenants shall be fully protected in making such payments in accordance with the provisions ofsuch notice.

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c. No pledge or assignment of any rents of the Mortgaged Property or anyportion thereof, other than any given to Mortgagee is outstanding or in force. Mortgagor willmake no such pledge or assignment thereof except with prior written consent of Mortgagee. Ifany such pledge or assignment is made, the same shall be deemed to be subject hereto and for theuse and benefit of Mortgagee.

d. Mortgagee shall have all of the rights against tenants of the MortgagedProperty as set forth in Section 291-f of the Real Property Law of New York. Mortgagor shall(1) fulfill or perform each and every provision of the Leases on the part of Mortgagor to befulfilled or performed, and (2) enforce, short of termination of the Leases, the performance orobservance of the provisions thereof by the tenants thereunder. In addition to the rights whichMortgagee may have herein, upon the occurrence of an Event of Default, Mortgagee, at itsoption, may require Mortgagor to pay monthly in advance to Mortgagee, or any receiverappointed to collect the Rents, the fair and reasonable rental value for the use and occupation ofsuch part of the Mortgaged Property as may be in possession of Mortgagor. Upon default in anysuch payment, Mortgagor will vacate and surrender possession of the Mortgaged Property toMortgagee, or to such receiver and, in default thereof, Mortgagor may be evicted by summaryproceedings or otherwise. Nothing contained in this Section 38 shall be construed as imposingon Mortgagee any of the obligations of the lessor under the Leases.

e. Mortgagor shall not, except as consented to by Mortgagee, lease or otherwisegrant to any person any right to use or occupy all or any portion of the Mortgaged Property.Mortgagor shall not, without the prior written consent of Mortgagee in each instance: (1) enterinto any Lease; (2) modify, amend or extend any Lease; (3) terminate or cancel or accept asurrender of any Lease; (4) discount any Rents under any Lease or increase tenant allowances oraccept a prepayment of any Rent due under any Lease, except a payment of Rent one (1) monthin advance or a prepayment in the nature of security for the performance of the obligations of thetenant under such Lease; (5) assign, pledge or encumber Mortgagor’s interest in the Leases, theRents, or permit such interest to be assigned, pledged or encumbered, except pursuant hereto; (6)consent to an assignment or subletting by the tenant under any Lease; (7) waive, excuse,discharge or in any manner release any tenant under any terms and conditions to be performed bysuch tenant under its Lease; (8) modify, amend or release any guaranty or any Lease except inaccordance with the terms of such guaranty; or (9) take or fail to take any other action withrespect to any Lease that would tend to impair or diminish the value of the security of thisMortgage or would render any representation or warranty by Mortgagor under this Mortgage orany Lease false or misleading.

f. Each Lease entered into by Mortgagor from and after the date hereof and eachrenewal of an existing Lease shall provide: (1) that, at the option of Mortgagee, such Lease shallbe subject and subordinate in all respects to this Mortgage and the lien created hereby, and to anyrenewals thereof, including any increase in the principal amount secured by this Mortgage, andany increase in the interest rates set forth in the Note and to each and all of the rights ofMortgagee or any holder thereof (2) that such provision shall be self-operative; (3) that, inconfirmation of such subordination, the tenant under such Lease shall promptly execute anddeliver any certificate that the holder of this Mortgage may reasonably request; (4) that the tenantexecute and deliver from time to time estoppel certificates (each, a “Tenant EstoppelCertificate”) addressed to Mortgagee or its designee and containing such information as may be

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reasonably requested by the Mortgagee; and (5) to the extent not so provided by applicable law,that in the event of the enforcement by Mortgagee of the remedies provided for by law or by thisMortgage, Mortgagee, or any successors or assigns of Mortgagee, shall, at its or their option,succeed to the interest of landlord under such Leases, whether through possessory or foreclosureaction or a deed in lieu of foreclosure.

g. Mortgagor, reasonably promptly after obtaining knowledge thereof, shallnotify Mortgagee of any material default under any Lease (including, without limitation, anydefault in the payment of any sums due under such Lease) or of any action or proceedingadversely affecting the Mortgaged Property and shall deliver to Mortgagee copies of all noticesof material default given or received by Mortgagor under the Leases (including, withoutlimitation, any default in the payment of any sums due under such Lease.

h. Mortgagor shall at all times perform and comply with, or cause to beperformed and complied with, all of the terms, covenants and conditions of the Leases to beperformed or complied with by Mortgagor thereunder, maintain the Leases in full force andeffect, enforce the Leases in accordance with their terms, and comply with all reasonablerequests from Mortgagee from time to time with respect to such enforcement.

i. At any time, and from time to time, Mortgagor shall deliver to Mortgagee, onrequest, a schedule of the Leases then in existence, certified by Mortgagor to be true andcomplete, which schedule shall set forth such information with respect to each Lease as may berequested by the Mortgagee. In addition, Mortgagor, upon Mortgagee’s request (which requestshall not be made more frequently than one (1) time per year unless reasonably required byMortgagee), shall promptly obtain from each tenant a Tenant Estoppel Certificate.

j. All security or other deposits of tenant held by Mortgagor shall be treated astrust funds, shall not be commingled with any other funds of Mortgagor, shall not be subject toany offset rights of Mortgagee contained herein, and shall be deposited in a tenant’s securityaccount to be maintained by Mortgagor at a commercial bank, savings bank or savings and loanassociation, satisfactory to the Mortgagee, located in the State of New York.

39. Offsets, Counterclaims and Defenses. Any assignee of this Mortgage, the Note orany other Loan Document shall take the same free and clear of all offsets, counterclaims ordefenses of any nature whatsoever which Mortgagor may have against any assignor of thisMortgage, the Note or any other Loan Document and the Indebtedness hereby secured and nosuch offset, counterclaim or defense shall be interposed or asserted by Mortgagor in any actionor proceeding brought by any such assignee upon this Mortgage, the Note or any other LoanDocument and/or the Indebtedness hereby secured and any such right to interpose or assert anysuch offset, counterclaim or defense in any such action or proceeding is hereby expressly waivedby Mortgagor.

40. Prepayment After Event of Default. If an Event of Default shall occur under thisMortgage and if by reason thereof Mortgagee elects to declare the entire principal balance hereofto be immediately due and payable, or if an action is commenced for the foreclosure of thisMortgage, then in such event the prepayment consideration in the Note provided for shallbecome due and payable on the date of such election in the same manner as though Mortgagor

28

had exercised such right of prepayment as herein set forth. If any such event occurs prior to theearliest date upon which Mortgagor has a right of prepayment, then in such event the prepaymentconsideration applicable upon the earliest date on which Mortgagor had such right of prepaymentshall apply and Mortgagor also shall pay to Mortgagee a sum equal to interest which would haveaccrued on the principal balance of the Indebtedness hereby secured at the rate specified in theNote from the date of payment to the end of the period during which prepayment is prohibited.The amount of such prepayment consideration computed on the principal balance as of the dateaforesaid, shall be added to and secured by this Mortgage and shall be recoverable by theMortgagee in the same manner as the principal balance hereof and in addition thereto, in anyaction brought for the foreclosure of this Mortgage.

41. Building Loan Agreement. This is a building loan and “construction loan”mortgage, the proceeds of which are loaned for the purpose of financing the construction of theImprovements at the Mortgaged Property. This Mortgage is subject to all of the terms andconditions of the Building Loan Agreement, which Building Loan Agreement and all of theterms, provisions, covenants, representations and warranties contained therein are by thisreference hereby incorporated herein and made a part hereof with the same force and effect as ifset forth at length herein. The proceeds of the building loan secured hereby are to be advancedby Mortgagee from time to time in accordance with the provisions of the Building LoanAgreement, and all advances made and all indebtedness arising and accruing under the BuildingLoan Agreement shall be secured hereby. Mortgagor shall observe and perform all of the termsand conditions of the Building Loan Agreement on Mortgagor’s part to be observed andperformed. In the event of any conflict between the terms and conditions of this Mortgage andthose of the Agreement, the terms and conditions which shall enlarge the rights and remedies ofMortgagee and the interest of Mortgagee in the Mortgaged Property, afford Mortgagee greaterfinancial security in the Mortgaged Property and better assure payment of the Loan in full shallcontrol.

42. Patriot Act. Mortgagor hereby represents and warrants to Mortgagee thatneither Mortgagor nor any of its officers, directors, shareholders, partners, members or affiliates(including the indirect holders of equity interests in Mortgagor) is or will be an entity or person:(1) that is listed in the Annex to, or is otherwise subject to the provisions of Executive Order13224 issued on September 24, 2001 (“E013224”); (ii) whose name appears on the UnitedStates Treasury Department’s Office of Foreign Assets Control (“OFAC”) most current list of“Specifically Designated National and Blocked Persons” (which list may be published from timeto time in various mediums including, but not limited to, the OFAC website,http://www.treas.gov/ofac/tl lsdn.pef); (iii) who commits, threatens to commit or supports“terrorism”, as is defined in EO 13223; or (iv) who is otherwise affiliated with any entity orperson listed above (any and all parties or persons described in clauses (i)-(iv) above are hereinreferred to as “Prohibited Persons”). Mortgagor covenants and agrees that neither Mortgagor norany of its officers, directors, shareholders, partners, members or affiliates (including the indirectholders of equity interests in Mortgagor) will: (i) conduct any business, nor engage in anytransaction or dealing, with any Prohibited Person, including, but not limited to, the making orreceiving of any contribution of funds, goods, or services, to or for the benefit of a ProhibitedPerson; or (ii) engage in or conspire to engage in any transaction that evades or avoids, or has thepurpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in EO13224. Mortgagor further covenants and agrees to deliver (from time to time) to Mortgagee anysuch certification or other evidence as may be requested by Mortgagee in its sole and absolutediscretion, confirming that: (i) neither Mortgagor nor its officers, directors, shareholders,

29

partners, members or affiliates (including the indirect holders of equity interests in Mortgagor) isa Prohibited Person; and (ii) neither Mortgagor nor its officers, directors, shareholders, partners,members or affiliates (including the indirect holders of equity interests in Mortgagor) hasengaged in any business, transaction or dealings with a Prohibited Person, including, but notlimited to, the making or receiving of any contribution of funds, goods, or services, to or for thebenefit of a Prohibited Person.

43. No Recourse: Special Obligation. Notwithstanding anything in this Mortgage tothe contrary:

a. This Mortgage is executed by the Agency for the purposes of subjectingits interest in the Premises to the lien of this Mortgage and agreeing to cause this Mortgage to bedelivered to the Montgomery County Clerk for recording and for no other purpose. Allrepresentations, covenants and warranties of the Mortgagor herein are hereby deemed to havebeen made by Hill & Markes Realty, LLC and not by the Agency. The Mortgagor andMortgagee hereby expressly agree that the term “Mortgagor”, as such term is used in thisMortgage, shall not be deemed to include the Agency.

b. The obligations and agreements of the Agency contained herein and anyother instrument or document executed in connection therewith or herewith, and any otherinstrument or document supplemental thereto or hereto, shall be deemed the obligations andagreements of the Agency and not of any member, officer, director, agent (other than theMortgagor) or employee of the Agency in his individual capacity, and the members, officers,directors, agents (other than the Mortgagor) and employees of the Agency shall not be liablepersonally hereon or thereon or be subject to any personal liability or accountability based uponor in respect hereof or thereof or of any transaction contemplated hereby or thereby.

c. The obligations and agreements of the Agency contained herein shall notconstitute or give rise to an obligation of the State of New York or the County of Montgomery,New York and neither the State of New York nor the County of Montgomery, New York shall beliable hereon or thereon, and, further, such obligations and agreements shall not constitute orgive rise to a general obligation of the Agency, but rather shall constitute limited obligations ofthe Agency payable solely from the revenues of the Agency derived and to be derived from thelease, sale or other disposition of the Premises.

d. No order or decree of specific performance with respect to any of theobligations of the Agency hereunder shall be sought or enforced against the Agency unless (1)the party seeking such order or decree shall first have requested the Agency, in writing, to takethe action sought in such order or decree of specific performance, and ten (10) days shall haveelapsed from the date of receipt of such request, and the Agency shall have refused to complywith such request (or, if compliance therewith would reasonably be expected to take longer thanten (10) days, shall have failed to institute and diligently pursue action to cause compliance withsuch request within such ten (10) day period or failed to respond within such notice period, (2) ifthe Agency refuses to comply with such request and the Agency’s refusal to comply is based onits reasonable expectation that it will incur fees and expenses (including, without limitation,reasonable attorney’s fees), the party seeking such order or decree shall have placed in anaccount with the Agency an amount or undertaking sufficient to cover such reasonable fees and

30

expenses, and (3) if the Agency refuses to comply with such request and the Agency’s refusal tocomply is based on its reasonable expectation that it or any of its members, officers, directors,agents (other than the Mortgagor) or employees shall be subject to potential liability, the partyseeking such order or decree shall (a) agree to indemnify, hold harmless and defend the Agencyand its members, officers, directors, agents (other than the Mortgagor) and employees againstany liability incurred as a result of its compliance with such demand, and (b) if requested by theAgency, furnish to the Agency satisfactory security to protect the Agency and its members,officers, directors, agents (other than the Mortgagor) and employees against all liability expectedto be incurred as a result of compliance with such request. Any failure to provide the indemnityrequired in this Paragraph shall not affect the full force and effect of an Event of Default underthe Note, this Mortgage or any of the other loan documents.

e. No provision of this Section 43 shall be deemed to relieve the Mortgagorfrom any liability which it may have personally to the Mortgagee by reason of this Mortgage orany of the other loan documents.

PROVIDED, THAT THE CONDITION OF THIS MORTGAGE IS SUCH that ifMortgagor shall pay all of the indebtedness secured hereby, then thereupon this Mortgage shallbe released of record by Mortgagee, at the cost and expense of Mortgagor, and thereafter theMortgage shall be void. The foregoing shall not affect the covenants, agreements,indemnifications and warranties in this Mortgage which expressly survive the release hereof,which shall remain in full force and effect.

[Remainder of Page Intentionally Left Blank — Signature Page Follows]

31

IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executedand delivered as of the date lirsi above written.

MORTGAGOR:

HiLL & MARKE REA Y, LC

By: //cAi4Title.1’

AGENCY:


By:

_________________________—

Title:

_____________________________________

STATEOFNEWYORK )) ss

COUNTY OF ALBANY )

On the

______

day of June in the year 2010 before me personally appeared

______________________

personally known to me or proved to me on the basis of satisfactoryevidence to be the individual(s) whose name(s) is(are) subscribed to the within instrument andacknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that byhis/her/their signature(s) on the instrument, the individual(s), or the persons on behalf of whichthe individual(s) acted, executed the instrument.

Notary Public

STATE OF NEW YORK ))

COUI’.TTY OF FULTON )

On t

_____

day of July in the year 2010 before me personally appeared

____________

, personally known to me or proved to me on the basis of satisfactoryevidence to be the individual(s) whose name(s) is(are) subscribed to the within instrument andacknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that byhis/her/their signature(s) on the instrument, the individual(s), or the persons on behalf of whichthe individual(s) acted, executed the instrument.

Wubli

Mortgage and Security Agreement Notary Public, State of New YorkQualified in Fulton Conty /

,My Commission Expires ((O( L3

IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be duly executedand delivered as of the date first above written.

MORTGAGOR:


By:

___________________________

Title:

____________________________________

AGENCY:


By: &-% ff4gC

Title: C-jmpv


COUNTY OF ALBANY )

On the

______

day of June in the year 2010 before me personally appeared

______________________

personally known to me or proved to me on the basis of satisfactoryevidence to be the individual(s) whose name(s) is(are) subscribed to the within instrument andacknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that byhis/her/their signature(s) on the instrument, the individual(s), or the persons on behalf of whichthe individual(s) acted, executed the instrument.

Notary Public



On the 30th day of June in the year 2010 before me personally appearedWilliam Hisert , personally known to me or proved to me on the basis of satisfactoryevidence to be the individual(s) whose name(s) is(are) subscribed to the within instrument andacknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that byhis/her/their signature(s) on the instrument, the individual(s), or the persons on behalf of whichthe individual(s) acted, executed the instrument.

Notary PublicPAUL L WOLLMAN

Mortgage and Security Agreement

SCHEDULE A

SCHEDULE A






3.) South 63°-li ‘-18” East, a distance of 198.52 feet to a point;









2.) North 82°-S l’-17” West, a distance of 763.31 feet to a point;


ASSIGNMENT OF LEASES AND RENTS

THIS ASSIGNMENT OF LEASES AND RENTS (“Assignment”), made this day ofJune, 2010, by HILL & MARKES REALTY, LLC, a New York limited liability company havingan address ofdo Hill & Markes, Inc., P.O. Box 7, 120 Edson Street, Amsterdam, New York 12010(“Assignor”) and MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY, apublic benefit corporation having an address of Old County Courthouse, 9 Port Street, P.O. Box1560, Fonda, New York 12068 (“Agency”) in favor of RBS CITIZENS, N.A., a nationalassociation, having an address at 833 Broadway, Albany, New York 12207 (“Assignee”),

WITNESS ETH:

FOR VALUE RECEIVED, Assignor and Agency do hereby absolutely and unconditionallySELL, ASSIGN, TRANSFER, SET OVER and DELIVER unto the Assignee, all leases andtenancies of all or any portion of the premises situated at 1975 NYS Route 5 5, Town of Florida,Montgomery County, New York, and more particularly described in Schedule A attached hereto andmade a part hereof, together with the buildings and improvements thereon (collectively called“Premises”);

TOGETHER with any and all extensions and renewals of such leases, and any and all otherand further leases, licenses, concession contracts and other agreements granting a right or privilege ofuse or occupancy, whether written or oral (including subleases and tenancies following attornment)of all or any part of the Premises (collectively, the “Leases”);

TOGETHER with any and all guarantees of performance by any of the lessees under any ofthe Leases;

TOGETHER with the immediate and continuing right to collect and receive all of the rents,income, receipts, revenues, issues and profits now due or which may become due or to whichAssignor may now or shall hereafter (including during the period of redemption, if any) becomeentitled or may demand or claim (all such moneys, rights and claims described in this paragraph arehereafter collectively called “Rents”), arising or issuing from or out of the Leases or from or out ofthe Premises or any part thereof, including, without limitation: minimum rents, additional rents,percentage rents, parking, maintenance, operation, tax and insurance contributions, proceeds of saleof electricity, gas, chilled and heated water and other utilities and services, deficiency rents andliquidated damages following default, royalties, the premium payable by any lessee upon the exerciseof a cancellation privilege originally provided in any of the Leases, and, except as may be otherwiseprovided for in the Loan Documents (as defined below), all proceeds payable under any policy ofinsurance for loss of rents, together with any and all rights and claims of any kind which Assignormay have against any lessee under such Leases or any subtenants or occupants of the Premises, itbeing the intention ofAssignor, Agency and Assignee that this Assignment be treated and construedas an absolute assignment and not an assignment for additional security only; and

TO HAVE AND TO HOLD the same unto the Assignee, its successors and assigns forever,or for such shorter period as hereinafter may be indicated.

FOR THE PURPOSE OF SECURING the payment of the indebtedness in the originalprincipal amount of Eight Million Three Hundred Fifty-Eight Thousand One Hundred Thirty-Threeand 00/100 Dollars U.S. ($8,358,133.00) as evidenced by that certain Promissory Note ofeven dateherewith executed and delivered by Assignor in favor of Assignee, as the same may be amended,extended, supplemented, modified and/or renewed, and all replacements and substitutions therefor(alternatively and collectively, the “Note”), as well as the payment, observance, performance anddischarge of all other obligations, covenants, conditions and warranties contained in the Mortgageand Security Agreement covering the Premises and securing the Note, executed and delivered byAssignor and Agency in favor ofAssignee, and to be recorded concurrently herewith (together withany amendments, modifications, extensions, supplements and/or consolidations thereof, the“Mortgage”) and all of the other Loan Documents (as defined in the Mortgage).

TO PROTECT THE SECURITY OF THIS ASSIGNMENT, IT IS COVENANTED ANDAGREED AS FOLLOWS:

1. Assignor’s Warranties. Assignor represents and warrants that (a) Assignor is theowner in fee simple of the Premises, Agency is the owner of a leasehold interest in the Premises andeach has good title to the Leases and Rents hereby assigned and good right to assign the same, andthat no other person or entity has any right, title or interest therein; (b) Assignor and Agency haveperformed all of the terms, covenants, conditions and warranties of the Leases on their respectiveparts to be kept, observed and performed; (c) the Leases are valid and unmodified except as indicatedherein and in full force and effect; (d) neither Assignor nor Agency has previously sold, assigned,transferred, mortgaged or pledged the Leases or the Rents, whether now due or hereafter to becomedue; (e) none of the Rents due for any period subsequent to the month in which this Assignment ismade have been collected by Assignor or Agency, and that payment of any of such Rents has nototherwise been anticipated, waived, released, discounted, setoff, or otherwise discharged orcompromised by Assignor or Agency, nor does Assignor or Agency have knowledge thereof,(f) Assignor or Agency has not received any funds or deposits from any lessee, other than securitydeposits pursuant to the terms of the applicable Leases, for which credit has not already been madeon account of accrued Rents; and (g) to the knowledge of Assignor, neither Assignor nor Agency isin default of any of the terms thereof.

2. Covenants of Assignor. Assignor covenants and agrees as follows: (a) to observe,perform and discharge, duly and punctually, all obligations, terms, covenants, conditions andwarranties of the Loan Documents, and of the Leases, on the part of the Assignor to be kept,observed and performed, and to give prompt notice to Assignee ofany failure on the part ofAssignorto observe, perform and discharge the same; (b) to notify and direct in writing each and every presentor future lessee or occupant of the Premises or any part thereof that any security or other depositheretofore delivered to Assignor has been retained by Assignor or assigned and delivered to Assigneeas the case may be; (c) to enforce or secure in the name of Assignee the performance of each andevery obligation, term, covenant, condition and agreement in the Leases to be performed by anylessee; (d) to appear in and defend any action or proceeding arising under, occurring out of, or in anymanner connected with the Leases or the obligations, duties or liabilities of the Assignor and anylessee thereunder, and, upon request by Assignee, will do so in the name and on behalf of theAssignee but at the expense of the Assignor, and to pay all costs and expenses of the Assignee,including attorney’s fees to the fullest extent not prohibited by applicable law, in any action orproceeding in which the Assignee may appear.

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3. Negative Covenants of Assignor. That Assignor further covenants and agrees asfollows: (a) not to receive or collect any Rents from any present lessee of the Premises or any partthereof in advance of the rent requirement set forth in such lessee’s Lease, or from any future lesseemore than one (1) month in advance of the due date thereof (whether in cash or by promissory note);(b) not to waive, excuse, condone, discount, set-off, compromise, or in any manner release ordischarge any lessee thereunder, of and from any obligations, covenants, conditions and agreementsby the lessee to be kept, observed and performed, including the obligation to pay the Rentsthereunder, in the manner and at the place and time specified therein; (c) not to cancel, terminate orconsent to any surrender ofany of the Leases, nor materially (in Assignee’s determination) modify oralter the terms thereof to the detriment of the Assignee; (d) not to consent, without the prior writtenconsent of Assignee, to any subletting of the Premises or any part thereof, or to any assignment ofany of the Leases by any lessee thereunder, unless the lessee has the right under the terms of theLease (i) to assign or sublet to specified assignees or sublessees, in which event Assignor shallprovide Assignee with written notice ofany such assignment or subletting, or (ii) generally assign orsublet to unspecified assignees or sublessees with the prior consent ofAssignor, as Landlord, not tobe unreasonably withheld, in which event the consent ofAssignee required under this clause (d) shallnot be unreasonably withheld; (e) not to enter into any renewal or extension of any of the Leases,other than upon exercise of an express option therefor contained in such Lease, nor into any newLease without the prior written consent of the Assignee. Any of the above acts done without theprior written consent of the Assignee shall be null and void at the option of Assignee.

4. Cross-Default. In the event any representation or warranty herein ofAssignor shall befound to be untrue in any respect, or Assignor shall default in the observance or performance of anyobligation, term, covenant, condition or warranty herein, then, in each such instance, the same shallbe a default under this Assignment and under each of the other Loan Documents. In the eventAssignor shall default in the observance or performance ofany obligation, term, covenant, conditionor warranty in any of the other Loan Documents, then, in each such instance, the same shall bedeemed to be a default hereunder. Upon any default hereunder or under any ofthe Loan Documents,Assignee shall be entitled to declare all sums evidenced and/or secured thereby and herebyimmediately due and payable, and to exercise any and all of the rights and remedies provided underthis Assignment, any of the other Loan Documents, or by law or at equity.

5. License to Receive Rents.

a. Assignor and Agency have and hereby do authorize Assignee or itsrepresentatives to collect the Rents and hereby directs each tenant of the Property and lessee underthe Leases to pay all Rent to Assignee or its representatives; provided, however, so long as thereshall exist no default or Event of Default by Assignor herein or in any of the other Loan Documentsor the Leases, Assignor and Agency shall have the right, but limited as provided in this Assignmentand in any of the other Loan Documents: (i) to collect upon, but not prior to one (1) month inadvance of, the due date thereof, all ofthe Rents as trustee for the benefit ofAssignee, and Assignorshall receive and first apply such Rents, subject to any obligation to escrow same with Assignee, tothe payment of taxes, payment in lieu of tax agreement obligations and assessments upon thePremises before penalty or interest are due thereon, to the cost of such insurance, maintenance andrepairs as may be required by the terms of the Mortgage, to satisfy all of Assignor’s obligationsunder the Leases, and pay interest and principal and other charges becoming due, as and when due

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and payable, under the Loan Documents; and (ii) to otherwise deal with, and enjoy the rights of thelessor under, the Leases. Assignee shall not at any time (regardless of any exercise by Assignee, orright of Assignee to exercise, any powers herein conferred) be obligated to perform or discharge, nordoes it hereby undertake to perform or discharge, any obligation, duty or liability of Assignor orAgency as landlord under any Lease, and Assignor shall and does hereby agree to indemnify andhold Assignee and its representatives harmless of and from any and all liability, loss or damagewhich Assignee or its representatives may or might incur under or by reason of(i) any Lease, (ii) thisAssignment, (iii) the Mortgage or any of the other Loan Documents, (iv) any action taken byAssignee or its representatives hereunder, the Mortgage or any of the other Loan Documents, unlessconstituting willful misconduct or gross negligence, or (iv) claims and demands which may beasserted against Assignee or its representatives by reason of any alleged obligations or undertakingson its part or their part to perform or discharge any of the terms, covenants or agreements containedin any Lease. This Assignment shall not operate to place upon Assignee any responsibility for themanagement, operation or maintenance of the Premises, and the execution of this Assignment byAssignor shall constitute conclusive evidence that all responsibility for the management, operationand maintenance of the Premises is, shall be and shall remain that of the Assignor, in the absence ofthe taking of actual possession of the Premises by Assignee pursuant to the provisions of theMortgage. The provisions of the foregoing indemnification obligation shall survive the assignmentor repayment of the Note, the assignment, satisfaction, foreclosure or other termination of theMortgage or this Assignment and the sale or other transfer or conveyance of the Premises.

b. Assignee may immediately take possession of all Rents, whether past due,then due or to become due, by delivering a notice to Assignor and Agency stating that a default orany “Event of Default”, by Assignor exists in the payments due under, or in the performance of anyof the terms, covenants or conditions of the Note, Mortgage or Loan Documents, and without thenecessity ofAssignee entering upon and taking possession of the Premises in person, by agent or bya court-appointed receiver, instituting legal proceedings of any kind or taking any other affirmativeaction of any kind, and the license referred to in Subsection 5(a) above shall thereupon be revokedand Assignor and Agency shall thereafter hold all such Rents as trustee for the exclusive benefit ofAssignee. After the delivery of such notice by Assignee, Assignor and Agency hereby authorize anddirect any lessee under any of the Leases and any successor to all or any part of the interests of anysuch lessee to pay to Assignee the Rents due and to become due under the Leases and each tenant isso authorized to make such payments. A demand on any lessee made by Assignee for such paymentof Rents shall be sufficient warrant to the lessee to make future payments of Rents to Assigneewithout the necessity for further consent by Assignor or Agency. Assignor agrees that (i) each lesseeunder any of the Leases shall have the right to rely upon any such request by Assignee, (ii) eachlessee shall pay such Rents to Assignee without any obligation or right to inquire as to whether suchdefault actually exists and notwithstanding any notice from or claim ofAssignor to the contrary, and(iii) Assignor and Agency shall have no right to claim against any lessee for any such Rents so paidby the lessee to Assignee. Nothing contained herein shall be construed as constituting Assignee a“mortgagee in possession” in the absence of Assignee taking actual possession of the Premisespursuant to the provisions ofthe Mortgage. As between Assignee, Agency, Assignor and any personclaiming through or under Assignor or Agency, this Assignment is intended to be absolute,unconditional and presently effective, and the provisions of this Subsection 5(b) regarding writtendemand for the Rents by Assignee to the lessees are intended solely for the benefit of such lesseesand shall never inure to the benefit of Assignor or Agency or any person claiming through or underAssignor or Agency, other than a tenant who has not received such written demand.

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6. Rights Upon Transfer.

a. Subject to the restrictions on the sale and conveyance ofthe Premises set forthin the Loan Documents, upon the sale or conveyance by Assignor, or its successors and assigns, oftitle to the Premises, all right, title, interest and powers granted to Assignor shall, unless amended orrevoked as provided in the Loan Documents, automatically pass to and may be exercised by eachsuch subsequent owner. At any time after a default or any “Event of Default” under this Assignmentor under any of the Loan Documents or under any of the Leases, Assignee, at its option, shall havethe right, power and authority to exercise and enforce any or all of the following rights and remedies:(i) to terminate the license granted above to Assignor and Agency to collect the Rents, and

thereafter, without taking or being deemed to have taken possession, in Assignee’s own name, todemand, collect, receive, sue for, attach and levy the Rents, to give proper receipts, releases andacquittances therefor, and after deducting all costs and expenses of operation and collection, asdetermined by Assignee, including attorneys’ fees to the fullest extent not prohibited by applicablelaw, to apply the net proceeds thereof, together with any funds ofAssignor deposited with Assignee,upon any indebtedness secured hereby and in such order as Assignee may determine; (ii) to declareall sums secured hereby immediately due and payable and, at its option, exercise any and all of therights and remedies contained in any of the Loan Documents; and (iii) without regard to theadequacy ofthe security, to the fullest extent not prohibited by applicable law, through any person oragent, then or thereafter (A) to enter upon, take possession of, manage and operate the Premises andthe other Mortgaged Property (as defined in the Mortgage) or any part thereof; (B) make, modify orenforce any of the Leases; (C) remove and evict any lessee; (D) increase or decrease Rents;(E) decorate, clean and repair the Premises; and (F) otherwise do any act or incur any costs orexpenses as Assignee shall deem proper to protect the security hereof, as fully and to the same extentas Assignor or Agency could do if in possession, and in such event to apply the Rents so collected tothe operation and management ofthe Premises, but in such order as Assignee shall deem proper, andincluding the payment of management, brokerage and attorneys’ fees to the fullest extent notprohibited by applicable law, payment of the indebtedness under the Loan Documents andmaintenance, without interest, of a reserve for replacement.

b. The acceptance by Assignee ofthis Assignment, and the exercise ofany or allofthe rights, powers, privileges and authority herein created, shall not, prior to entry upon and takingof possession of the Premises by Assignee, be deemed or construed to constitute Assignee amortgagee in possession, or thereafter or at any time or in any event obligate Assignee (i) to appearin or defend any action or proceeding relating to any of the Leases or the Premises, (ii) to take anyaction hereunder, (iii) to expend any money or incur any expenses or perform or discharge anyobligation, duty or liability under any ofthe Leases or (iv) to assume any obligation or responsibilityfor any security or other deposits delivered to Assignor or Agency by any ofthe lessee(s) thereunderand not assigned and delivered to Assignee. Assignee shall not be liable in any way for any injury ordamage to person or property sustained by any person or entity in or about the Premises.

c. Collection and application of the Rents by Assignor, or its agent, as set forthabove, and/or the entry upon and taking possession of the Premises, shall not cure or waive anydefault, or waive, modify or affect any notice ofdefault, under the Loan Documents or invalidate anyact done pursuant to such notice, and the enforcement of such right or remedy by Assignee, onceexercised, shall continue for so long as Assignee shall elect during the pendency of the default. If

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Assignee shall thereafter elect to discontinue the exercise of any such right or remedy, the same orany other right or remedy hereunder may be reasserted at any time and from time to time followingany subsequent default.

7. Assignee’s Collection Authority. Upon a default, following any applicable notice andexpiration of any applicable grace period, or any “Event of Default”, by Assignor hereunder or underany ofthe other Loan Documents, Assignor hereby constitutes and irrevocably appoints Assignee, itssuccessors and assigns, the true and lawful attorney-in-fact, coupled with an interest, of Assignor,and authorizes Assignee in the name, place and stead of Assignor, in the exercise of the powersprovided and set forth in Subsection 5(b) and the remedies provided for in clause (i) ofsubparagraph 6(a) above, but subject to and not in limitation of the provisions of Subsection 5(b)hereof or the absolute assignment of the Rents made hereby, to demand, sue for, attach, levy, recoverand receive any premium or penalty payable upon the exercise, by any lessee under any of theLeases, of a privilege of cancellation provided in any of the Leases, and to give proper receipts,releases and acquittances therefor, and, after deducting expenses of collection, to apply the netproceeds as a credit upon any portion, as selected by Assignee, of the indebtedness evidenced orsecured by the Loan Documents, notwithstanding that the amount owing thereunder may not then bedue and payable or that the indebtedness is otherwise adequately secured. Assignor and Agencyhereby authorize and direct any such lessee to deliver such payment to Assignee in accordance withthe foregoing, and hereby ratifies and confirms all actions whatsoever that its attorney, the Assignee,shall do or cause to be done by virtue of the powers granted hereby. The foregoing appointmentshall be continuing, and such rights, powers and privileges shall be exclusive in Assignee, itssuccessors and assigns, so long as any part of the indebtedness secured hereby shall remain unpaid.

8. Assignee’s Subordination Authority. Assignor and Agency hereby constitute andirrevocably appoint Assignee, its successors and assigns, the true and lawful attorney-in-fact, coupledwith an interest, of Assignor and Assignees and in the name, place and stead of Assignor andAgency, at any time and from time to time, to subject and subordinate any of the Leases to theMortgage, or to request or require such subordination of the lessee as the case may be, to the extentAssignor and Agency would have the right, power or authority so to do. This appointment is to becontinuing and these rights, powers and privileges shall be exclusive in Assignee, its successors andassigns, so long as the indebtedness secured hereby remains unpaid. Assignor hereby warrants thatAssignor has not, at any time prior to the date hereof, exercised any such right, and covenants not toexercise any such right, to so subordinate any of such Leases to any other mortgage or lien exceptonly those which exist under this Assignment or any of the other Loan Documents.

9. Indemnification. Assignor hereby indemnifies Assignee and agrees to defend andhold Assignee harmless from and against any and all liability, loss, damage or expense whichAssignee may incur under or by reason of this Assignment, or for any action taken by the Assigneeas contemplated herein, (other than Assignee’s gross negligence or willful misconduct) or by reasonor in defense ofany and all claims and demands whatsoever which may be asserted against Assigneearising out of any of the Leases, including, without limitation, any claim by any lessee of credit forrental paid to and received by Assignor but not delivered to Assignee for any period under any oftheLeases more than one (1) month in advance ofthe due date thereof. Should Assignee incur any suchliability, loss, damage or expense, the amount thereof (including attorneys’ fees to the fullest extentnot prohibited by applicable law), with interest thereon at the Default Rate (as defined in the Note),

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shall be payable by Assignor immediately without demand, and shall be secured hereby and by theother Loan Documents.

10. Lease Copies and Further Assurances. Until the indebtedness secured by the LoanDocuments is paid in full, Assignor will deliver to the Assignee photocopies certified by Assignor astrue, correct and complete, of executed originals of(a) any and all existing Leases, and (b) all otherand future Leases upon all or any part of the Premises. Upon request of Assignee, Assignor willspecifically transfer and assign to Assignee such other and future Leases upon the same terms andconditions as herein contained. Assignor hereby covenants and agrees to make, execute and deliverto Assignee, upon demand and at any time or times, any and all further assignments and otherinstruments as Assignee may determine for carrying out the purposes and intent of this Assignment.

11. Non-Waiver. The failure of Assignee to avail itself of any of the terms, covenantsand conditions of this Assignment for any period of time or at any time or times, shall not beconstrued or deemed to be a waiver of any such right, an amendment to any of the Loan Documents,or an estoppel against Assignee in any respect, and nothing herein contained nor anything done oromitted to be done by Assignee pursuant hereto shall be deemed a waiver by Assignee of any of itsrights and remedies under the Loan Documents or under the laws of the State of New York. Theright of the Assignee to collect the indebtedness and to enforce any other security therefor may beexercised by Assignee, either prior to, simultaneously with, or subsequent to any action takenhereunder.

12. Non-Merger. So long as any of the indebtedness evidenced or secured by the LoanDocuments shall remain unpaid, unless the Assignee shall otherwise consent in writing, the fee titleand the leasehold estate(s) on the Premises shall not merge, but shall always be kept separate anddistinct, notwithstanding the union ofboth such estates in the Assignor, any lessee or a third party bypurchase or otherwise.

13. Defeasance. Upon payment in full of the unpaid balance of the principal, interest,advances and other charges evidenced or secured by the Loan Documents, this Assignment shallbecome void and of no effect, and all the Leases shall be immediately and automatically revested,reconveyed and released to Assignor. Upon demand from Assignor in such event, Assignee, itssuccessors or assigns, shall mark this Assignment as void and paid in full, satisfied and dischargedand return this Assignment to the Assignor; provided, however, that an affidavit, certificate, letter orstatement ofAssignee showing any part ofthe indebtedness remaining unpaid shall be and constituteconclusive evidence of the validity, effectiveness and continuing force of this Assignment, and anyperson or entity may and is hereby authorized to rely thereon.

14. Notices. Any notice required hereunder shall be in writing, and shall be given inaccordance with the requirements of, and to the addresses, as set forth in the Mortgage.

15. Binding Effect. The terms, covenants, conditions and warranties contained herein andthe powers granted hereby shall run with the land, shall inure to the benefit of and bind all partieshereto and their respective heirs, executors, administrators, successors and assigns, and all lessees,subtenants, assigns, and all subsequent owners of the Premises, subject however to the terms ofParagraph 6 above, and all subsequent holders of the Loan Documents.

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16. Miscellaneous. The captions and headings in this instrument are inserted only as amatter of convenience and for reference, and they in no way define, limit or describe the scope ofthisinstrument or the intent of any provision thereof. Whenever the context so requires, the masculinegender shall include the feminine andlor neuter and the singular number shall include the plural andconversely in each case.

17. No Recourse; Special Obligation.

a. This Assignment is executed by the Agency for the purposes of subjecting itsinterest in the Premises to the lien of this Assignment and agreeing to cause this Assignment to bedelivered to the Montgomery County Clerk for recording and for no other purpose. Allrepresentations, covenants and warranties of the Assignor herein are hereby deemed to have beenmade by Hill & Markes Realty, LLC and not by the Agency. The Assignor and Assignee herebyexpressly agree that the term “Assignor”, as such term is used in this Assignment, shall not bedeemed to include the Agency.

b. The obligations and agreements ofthe Agency contained herein and any otherinstrument or document executed in connection therewith or herewith, and any other instrument ordocument supplemental thereto or hereto, shall be deemed the obligations and agreements of theAgency and not ofany member, officer, director, agent (other than the Assignor) or employee oftheAgency in his individual capacity, and the members, officers, directors, agents (other than theAssignor) and employees ofthe Agency shall not be liable personally hereon or thereon or be subjectto any personal liability or accountability based upon or in respect hereof or thereof or of anytransaction contemplated hereby or thereby.

c. The obligations and agreements of the Agency contained herein shall notconstitute or give rise to an obligation ofthe State ofNew York or the County ofMontgomery, NewYork and neither the State of New York nor the County of Montgomery, New York shall be liablehereon or thereon, and, further, such obligations and agreements shall not constitute or give rise to ageneral obligation of the Agency, but rather shall constitute limited obligations of the Agencypayable solely from the revenues of the Agency derived and to be derived from the lease, sale orother disposition of the Premises.

d. No order or decree of specific performance with respect to any of theobligations of the Agency hereunder shall be sought or enforced against the Agency unless (1) theparty seeking such order or decree shall first have requested the Agency, in writing, to take the actionsought in such order or decree of specific performance, and ten (10) days shall have elapsed from thedate ofreceipt of such request, and the Agency shall have refused to comply with such request (or, ifcompliance therewith would reasonably be expected to take longer than ten (10) days, shall havefailed to institute and diligently pursue action to cause compliance with such request within such ten(10) day period or failed to respond within such notice period, (2) if the Agency refuses to complywith such request and the Agency’s refusal to comply is based on its reasonable expectation that itwill incur fees and expenses (including, without limitation, reasonable attorney’s fees), the partyseeking such order or decree shall have placed in an account with the Agency an amount orundertaking sufficient to cover such reasonable fees and expenses, and (3) if the Agency refuses tocomply with such request and the Agency’s refusal to comply is based on its reasonable expectation

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that it or any of its members, officers, directors, agents (other than the Assignor) or employees shallbe subject to potential liability, the party seeking such order or decree shall (a) agree to indemnify,hold harmless and defend the Agency and its members, officers, directors, agents (other than theAssignor) and employees against any liability incurred as a result of its compliance with suchdemand, and (b) ifrequested by the Agency, furnish to the Agency satisfactory security to protect theAgency and its members, officers, directors, agents (other than the Assignor) and employees againstall liability expected to be incurred as a result of compliance with such request. Any failure toprovide the indemnity required in this Paragraph shall not affect the full force and effect ofan Eventof Default under the Note, this Assignment or any of the other loan documents.

e. No provision of this Section 17 shall be deemed to relieve the Assignor fromany liability which it may have personally to the Assignee by reason ofthis Assignment or any oftheother loan documents.

ASSIGNOR AND AGENCY HEREBY, AND ASSIGNEE BY ITS ACCEPTANCEHEREOF, EACH WAIVES THE RIGHT OF A JURY TRIAL IN EACH AND EVERY ACTIONON THIS ASSIGNMENT OR ANY OF THE OTHER LOAN DOCUMENTS, IT BEINGACKNOWLEDGED AND AGREED THAT ANY IS SUES OF FACT IN ANY SUCH ACTIONARE MORE APPROPRIATELY DETERMINED BY THE COURTS; FURTHER ASSIGNORHEREBY CONSENTS AND SUBJECTS ITSELF TO THE JURISDICTION OF COURTS OF THESTATE OF NEW YORK AND, WITHOUT LIMITING THE GENERALITY OF THEFOREGOING, TO THE VENUE OF SUCH COURTS IN THE COUNTY IN WHICH THEPREMISES IS LOCATED.

[Remainder of Page Intentionally Left Blank — Signature Page Follows)

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IN WITNESS WHEREOF, this Assignment has been duly executed by the Assignor andthe Agency as of the date first above written.

ASSIGNOR:

HILL & MARKES REALTY LLC

By:

Ttle:

_________

AGENCY:

STATE OF NEW YORK

COUNTY OF ALBANY

)))


By:Name:Title:

On the

_______

day of June, 2010, before me, the undersigned, personally appeared

___________________________________

personally known to me or proved to me on the basis ofsatisfactory evidence to be the individual whose name is subscribed to the within instrument and heacknowledged to me that he executed the same in his capacity, and that by his signature on theinstrument, the individual, or the person upon behalf of which the individual acted, executed theinstrument.

Notary Public

COUNTY OF ALBANY )

Q tl day of.4tn,j0l0, before me, the undersigned, personally appearedf-p , personally known to me or proved to me on the basis of

satisfactory evidence to be the individual whose name is subscribed to the within instrument and heacknowledged to me that he executed the same in his capacity, and that by his signature on theinstrument, the individual, or the person upon behalf of which the executed theinstrument.


Assignment of Leases and RentsMARIo A

Notary Pc E:-of New YcQaec Dfl C nt

MyCornrnssjon EEX.SJi

CLOSING ITEM NO.: A-Il


AND

HILL & MARKES, TNC.

PROJECT BENEFITS AGREEMENT


RELATING TO A LEASEHOLD INTEREST AND A LICENSEINTEREST HELD BY THE AGENCY IN A CERTAIN PARCEL OFLAND LOCATED ON STATE ROUTE 5S IN THE TOWN OFFLORIDA, MONTGOMERY COUNTY, NEW YORK.

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TABLE OF CONTENTS

(This Table of Contents is not part of the Project Benefits Agreementand is for convenience of reference only.)

PARTIES 1

ARTICLE I


Section 1.01. Definitions 1

ARTICLE II


Section 2.01. Representations of and Warranties by the Agency 4Section 2.02. Representations of and Warranties by the Company 4

ARTICLE III


Section 3.01. Financial Assistance 6Section 3.02. Company Agreements 6

ARTICLE IV


Section 4.01. Events of Default Defined 8Section 4.02. Remedies on Default 8Section 4.03. Recapture of Financial Assistance 8Section 4.04. Late Payments 9Section 4.05. Payment of Attorney’s Fees and Expenses 9Section 4.06. Remedies; Waiver and Notice 10

ARTICLE V

MISCELLANEOUS

Section 5.01. Term 11Section 5.02. Form of Payments 11Section 5.03. Company Acts 11Section 5.04. Amendments 11Section 5.05. Notices 11Section 5.06. Binding Effect 12Section 5.07. Severability 12Section 5.08. Counterparts 12

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Section 5.09. Applicable Law.12

TESTIMONIUM 13SIGNATURES 13ACKNOWLEDGEMENTS 14

EXHIBIT A - Form of Employment Affidavits A-i

— 11 —

000160/01178 Business 7533720v4

PROJECT BENEFITS AGREEMENT

THIS PROJECT BENEFITS AGREEMENT dated as of June 1, 2010 (the “Project BenefitsAgreement”) between MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY, apublic benefit corporation organized and existing under the laws of the State of New York having anoffice for the transaction of business located at Old County Courthouse, Park Street, Fonda, New York(the “Agency”), and HILL & MARKES, INC., a business corporation organized and existing under thelaws of the State of New York (the “State”) having an office for the transaction of business located at 120Edson Street, Amsterdam, New York (the “Company”) is being entered into by the Agency and theCompany to establish the conditions under which the Agency will be entitled to recapture some or all ofthe Financial Assistance (as such term is defined herein) that has been granted to the Company under theBasic Documents (as such term is defined herein).

ARTICLE I

DEFiNITIONS

SECTION 1.01. DEFINITIONS. The following words and terms used in this Project Benefits Agreementshall have the respective meanings set forth below unless the context or use indicates another or differentmeaning or intent.

“Application” means the application submitted by the Company to the Agency on or aboutSeptember 3, 2008, in which the Company describes the Project, certifies the number of Full TimeEquivalent Employees that will be employed at the Project Facility, and requests the Agency’s assistancewith the completion of the Project.

“Basic Documents” means the Conveyance Documents, the Lease Agreement, the Payment inLieu of Tax Agreement, the Project Benefits Agreement, the Loan Documents and all other instrumentsand documents related thereto and executed in connection therewith, and any other instrument ordocument supplemental thereto, each as amended from time to time.

“Completion Date” means the earlier to occur of (A) December 31, 2011 or (B) such date as shallbe certified by the Company to the Agency as the date of completion of the Project pursuant to Section4.2 of the Lease Agreement, or (C) such earlier date as shall be designated by written communicationfrom the Company to the Agency as the date of completion of the Project.

“Contract Employee” means (A) a full-time, private-sector employee (or self employedindividual) that is not on the Company’s payroll but who has worked for the Company at the ProjectFacility for a minimum of 35 hours per week for not less than 4 consecutive weeks providing services thatare similar to services that would otherwise be performed by a Full Time Equivalent Employee, or (B) 2part-time, private-sector employees (or self employed individuals) that are not on the Company’s payrollbut who have worked for the Company at the Project Facility for a combined minimum of 35 hours perweek for not less than 32 consecutive weeks providing services that are similar to services that wouldotherwise be performed by a Full Time Equivalent Employee.


“Equipment” means various machinery and equipment that is located on the Land and in theFacility.

000160/01178 Business 7533720v4

“Facility” means an approximately 100,000 square foot warehouse, and an approximately 15,000square foot office building.

“Financial Assistance” means exemptions from certain sales and use taxes, real property taxes,real property transfer taxes and mortgage recording taxes as more particularly described in the BasicDocuments.

“Full Time Equivalent Employee” means (A) a full-time, permanent, private-sector employee onthe Company’s payroll, who has worked at the Project Facility for a minimum of 35 hours per week fornot less than 4 consecutive weeks and who is entitled to receive the usual and customary fringe benefitsextended by the Company to other employees with comparable rank and duties; or (B) two part-time,permanent, private-sector employees on Company’s payroll, who have worked at the Project Facility for acombined minimum of 35 hours per week for not less than 4 consecutive weeks and who are entitled toreceive the usual and customary fringe benefits extended by the Company to other employees withcomparable rank and duties; or (C) a Contract Employee.

“Land” means a 45.3+!- acre parcel of land (tax map parcel identification number 54-2-2.1) thatis located on Highway 5 S in the City of Amsterdam, Town of Florida, Montgomery County, New York.


“Payment in Lieu of Tax Agreement” means the payment in lieu of tax agreement dated as ofJune 1, 2010 by and between the Agency and the Company, pursuant to which the Company has agreed tomake payments in lieu of taxes with respect to the Project Facility; as such agreement may be amended orsupplemented from time to time.

“Project” means (A) (1) the acquisition of an interest in a 45.3+!- acre parcel of land (tax mapparcel identification number 54-2-2.1) located on Highway 5S in the City of Amsterdam, Town ofFlorida, Montgomery County, New York, (2) the construction of two facilities on the Land: (a) anapproximately 100,000 square foot warehouse, and (b) an approximately 15,000 square foot officebuilding, (3) the acquisition and installation of certain machinery and equipment, all of the foregoing toconstitute new warehousing and office facilities to support the growth of the Company’s supply businessand related activities;


“Recapture Period” means a period often (10) years, commencing on the Completion Date.

“Recapture Events” shall mean the following:

(1) failure to complete the acquisition, construction and installation of the ProjectFacility;

(2) liquidation of substantially all of the Company’s operating assets and/or cessationof substantially all of the Company’s operations;

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(3) relocation of all or substantially all of Company’s operations at the ProjectFacility to another site, or the sale, lease or other disposition of all or substantially all of theProject Facility;

(4) elimination of jobs or transfer ofjobs out of Montgomery County that is equal toat least fifteen percent (15%) of the Company’s Employment Level;

(5) sublease of all or part of the Project Facility in violation of Basic Documents; or

(6) a change in the use of the Project Facility, other than as warehouse, office anddistribution facilities.

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ARTICLE II


SECTION 2.01. REPRESENTATIONS OF AND WARRANTIES BY THE AGENCY. The Agencydoes hereby represent, warrant and covenant as follows:

(A) Power. The Agency is a public benefit corporation of the State, has been duly establishedunder the provisions of the Act, is validly existing under the provisions of the Act and has the powerunder the laws of the State of New York to enter into this Project Benefits Agreement and to carry out thetransactions contemplated hereby and to perform and carry out all covenants and obligations on its part tobe performed under and pursuant to this Project Benefits Agreement.

(B) Authorization. The Agency is authorized and has the corporate power under the Act, itsby-laws and the laws of the State to enter into this Project Benefits Agreement and the transactionscontemplated hereby and to perform and carry out all the covenants and obligations on its part to beperformed under and pursuant to this Project Benefits Agreement. By proper corporate action on the partof its members, the Agency has duly authorized the execution, delivery and performance of this ProjectBenefits Agreement and the consummation of the transactions herein contemplated.

(C) Conflicts. The Agency is not prohibited from entering into this Project BenefitsAgreement and discharging and performing all covenants and obligations on its part to be performedunder and pursuant to this Project Benefits Agreement by the terms, conditions or provisions of any order,judgment, decree, law, ordinance, rule or regulation of any court or other agency or authority ofgovernment, or any agreement or instrument to which the Agency is a party or by which the Agency isbound.

SECTION 2.02. REPRESENTATIONS OF AND WARRANTIES BY THE COMPANY. The Companydoes hereby represent, warrant and covenant as follows:

(A) Power. The Company is a business corporation duly organized and validly existing underthe laws of the State of New York, is duly authorized to do business in the State of New York and has thepower under the laws of the State of New York to enter into this Project Benefits Agreement and toperform and carry out the transactions contemplated hereby and to perform and carry out all covenantsand obligations on its part to be performed under and pursuant to this Project Benefits Agreement, and byproper action of its board of directors has been duly authorized to execute, deliver and perform thisProject Benefits Agreement.

(B) Authorization. The Company is authorized and has the power under its certificate ofincorporation, by-laws and the laws of the State of New York to enter into this Project BenefitsAgreement and the transactions contemplated hereby and to perform and carry out all covenants andobligations on its part to be performed under and pursuant to this Project Benefits Agreement. By properaction of its board of directors, the Company has duly authorized the execution, delivery and performanceof this Project Benefits Agreement and the consummation of the transactions herein contemplated.

(C) Conflicts. The Company is not prohibited from entering into this Project BenefitsAgreement and discharging and performing all covenants and obligations on its part to be performedunder and pursuant to this Project Benefits Agreement by (and the execution, delivery and performance ofthis Project Benefits Agreement, the consummation of the transactions contemplated hereby and thefulfillment of and compliance with the provisions of this Project Benefits Agreement will not conflictwith or violate or constitute a breach of or a default under) the terms, conditions or provisions of its

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certificate of incorporation or by-laws or any other restriction, law, rule, regulation or order of any courtor other agency or authority of government, or any contractual limitation, restriction or outstandingindenture, deed of trust, mortgage, loan agreement, other evidence of indebtedness or any other agreementor instrument to which the Company is a party or by which it or any of its property is bound, and neitherthe Company’s entering into this Project Benefits Agreement nor the Company’s discharging andperforming all covenants and obligations on its part to be performed under and pursuant to this ProjectBenefits Agreement will be in conflict with or result in a breach of or constitute (with due notice and/orlapse of time) a default under any of the foregoing, or result in the creation or imposition of any lien ofany nature upon any of the property of the Company under the terms of any of the foregoing, and thisProject Benefits Agreement is the legal, valid and binding obligation of the Company enforceable inaccordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency,reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and bygeneral principles of equity (regardless of whether enforcement is sought in a proceeding in equity or atlaw).

(D) Governmental Consent. No consent, approval or authorization of, or filing, registrationor qualification with, any governmental or public authority on the part of the Company is required as acondition to the execution, delivery or performance of this Project Benefits Agreement by the Companyor as a condition to the validity of this Project Benefits Agreement.

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ARTICLE Ill


SECTION 3.01. FINANCIAL ASSISTANCE. (A) Financial Assistance. In connection with the Project,and in reliance on the certifications provided by the Company in the Application, the Agency has agreedto provide the Company with (i) sales and use tax exemptions, (ii) a mortgage recording tax exemption,and (iii) a real property tax abatement on the Project Facility.

(B) Contingent Nature of the Financial Assistance. The Agency and the Company agree thatthe purpose of the Project is to create or retain permanent private sector jobs in Montgomery County inthe form of direct employees at the Project Facility. Accordingly, the Agency and the Company agree thatthe amount of Financial Assistance to be received by the Company with respect to the Project shall bear adirect relationship to the success or lack of success of the Project in achieving this goal.

SECTION 3.02. COMPANY AGREEMENTS. The Company hereby agrees as follows:

(A) To file with the Agency, prior to the Closing Date, an employment plan, in substantiallythe form attached as Exhibit G to the Lease Agreement.

(B) To file with the Agency, on an annual basis, reports regarding the number of peopleemployed at the Project Facility and certain other matters, including as required under Applicable Law,the initial said annual employment report to be in substantially the form annexed as Exhibit H to theLease Agreement.

(C) To list new employment opportunities created as a result of the Project with the followingentities (hereinafter, the “JTPA Entities”): (1) the New York State Department of Labor CommunityServices Division and (2) the administrative entity of the service delivery area created by the Federal JobTraining Partnership Act (P.L. No. 97-300) in which the Project Facility is located (while currently citedin Section 858-b of the Act, the Federal Job Training Partnership Act was repealed effective June 1, 2000,and has been supplanted by the Workplace Investment Act of 1998 (P.L. No. 105-220)). The Companyagrees, where practicable, to first consider for such new employment opportunities persons eligible toparticipate in federal job training partnership programs who shall be referred by the JTPA Entities.

(D) (1) In the Application, the Company certified to the Agency employmentinformation with respect to the Project Facility and the Company’s operations.

(2) To maintain the following employment levels (the “Employment Levels”) duringthe term of the Lease Agreement (beginning immediately after the Completion Date):

Year Full Time Equivalent Employees1 1572 1783 2044 221

5 and thereafter 238

(3) To verify that the Company is achieving the Employment Levels, the Companyis required to submit the following reports: (1) by the 15th day of the first calendar month of each

-6-000160/01178 Business 7533720v4

new quarter, a form NYS-45-MN (the “Quarterly Report,” a copy of which is attached hereto asExhibit A), and (2) by February 1 of each year during the term of this Project BenefitsAgreement, a project and employment plan status report (the “Status Report,” a copy of which isattached hereto as Exhibit B and, together with the Quarterly Report, being collectively referredto as the “Employment Affidavits”). Full Time Equivalent Employees for each calendar yearduring the term of this Project Benefits Agreement shall be determined by calculating the averagenumber of Full Time Equivalent Employees for the prior calendar year, computed by adding thenumber of Full Time Equivalent Employees as of the Company’s last payroll date in the monthsof March, June, September and December and dividing that sum by 4.

(4) For purposes of determining the number of Full Time Equivalent Employees, nomore than ten percent (10%) of such Full Time Equivalent Employees may consist of ContractEmployees.

-7-000160/01178 Business 7533720v4

ARTICLE IV


SECTION 4.01. EVENTS OF DEFAULT DEFiNED. (A) The following shall be “Events of Default”under this Project Benefits Agreement, and the terms “Event of Default” or “default” shall mean,whenever they are used in this Project Benefits Agreement, any one or more of the following events:

(1) A default in the performance or observance of any of the covenants, conditions oragreements on the part of the Company in this Project Benefits Agreement and the continuancethereof for a period of thirty (30) days after written notice thereof is given by the Agency to theCompany, provided that, if such default is capable of cure but cannot be cured within such thirty(30) day period, the failure of the Company to commence to cure within such thirty (30) dayperiod and to prosecute the same with due diligence.

(2) The occurrence of an “Event of Default” under any other Basic Document.

(3) Any representation or warranty made by the Company herein or in any otherBasic Document proves to have been false at the time it was made.

SECTION 4.02. REMEDIES ON DEFAULT. (A) Whenever any Event of Default hereunder shall haveoccurred, the Agency may, to the extent permitted by law, take any one or more of the following remedialsteps:

(1) declare, by written notice to the Company, to be immediately due and payable,whereupon the same shall become immediately due and payable, (a) all amounts payable pursuantto Section 5.3 of the Lease Agreement, and (b) all other payments due under this Project BenefitsAgreement or any of the other Basic Documents; or

(2) terminate the Lease Agreement and the Payment in Lieu of Tax Agreement andconvey to the Company all the Agency’s right, title and interest in and to the Project Facility (Theconveyance of the Agency’s right, title and interest in and to the Project Facility shall be effectedby the recording by the Agency of the Termination of Lease to Agency and the Bill of Sale toCompany. The Company hereby agrees to pay all expenses and taxes, if any, applicable to orarising from any such transfer of title); or

(3) take any other action at law or in equity which may appear necessary or desirableto collect any amounts then due or thereafter to become due hereunder and to enforce theobligations, agreements or covenants of the Company under this Project Benefits Agreement.

(B) No action taken pursuant to this Section 4.01 (including repossession of the ProjectFacility) shall relieve the Company from its obligations to make all payments required by this ProjectBenefits Agreement and the other Basic Documents.

SECTION 4.03. RECAPTURE OF FiNANCIAL ASSISTANCE. (A) General. Upon the occurrence ofa Recapture Event that occurs during the Recapture Period, the Agency may require the Company toprovide for the recapture of the project financial assistance (the “Project Financial Assistance”), all inaccordance with the terms of this Section 4.03. The Company hereby agrees, if requested by the Agency,to pay to the Agency the recapture of the Project Financial Assistance, as provided in this Section 4.03.

-8-000160/01178 Business 7533720v4

(B) Project Financial Assistance to be Recaptured. The Project Financial Assistance to berecaptured by the Agency upon the occurrence of a Recapture Event during a Recapture Period shall bean amount equal to the sum of the following:

(1) the portion of the amount of New York State sales and use taxes allocable toMontgomery County that the Company would have paid in connection with the undertaking ofthe Project if the Project Facility was privately owned by the Company and not deemed owned orunder the jurisdiction and control of the Agency;

(2) the amount of any mortgage recording tax exemption provided by the Agency tothe Company in connection with the undertaking of the Project; and

(3) the difference between the amount of the payment in lieu of tax payments paid bythe Company under the Payment in Lieu of Tax Agreement and the amount of the general realproperty ad valorem taxes that would have been payable by the Company to the Taxing Entities ifthe Project Facility was privately owned by the Company and not deemed owned or under thejurisdiction and control of the Agency.

(C) Amount of Project Financial Assistance to be Recaptured. Upon the occurrence of aRecapture Event, the Company shall pay the following amounts as recapture:

Year Amount of Recapture1-2 90% of the Project Financial Assistance3 80% of the Project Financial Assistance4 70% of the Project Financial Assistance5 60% of the Project Financial Assistance6 50% of the Project Financial Assistance7 40% of the Project Financial Assistance8 30% of the Project Financial Assistance9 20% of the Project Financial Assistance10 10% of the Project Financial Assistance

(D) Survival of Obligations. The Company acknowledges that the obligations of theCompany in this Section 4.03 shall survive the conveyance of the Project Facility to the Company and thetermination of the Lease Agreement.

SECTION 4.04. LATE PAYMENTS. (A) One Month. If the Company shall fail to make any paymentrequired by this Project Benefits Agreement within thirty days of the date that written notice of suchpayment is sent from the Agency to the Company at the address provided in Section 4.05 of this ProjectBenefits Agreement, the Company shall pay the amount specified in such notice together with a latepayment penalty equal to five percent (5%) of the amount due.

(B) Thereafter. If the Company shall fail to make any payment required by this ProjectBenefits Agreement when due and such delinquency shall continue beyond the thirty days after suchnotice, the Company’s obligation to make the payment so in default shall continue as an obligation of theCompany to the Agency until such payment in default shall have been made in full, and the Companyshall pay the same to the Agency together with (1) a late payment penalty of one percent (1%) per monthfor each month, or part thereof, that the payment due hereunder is delinquent beyond the first month, plus(2) interest thereon, to the extent permitted by law, at the greater of (a) one percent (1%) per month, or (b)the rate per annum which would be payable if such amount were delinquent taxes, until so paid in full.

-9-000160/01178 Business 7533720v4

SECTION 4.05. PAYMENT OF ATTORNEY’S FEES AND EXPENSES. If the Company shoulddefault in performing any of its obligations, covenants or agreements under this Project BenefitsAgreement and the Agency should employ attorneys or incur other expenses for the collection of anyamounts payable hereunder or for the enforcement of performance or observance of any obligation,covenant or agreement on the part of the Company herein contained, the Company agrees that it will, ondemand therefor, pay to the Agency not only the amounts adjudicated due hereunder, together with thelate payment penalty and interest due thereon, but also the reasonable fees and disbursements of suchattorneys and all other expenses, costs and disbursements so incurred, whether or not an action iscommenced.

SECTION 4.06. REMEDIES; WAIVER AND NOTICE. (A) No Remedy Exclusive. No remedy hereinconferred upon or reserved to the Agency is intended to be exclusive of any other available remedy orremedies, but each and every such remedy shall be cumulative and shall be in addition to every otherremedy given under this Project Benefits Agreement or now or hereafter existing at law or in equity or bystatute.

(B) Delay. No delay or omission in exercising any right or power accruing upon theoccurrence of Recapture Event hereunder shall impair any such right or power or shall be construed to bea waiver thereof, but any such right or power may be exercised from time to time and as often as may bedeemed expedient.

(C) Notice Not Required. In order to entitle the Agency to exercise any remedy reserved to itin this Project Benefits Agreement, it shall not be necessary to give any notice, other than such notice asmay be expressly required in this Project Benefits Agreement.

(D) No Waiver. In the event any provision contained in this Project Benefits Agreementshould be breached by any party and thereafter duly waived by the other party so empowered to act, suchwaiver shall be limited to the particular breach so waived and shall not be deemed to be a waiver of anyother breach hereunder. No waiver, amendment, release or modification of this Project BenefitsAgreement shall be established by conduct, custom or course of dealing.

-10000160/01178 Business 7533720v4

ARTICLE V

MISCELLANEOUS

SECTION 5.01. TERM. (A) General. This Project Benefits Agreement shall become effective and theobligations of the Company shall arise absolutely and unconditionally upon the execution and delivery ofthis Project Benefits Agreement by the Company and the Agency. Unless otherwise provided byamendment hereof, this Project Benefits Agreement shall continue to remain in effect until December 31,2022.

SECTION 5.02. FORM OF PAYMENTS. The amounts payable under this Project Benefits Agreementshall be payable in such coin and currency of the United States of America as at the time of payment shallbe legal tender for the payment of public and private debts.


SECTION 5.04. AMENDMENTS. This Project Benefits Agreement may not be effectively amended,changed, modified, altered or terminated except by an instrument in writing executed by the partieshereto.


(B) Addresses. The addresses to which notices, certificates and other communicationshereunder shall be delivered are as follows:

IF TO THE COMPANY:

Hill & Markes, Inc.120 Edson StreetAmsterdam, New York 12010Attention: Neal Packer, COO

WITH COPIES TO:


-11-000160/01178 Business 7533720v4


IF TO THE AGENCY:


WITH A COPY TO:

Law Offices of Paul L. Woliman41 Market StreetAmsterdam, New York 12010Attention: Paul L. Woilman, Esq.

(C) Change of Address. The Agency and the Company may, by notice given hereunder,designate any further or different addresses to which subsequent notices, certificates and othercommunications shall be sent.

SECTION 5.06. BINDING EFFECT. This Project Benefits Agreement shall inure to the benefit of, andshall be binding upon, the Agency, the Company and their respective successors and assigns. Theprovisions of this Project Benefits Agreement are intended to be for the benefit of the Agency.

SECTION 5.07. SEVERABILITY. If any article, section, subdivision, paragraph, sentence, clause,phrase, provision or portion of this Project Benefits Agreement shall for any reason be held or adjudged tobe invalid or illegal or unenforceable by any court of competent jurisdiction, such article, section,subdivision, paragraph, sentence, clause, phrase, provision or portion so adjudged invalid, illegal orunenforceable shall be deemed separate, distinct and independent and the remainder of this ProjectBenefits Agreement shall be and remain in full force and effect and shall not be invalidated or renderedillegal or unenforceable or otherwise affected by such holding or adjudication.

SECTION 5.08. COUNTERPARTS. This Project Benefits Agreement may be simultaneously executedin several counterparts, each of which shall be an original and all of which shall constitute but one and thesame instrument.

SECTION 5.09. APPLICABLE LAW. This Project Benefits Agreement shall be governed by andconstrued in accordance with the laws of the State of New York.

- 12 -

000160/01178 Business 7533720v4

IN WITNESS WHEREOF, the Agency and the Company have caused this Project Benefits

Agreement to be executed in their respective names by duly authorized officers thereof, all being done as

of the date first above written.


BY:/jJ4J,M2:/—Y) Chairman

HILL & MARKES, INC.


- 13-000160/01178 Business 7533720v3

IN WITNESS WHEREOF, the Agency and the Company have caused this Project BenefitsAgreement to be executed in their respective names by duly authorized officers thereof, all being done asof the date first above written.


BY:

- 13 -

(Vice) Chairman

HILL &

000160/01178 Business 7533720v3



On the 30tI day of June, in the year 2010, before me, the undersigned, personally appearedWILLIAM HISERT, personally known to me or proved to me on the basis of satisfactory evidence to bethe individual whose name is subscribed to the within instrument and acknowledged to me that heexecuted the same in his capacity, and that by his signature on the instrument, the individual, or theperson upon behalf of which the individual acted, executed t ns ment.

Notary Public

- 14 -

WOLLMANNOJARy PUflLIC TAr[ OF NE/ VrRk

OUAUFJED IN I( GCj,Oy uUNRE(5#

Y(’)tj JUL

OOO16O/O 178 Business 7533720v4


COUI’4TY OF FULT )

On the day of July, in the year 2010, before me, the undersigned, personally appearedNEAL PACKER, personally known to me or proved to me on the basis of satisfactory evidence to be theindividual whose name is subscribed to the within instrument and acknowledged to me that he executedthe same in his capacity, and that by his signature on the instrument, the individual, or the person uponbehalf of which the individual acted, executed the instrument.

- 15 -

Notary Public

MAR to. PA PA

Notary Pithj SatF) cl r’Rw YorkQLJaIIIOI Fui0 Co nMy Commj5s

000160/01178 Business 7533720v3

SCHEDULE A

QUARTERLY REPORT

---SEE ATTACHED—

A-I000160/01178 Business 7533720v4

NYS-45-ATT-MN Quarterly Combined Withholding, Wage Reporting, II1J1111111111111111111(7/06)And Unemployment Insurance Return-Attachment

60629418

Withholding identification number:

I IMark an Xin the applicable box(es):

A. Original J or Amended return

Jan 1-

Apr 1-

July 1-

Oct 1 - Taa

Employer legal name: Mar31 Jun30 Sep30 Dec31 U year E11 2 3 4 YY

C. Seasonal employer Q

Page No. of

_____

Total this page only

If first page, enter grand totalsof all pages

. Contact information Name Daytime telephone number

(see instructions) ( )

For office use onlyPostmark Received date

L[ I 111111 11 I I IMail to: NYS EMPLOYMENT TAXES

P0 BOX 4119BINGHAMTON NY 13902-4119

IILI

B. Other wages only reported on this page EJ

Annual wage and withholding totalsQuarterly employee/payee wage reporting information If this return is for the 4th quarter or the last

(Do not enter negative numbers in columns c, d, and e; see instructions) return you will be filing for the calendar year,complete columns d and e.

C ross wages or eThtal tax

.

SCHEDULE B

STATUS REPORT

---SEE ATTACHED--

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Sig

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PRODUCER THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATIONONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE

Capital Bauer Ins Agency, Inc HOLDER. THIS CERTIFICATE DOES NOT AMEND, EXTEND ORP.O. Box 15094 ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW.Albany NY 12212-5094Phone: 518-869-3535 Fax:518-869-3580 INSURERSAFFORDINGCOVERAGE NAIC#

INSURED INSURER A Peerless Insurance Company 273

INSURER B Travelers Insurance 345

Hill & Markes Inc INSURER C

Edson St - PC Box 7 INSURER 0Amsterdam NY 12010I INSURERE

COVERAGES

THE PCLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDINGANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED ORMAY P RTAIN. THE INSURANCE AFFORDED BY THE POLIC ES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCHPCLICIES AGGREGATE LltITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.

FISH AUU POUCY EFFECTIVE POLICY EXPIRATIONLTR INSR TYPE OF INSURANCE — POLICY NUMBER DATE (MMIOOYYYY) DATE (NM!DD!VYYY) LIMITS

GENERAL LIABILITY EACH OCCURRENCE $ 1000000A 1COMMERCIALGENERALLIABILITY CBP8162828 06/01/09 06/01/10 PREWSES(Eaoccurence) $300000

_J_] CLAIMS MADE OCCUR MED EXP IAnyoneprson) $ 10000

—_____________________ PERSONAL &ADV INJURY $ 1000000

GENERALAGGREGATE $ 2000000GENL AGGREGATE LIMIT APPLIES PER PRODUCTS - COMP/OP AGG $ 2000000

— DLICYfl r flLOC Emp Ben. 1000000AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT

$ 1000000A X AYAUTO BA8163328 06/01/09 06/01/10 (Eaaccdenl)

A..L OWNED AUTOS BODILY INJURY$

SDHEDULEO AUTOS (Per person)

HIRED AUTOS BODILY INJURY

[ NON-OWNEDAUTOS (Perancidenl) $

I—____________________ PROPERTY DAMAGE $(P61 accidenl)

jGRA3ELIABILITY AUTOONLY-EAACCIOENT $

NY AUTO OTHER THAN EAACC $AUTO ONLY: AGO $

EXCESS! UMBRELLA LIABILITY EACH OCCURRENCE $ 5000000

A CICCUR DCLAIMSMADE CUE1164028 06/01/09 06/01/10 AGGREGATE $5000000

DEDUCTIBLE $

X F1ETENTION $ 10000 —______________________ $

WORKERS COMPENSATION xl WCSTATU- 0TH-

AND EMPLOYERS LIABILITY Y! NTORY LIMITS ER

A ANY PROPRIETOR/PARTNERIEXECUTIV WC8163928 07/01/09 07/01/10 EL. EACHACCIDENT $ 100000OF FICERJMIEMBER EXCLUDED?(Mandatory in NH) EL. DISEASE - EA EMPLOYEE $ 100000

SECIAL PEOVISIONS below —_____________________ E.L. DISEASE-POLICYLIMIT $ 500000OTHER

A COMP/COLLISION BA13163328 06/01/09 06/01/10 DEDtJCTIBL 500/1000

B EMPLOYEE DISHONEST 104801500 06/01/09 06/01/10 125000 1000 DEDDESCRIPTION OF OPERATIONS! LOCATIONS! VEHICLES /EXCLUSIONS ADDED BY ENDORSEMENT I SPECIAL PROVISIONS

PROOF OF COVERAGE

CERTIFICATE HOLDER CANCELLATIONSHOULD ANY OF THE AEOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION

MONTGO8 DATE THEREOF. THE ISSUING INSURER WiLL ENDEAVOR TO MAIL 30 DAYS WRITTEN

MONTGO!RY COUNTY INDUSTRIAL NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LEFT. BUT FAILURE TO DO SO SHALL

DEVELOPINT AGENCY C/C> MONTOOM IMPOSE NO OBLIGATION OR LIABILITY OF ANY KIND UPON THE INSURER, ITS AGENTS OR

COUNTY ECONOMIC OPP & DEVREPRESENTATIVES.

PID BOX 1500AUTHORIZED REPRESENTATIVE

FONDA NY 12068

CORPORATION. All rights reserved.

CERTIFICATE OF LIABILITY INSURANCEDATE (MM!DD/YYYY)

OPID WBI-$ILL&-2 05/12/10

ACORD 25 (2009101)

The ACORD name and logo are registered marks of ACO


CLOSING RECEIPT

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY(HILL & MARKES REALTY, LLC PROJECT)

CLOSiNG RECEIPT executed this 7th day of July, 2010, by MONTGOMERY COUNTYINDUSTRIAL DEVELOPMENT AGENCY (the “Agency”) and HILL & MARKES REALTY, LLC (the“Company”).

WITNES SETH:

Capitalized terms used herein which are not otherwise defined herein and which are defined inthe lease agreement dated as of June 1, 2010 (the “Lease Agreement”) by and between the Agency andthe Company shall have the meanings ascribed to them in the Lease Agreement, except that, for purposesof this Closing Receipt, (A) all definitions with respect to any document shall be deemed to refer to suchdocument only as it exists as of the date of this Closing Receipt and not as of any future date, and (B) alldefinitions with respect to any Person shall be deemed to refer to such Person only as it exists as of thedate of this Closing Receipt and not as of any future date or to any successor or assign.

(1) The Agency (A) has executed, delivered and acknowledged, where appropriate, the BasicDocuments to which it is a party, (B) acknowledges receipt of the Basic Documents duly executed andacknowledged, where appropriate, by the Company and (C) acknowledges receipt from the Company ofthe Agency’s administrative fee relating to the Project.

(2) The Company (A) has executed, delivered and acknowledged, where appropriate, theBasic Documents to which it is a party and (B) acknowledges receipt of the Basic Documents dulyexecuted and acknowledged by the Agency, where appropriate.

012178/00069 Business 7532499v1

IN WITNESS WHEREOF, the Agency and the Company have caused this Closing Receipt to beexecuted in their respective names by their duly authorized officers and dated as of the day and year setforth above.


BY:______________(.ie) Chairman

Hill & MARKES REALTY, LLC

BY:_______________Authorized Member

-2-000161/01178 Business 7532499v1

IN WITNESS WHEREOF, the Agency and the Company have caused this Closing Receipt to beexecuted in their respective names by their duly authorized officers and dated as of the day and year setforth above.


BY:_________________________(Vice) Chairman

Hill & MARKES REALTY, LL9

BYkA//

7/ Authorized Mëmber

-2-012178/00069 Business 7532499v1

CLOSING ITEM NO.: B-I

GENERAL CERTIFICATE

OF


This certificate is made in connection with the execution by Montgomery County IndustrialDevelopment Agency (the “Agency”) of a lease agreement dated as of June 1, 2010 (the “LeaseAgreement”) by and between Hill & Markes Realty, LLC (the “Company”) and the Agency, theMemorandum of Lease Agreement, the Underlying Lease, the Memorandum of Underlying Lease, theLicense to Agency, the Payment in Lieu of Tax Agreement, the Project Benefits Agreement, theMortgage, (as each of said documents is defined in the Lease Agreement) and any other document to beexecuted by the Agency (all of the preceding documents being collectively referred to as the “AgencyDocuments”) in connection with the undertaking by the Agency of a project (the “Project”) consisting ofthe following: (A) (1) the acquisition of an interest in a 45.3+!- acre parcel of land (tax map parcelidentification number 54-2-2.1) and located on Highway 5S in the City of Amsterdam, Town of Florida,Montgomery County, New York (the “Land”), (2) the construction of two facilities on the Land: (a) anapproximately 100,000 square foot warehouse, and (b) an approximately 15,000 square foot officebuilding (both facilities being collectively referred to as the “Facility”), (3) the acquisition and installationof certain machinery and equipment therein and thereon (the “Equipment”) (the Land, the Facility and theEquipment hereinafter collectively referred to as the “Project Facility”), all of the foregoing to constitutenew warehousing and office facilities to support the growth of the Company’s supply business and relatedactivities; (B) the granting of certain “financial assistance” (within the meaning of Section 854(14) of theAct) with respect to the foregoing, including potential exemptions from sales and use taxes, real propertytransfer taxes, mortgage recording taxes and real estate taxes (collectively, the “Financial Assistance”);and (C) the lease of the Project Facility to the Company pursuant to the terms of the Lease Agreement.

Capitalized terms used herein which are not otherwise defined herein shall have the meaningsascribed to them in the Lease Agreement except that, for purposes of this certificate, (A) all definitionswith respect to any document shall be deemed to refer to such document only as it exists as of the date ofthis certificate and not as of any future date, and (B) all definitions with respect to any Person shall bedeemed to refer to such Person only as it exists as of the date of this certificate and not as of any futuredate or to any successor or assign.

THE UNDERSIGNED OFFICER OF THE AGENCY HEREBY CERTIFIES THAT:

1. I am an officer of the Agency and am duly authorized to execute and deliver thiscertificate in the name of and on behalf of the Agency.

2. The Agency is a corporate governmental agency constituting a public benefit corporationof the State of New York (the “State”) duly established under Title 1 of Article 18-A of the GeneralMunicipal Law, Chapter 24 of the Consolidated Laws of New York, as amended (the “Enabling Act”),and Chapter 666 of the Laws of 1970 of the State, as amended, constituting Section 895-d of said GeneralMunicipal Law (said Chapter and the Enabling Act being hereinafter collectively referred to as the“Act”). A copy of Chapter 666 of the Laws of 1970 of the State is attached hereto as Exhibit A.

012178/00069 Business 7555096v2

3. The Agency (A) has full legal power and authority to own its Properties, conduct itsbusiness, execute, deliver and perform its obligations under each of the Agency Documents and (B) hastaken all actions and obtained all approvals required in connection therewith by the Act and any otherapplicable laws and regulations.

4. Under the Act, it is the purpose of the Agency to promote, develop, encourage and assistin the acquiring, constructing, reconstructing, improving, maintaining, equipping and furnishingindustrial, manufacturing, warehousing, and research facilities, including commercial facilities, and theAgency has the power to acquire, construct, reconstruct, lease, sell, improve, maintain, equip or furnishcertain properties, including commercial facilities.

5. Pursuant to the Act, the governing body of Montgomery County, New York, for whosebenefit the Agency was established filed or caused to be filed within six (6) months after the effectivedate of such Chapter 666 of the Laws of 1970 of the State, in the office of the New York StateDepartment of State, Miscellaneous Records Unit, the Certificate of Establishment of the Agencypursuant to Section 856(1)(a) of the New York General Municipal Law. The Certificate of Establishmentof the Agency described in the preceding sentence also named the members and officers of the Agency asappointed by the governing body of Montgomery County, New York. Attached hereto as Exhibit B is acertified copy of said Certificate of Establishment of the Agency and certificates of appointment relatingto all of the current members of the Agency.

6. The current members and officers of the Agency are as follows: William Hisert,Chairman, Eugene Richards, Vice Chairman, Carol Shinemen, Secretary, Robert Hoefs, Treasurer,Charles Schwartz, Esq., Member, Daniel Wilson, Member and Joseph R. Emanuele, III, Member. Theforegoing named individuals constitute all of the members of the Agency; each of such individuals wasand is duly appointed, qualified and acting as such member; each of such individuals who is indicated asan officer of the Agency was and is duly elected or appointed, qualified and acting as such officer; andeach of such individuals has been a member of the Agency since at least January 1, 2010.

7. Attached hereto as Exhibit C is a true, correct and complete copy of the by-laws of theAgency, together with all amendments thereto or modifications thereof, and said by-laws as so amendedand modified are in full force and effect in accordance with their terms as of the date of this certificate.

8. The execution, delivery and performance of all agreements, certificates and documentsrequired to be executed, delivered and performed by the Agency in order to carry out, give effect to andconsummate the transactions contemplated by the Agency Documents have been duly authorized by allnecessary action of the Agency. The Agency Documents are in full force and effect on and as of the datehereof, and no authority for the execution, delivery or performance of the Agency Documents has beenrepealed, revoked or rescinded.

9. The execution, delivery and performance of the Agency Documents, the consummationof the transactions therein contemplated and compliance with the provisions of each by the Agency do notand will not (A) violate the Act or the by-laws of the Agency, (B) require consent under (which has notheretofore been received) or result in a breach of or default under any credit agreement, purchaseagreement, indenture, mortgage, deed of trust, commitment, guaranty, lease or other agreement orinstrument to which the Agency is a party or by which the Agency may be bound or affected, or (C)conflict with or violate any existing law, rule, regulation, judgment, order, writ, injunction or decree ofany government, governmental instrumentality or court, domestic or foreign, having jurisdiction over theAgency or any of the Property of the Agency.

-2-012178/00069 Business 7555096v2

10. The Agency has duly authorized the taking of and has taken any and all actions necessaryto carry out and give effect to the transactions contemplated to be performed on its part by the AgencyDocuments.

11. Each of the representations and warranties of the Agency contained in each of theAgency Documents is true, accurate and complete on and as of the date of this certificate with the sameforce and effect as though such representations and warranties were made on and as of the date hereof.

12. There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before orby any court, public board or body pending or, to our knowledge, threatened against or affecting theAgency (nor, to our knowledge, any basis therefor), wherein an unfavorable decision, ruling or findingwould adversely affect (A) the transactions contemplated by the Approving Resolution (as hereinafterdefined), (B) the validity or the enforceability of the Approving Resolution or the Agency Documents orthe transactions contemplated therein, or (C) the existence or organization of the Agency.

13. The Agency Documents have been each duly executed, acknowledged, whereappropriate, and delivered on behalf of the Agency by the Chairman or Vice Chairman of the Agency; thesignature of said officer thereon is the genuine signature of such officer; and said executed AgencyDocuments are in substantially the same form as the forms thereof presented to the members of theAgency and approved by the Approving Resolution.

14. Pursuant to a resolution adopted by the members of the Agency on April 9, 2009 (the“Public Hearing Resolution”), the Agency authorized the Executive Director to conduct a public hearingwith respect to the Project. Attached hereto as Exhibit D is a certified copy of the Public HearingResolution.

15. Attached hereto as Exhibit E is proof of mailing of notice of the public hearing, held withrespect to the Project (the “Public Hearing”), to the chief executive officers of the “affected taxjurisdictions” with respect to the Project (as such quoted term is defined in Section 854(16) of the Act).

16. Attached hereto as Exhibit F is an affidavit of publication of notice of the Public Hearingpursuant to Section 859-a of the Act.

17. Attached hereto as Exhibit G is the report of the Public Hearing (the “Report”).

18. Pursuant to Article 8 of the Environmental Conservation Law, Chapter 43-B of theConsolidated Laws of New York, as amended (the “SEQR Act”) and the regulations (the “Regulations”)adopted pursuant thereto by the Department of Environmental Conservation of the State of New York,being 6NYCRR Part 617, as amended (collectively with the SEQR Act, “SEQRA”), by resolutionadopted by the members of the Agency on May 20, 2010 (the “SEQR Resolution”), the Agency(A) ratified the determination by the Town of Florida Planning Board (the “Planning Board”) to act as“lead agency” with respect to the Project, (B) acknowledged receipt of a copy of a negative declarationissued by the Planning Board on March 30, 2009 (the “Negative Declaration”), and (C) indicated that theAgency had no information to suggest that the Planning Board was incorrect in authorizing the issuanceof the Negative Declaration. Attached hereto as Exhibit H is a certified copy of the SEQR Resolution.

19. Attached hereto as Exhibit I is a true, correct and complete copy of the resolution of themembers of the Agency adopted on June 30, 2010 (the “Approving Resolution”) approving andauthorizing execution by the Agency of the Agency Documents. Such Approving Resolution was dulyadopted by the members of the Agency, has not been amended or modified since its adoption and is in fullforce and effect as of the date of this certificate in accordance with its terms.

-3-012178/00069 Business 7555096v2

20. Pursuant to Section 9(B) of the Approving Resolution, the Chairman of the Agency hasdesignated the Chief Executive of the Agency as an Authorized Representative (as defined in the LeaseAgreement) and, as such, the Chief Executive Officer of the Agency is authorized to execute the AgencyDocuments on behalf of the Agency.

21. The Agency is not contemplating instituting bankruptcy, insolvency or similarproceedings against itself.

22. The Agency has complied with all of the agreements and satisfied all of the conditions onits part to be performed and satisfied by the terms of the Agency Documents on or prior to the ClosingDate.

-4-012178/00069 Business 7555096v2

IN WITNESS WHEREOF, I have hereunto set my signature as (Vice) Chairman the Agency this7thdayofJUlY 2010


BY:______________L) Chairman

The undersigned, Paul L. Woliman, counsel for the Agency, hereby certifies that the signature ofthe officer of the Agency subscribed to and contained in the foregoing General Certificate of the Agencyis true and genuine.

Paul L. Woliman

-5-012178/00069 Business 7555096v1

EXHIBIT A

CHAPTER 666 OF THE LAWS OF 1970

A-i012178/00069 Business 7555096v1

I hereby certify that the annexed copy has been compared with the original document filed by the Department ofState and that the came is a true copy of said original.

Witness my hand and seal of the Department of State on DEC 1 7 2O2

Slate of New YorkDepartment of State

II

‘S’s..

Secretary of State

DOS-20{) (Rev. 03/02)

CHAPTER 666A-N ACT to amend the general municipal law, in relation to creating andestablishing the Montgomery county industrial development agency, andproviding for its functions, powers and dutiesBecame a law May 8, l70, with the approval of the Governor. Passed onaaxue Rule request pursuant to article IX, section 2(b) (2) of the Constitution by a majority vote, three-dfths being present

The Peopie of the State of Yew Yoik, represented n Senate and A3sCmbly,do enact a. foLlow.:

Section 1. The general municipal law is hereby amended byinserting in titIe two of article eighteen-A, a new section, to besection eight hundred ninety-flve-d, to read as follows:§ 895-d. Montgomery county industrial development agency. Fortite benefit of the county of Montgomery and the inhabitants thereof,an industrial development agency, to be known as the MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY,i.i hereby established for the accomplishment of any or all of thepurposes specified in title one of article eighteen-A of this chapter.It shall constitute a body corporate and politic, and be perpetual induration. It shall have the powers and duties now or hereafter conferred by title one of article eighteen-A of this chapter upon indujtrial development agencies. It shall be organized in a mannerprescribed by and be subject to the provisions of title one of articleeighteen-A of this chapter. Its members shall be appointed by thegoverning body of the county of Montgomery. The agency, its members, officers and employees and its operations and activities shall inall respects be governed by the provisions of title one of articleeighteen-A of this chapter. Any agreement as made between agencyand project occupant regarding fees shall be subject to the approvalof the Board of Supervisors of Montgomery County.

§ 2. This act shall take effect immediately.

EXHIBIT B

CERTIFICATE OF ESTABLISHMENT OF THE AGENCY ANDCERTIFICATES OF APPOINTMENT OF CURRENT MEMBERS

B-I012178/00069 Business 7555096v1

STATE OF NEW YORK

DEPARTMENT OF STA TE

I hereby certify that the annexed copy has been compared with theoriginal document in the custody of the Secretary of State and that the sameis a true copy of said original.

WITNESS my hand and official seal of theDepartment of State, at the City of Albany, onSeptember 15, 2008.

Paul LaPointeSpecial Deputy Secretary of State

Rev. 06/07

State v/New York I!)e/iartllieiil o/State )

I hrebv c’rui[’ 111(11 ih’ (lnnev(’d copy has bceii compared with 1/u’ original (loelliflepIt filed by the I)epartmeni ofstate (111(1 111(11 the sailic a (rue i opv ci sad original.

lViiness lily lunid cud un! o[the I)epartnienl of Slate on U U i ?002

Secretary of State

DOS-2J31) Rev. 1)3/1)2)

:(Tj.()p T’r

SP2197Q

;IIK ri

CETIF1CATEOF

ESTA2LIS}i’.TENTOF

MONT 001€ Y COUNTY INDUSTRIAL DEVELOPMEr’PI AGENCYFor Filing

WithSecretary of State

THIS IS TO CERTIFY that the Montgomery County IndustrialAgency has been established by secial act of he New York StateLegislature, and the following is set forth pursuant to Section856 of the New York State Industrial Development Agency Act:

(1) The special act establishing the agency was passedan May 8, 1970 by Chapter 666 of the Laws of 1970 which becameeffective May 8, 1970.

(2) The name of the agency is:

MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY(3) The names of the members of the Agency, their

Chairman, and their terms of office are as follows:NAME

TERM OF OFFICE EXPIRESF. RAYMOND GOLLER, Chairman At pleasure of Montgomery

County Board of SupervisorsEDWARD L. WILKINSON, Member At pleasure of Montgomery

County Board of SupervisorsHARVEY SMITH, Member At pleasure of Montsomery

County Board of SupervisorsGLENN MATHIASEN, Member At pleasure of Montgomery

County Board of SupervisorsHAROLD L. PHILBROOK, Member December 31, 1971

(Lb) The facts establishing the need for such Agency inthe municipality are as follows:

(a) To insure and promote the economic stabilityand growth of Montgomery County.

(b) To enable lOO financing of new industry andexoanson of existing industry in certain instances.

(c) Provide additional new employment opportunitiesto stem out—migration of the County’s labor force.

(d) Provide new job opportunities paying betterthan minimum wages.

Ce) Combat the under—employment of sections of thepresent labor force.

THE BOARD OF SUPERVISORS OFTHE COUNTY OP MONTGOMERY

\ 0By

________________

Jsehkjlong,1erk1-‘

374T! owyDEP5.R’MENT OP STATEIt

197g

I hereby certtfy that the anzexed copy has been compared with the original document filed by the Department ofState and that the same is a true copy ofsaid original.

Witness my hand and seal of the Department of State on?1104

State of New York IDepartment of State)

ss:

Secretary of State

DOS-200 (Rev. 03/02)

CERTIFICATEOF

APPOINTMENTAS MEMBER OF

THE MONTGOMERY COUNTYINDUSTRIAL DEVELOPMENT AGENCY F I L E DFOR FILINGWITH

JAN 8 — 2004SECRETARY OF STATE

M SCELLANEOvSTHIS is to certify that& STATE RECORDS

WILLIAM HISERT

has been appointed as a

MEMBER

of the Montgomery County Industrial Development Agency, which has bean duly established byChapter 666 of the Laws of 1970, copy of which Certified Resolution is attached hereto.

State of New YorkDepartment of State)

I

1 hereby certify that the annexed copy has been compared with the original docunent filed by the Depart,nent ofState and that the same is a true copy ofsaid original.

Witness my hand and seal of the Department of State on f) f7— t004

Secretary ofState

DOS-200 (Rev. 03/02)

CERTIFICATE/ OF

/ APPOINTMENTAS A MEMBER OF THE


FOR FILINGWITH

NEW YORK STATEDEPARTMENT OF STATE,

MISCELLANEOUS RECORDS UNITSTATE OF N YORKDEf_ARTMENT OF STATE

FILEDAUG 2 6 2004

MISCELLANEOUS THIS is to certify that& STATE RECORDS

Eugene Richards

has been appointed as aMEMBER

of theMontgomery County Industrial Development Agency

which has been duly established by Chapter 666of the Laws of 1970

This appointment was made by the Board of Supervisors of Montgomery County, New‘York on July 27, 2004.

CHRISTINE PASQUARELI, Clerk of thei Board of Supervisors of

‘-(i j Montgomery County, New York

:

(SEAL)

j /, i(_‘•

f /

:t

MyDocs/MCAPPOrntmefltCe!lificatt

State of New York )

Special Deputy Secretary ofState

ss:Department of State)

I hereby certify that the annexed copy has been compared with the original document in the custody of the Secretaryof State and that the same is a true copy of said original.

Witness my hand and seal of the Department of State on MAY 0 8 2O7

DOS-1266 (Rev. 11105)

APR 0 9 2007CERTIFICATEOF MCELL,JUUSAPPOINTMENT & STATE RECOpwAS A MEMBER OF THE


FOR FILINGWITH


MISCELLANEOUS RECORDS UNIT

THIS is to certify that

Carol A. Shineman




This appointment was made by the Board of Supervisors of Montgomery County, NewYork on December 26, 2006, effective January 1, 2007

ERLY SANBORN, Clerk of theBoard of Supervisors ofMontgomery County, New York

(SEAL)

MyDocsfMClDAlAppointmentCertificate

I hereby certify that the annexed copy has been conpared vith the original document in the custody of the Secretaryof State and that the satne is a true copy ofsaid original.

Witness my hand and seal of the Department of State on j 2006

State of New York IDepartment of State)

DOS-1266 (Rev. 11/05)

Special Deputy Secretary of State

b

çjjDAR1MT UF STTE

FILED

AUG 1 8 2CERTIFICATE

OF MdCLL,N(JLJAPPOINTMENT & STATE EOORDS

AS A MEMBER OF THEMONTGOMERY COUNTY

INDUSTRIAL DEVELOPMENT AGENCYFOR FILING

WITHNEW YORK STATE

DEPARTMENT OF STATE,MISCELLANEOUS RECORDS UNIT


Robert Hoefs




This appointment was made by the Board of Supervisors of Montgomery County, NewYork on May 23, 2006.

theBoard of Supervisors ofMontgomery County, New York

(SEAL)

MyDocsfMClDAJAppointinentCertificate

STATE Of N YOA$(OIPrWNT S1ATE

FILED

SEP 1 22008

‘Ib(SEtLMNtUUS& STATE RECOADS

STATE OF NEW YORK )ss


I, Kim Sanborn, Clerk of the Board of Supervisors of Montgomery County, NewYork, DO HEREBY CERTIFY that I have compared the foregoing copy of Resolution 240of 2008 with the original on file in my office and that the same is a true and complete copythereof.

WITNESS my hand and official seal of the Board of Supervisors of MontgomeryCounty, New York, New York, this 6th day of August, 2008.

Cle of the Board of SupervisorsMontgomery County, New York

__

Board of SupervisorsOffice (518) 853-4304Fax (518) 853-8220

20 Park St., P0 Box 1501)Fonda, NY 12068-1501)

www.comontnnmrv fly ic

RESOLUTION NO. 240 of 2008

DATED: Fonda, New York, July 22, 2008

RESOLUTION APPOINTING MEMBER OF MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENTAGENCY (McIDA) BOARD OF DIRECTORS

Resolution By Supervisor: Greco Seconded By: Dybas

WHEREAS, the current Board consists of the following:

William Hisert, ChairmanEugene Richards, Vice chaircarol Shineman, SecretaryRobert Hoefs, TreasurerDaniel Wilson, MemberVacant, MemberCharles R. Schwartz, Esq., MemberKenneth F. Rose, chief Executive OfficerSheila Snell, chief Financial officer

and

WHEREAS, a vacancy exists on the Montgomery County Industrial DevelopmentAgency Board of Directors.

RESOLVED, that the Board of Supervisors, in accordance with General MunicipalLaw 895-D, hereby appoints Joseph R. Emanuele III of Amsterdam, NY as amember of the Montgomery County Industrial Development Agency Board ofDirectors, and

FURTHER RESOLVED, that said appointee shall serve at the pleasure of theBoard of Supervisors.RESOLUTION APOPTED with Aye(1486). Supervisors Greco, Paton and Stagliano-wF absen / (7/22 8)

County Attorney

cc: County clerkCounty TreasurerEOD Director

N077y*TE

I 22Oo

& STA RECO

State of New YorkDepartmeizt ofState j ss:

1 hereby certify that the annexed copy has been compared with the original document in the custody of the Secretaryof State and that the same is a true copy ofsaid original.

Witness ,nv hand and seal of the Department of Stare on AUt 3 2U06

Special Deputy Secretary of State

DOS-1266 (Rev. 11/05)

CERTIFICATEOF

APPOINTMENTAS A MEMBER OF THE


FOR FILINGWITH


MISCELLANEOUS RECORDS UNITji292005

M%SCE1LAN1ö& STATE RECORDS


Charles R. Schwartz




This appointment was made by the Board of Supervisors of Montgomery County, NewYork on June 28, 2005.

ERLY SANBORN, Clerk of theBoard of Supervisors ofMontgomery County, New York

(SEAL)

MyDocs/MClDAlAppointnientcertificate

STATE OF NEW YORK

DEPARTMENT OF STA TE

I hereby certif,’ that the annexed copy has been compared with theoriginal document in the custody of the Secretary of State and that the sameis a true copy of said original.

WITNESS my hand and official seal of theDepartment of State, at the City of Albany, onJanuary 14, 2008.

Paul LaPointeSpecial Deputy Secretary of State

Rev. 06107

rJAN,428CERTIFICATE

OFAPPOINTMENT & STA7Er3AS A MEMBER OF THE


FOR FILINGWITH


MISCELLANEOUS RECORDS UNIT


Daniel P. Wilson




This appointment was made by the Board of Supervisors of Montgomery County, NewYork on December 22, 2007, effective December 22, 2007

()RN,(Dlerk of theBoard of Supervisors ofMontgomery County, New York

(SEAL)

MyDocs/MCIDA/AppointmentCeitificate

EXHIBIT C

BY-LAWS OF THE AGENCY

C-i012178/00069 Business 7555096v1

BY-LAWSOF

THE MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY

ARTICLE ITHE AGENCY

Section 1. Name. The name of the Agency shall be Içj Montgomery County Industrial

Development Agency.

Section 2. Seal of Agency. The seal of the Agency shall be in the form of a circle and

shall bear the name of the Agency and the year of its organization.

Section 3. Office of Agency. The office of the Agency shall be at Old County

Courthouse, P.O. Box 1500, Fonda, New York, but the Agency may have other offices at such

other places as the Agency may from time to time designate by resolution.

ARTICLE IIOFFICERS

Section 1. Officers. The officers of the Agency shall be a Chairman, a Vice Chairman,

a Secretary, a Treasurer, an Assistant Secretary-Assistant Treasurer.

Section 2. Chainnan. The Chairman shall preside at all meetings of the Agency. Except

as otherwise authorized by resolution of the Agency, the Chairman shall sign all agreements,

contracts, deeds, bonds or other evidences of indebtedness and any other instruments of the

Agency. At each meeting the Chairman shall submit such recommendations and information as

he may consider proper concerning the business, affairs and policies of the Agency.

Section 3. Vice Chairman. The Vice Chairman shall perform the duties of the Chairman

in the absence or incapacity of the Chairman; and in case of the resignation or death of the

Chairman, the Vice Chairman shall perform such duties as are imposed on the Chairman until

such time as the Agency shall appoint a new Chairman.

Section 4. Secretary. The Secretary shall keep the records of the Agency, shall act as

Secretary of the meetings of the Agency and record all votes, and shall keep a record of the

proceedings of the Agency in a journal of proceedings to be kept for such purpose, and shall

perform all duties incident to his office. He shall keep in safe custody the seal of the Agency

and shall have power to affix such seal to all contracts and other instruments authorized to be

executed by the Agency.

Section 5. Treasurer. The Treasurer shall have the care and custody of all funds of the

Agency and shall deposit the same in the name of the Agency in such bank or banks as the

Agency may select. The Treasurer shall sign all checks for the payment of money; and shall

12178.0021/03:8934/08-31-98

pay out and disburse such moneys under the direction of the Agency except as otherwise

authorized by resolution of the Agency, all such checks shall be countersigned by the Chairman.

In the event of the absence or incapacity of the Chairman, the Vice Chairman is authorized to

countersign any checks prepared by the Treasurer. He shall keep regular books of accounts

showing receipts and expenditures and shall render to the Agency at each regular meeting an

account of his transactions and also of the financial condition of the Agency. He shall give such

bond for the faithful performance of his duties as the Agency may determine.

Section 6. Assistant Secretary-Assistant Treasurer. The Assistant Secretary-Assistant

Treasurer shall perform the duties of the Secretary and/or Treasurer in the absence or incapacity

of either; and in case of the resignation or death of either, shall perform such duties as are

imposed until such time as the Agency shall appoint a replacement.

Section 7. Additional Duties. The officers of the Agency shall perform such other duties

and functions as may from time to time be required by the Agency, by the bylaws of the

Agency, or by the rules and regulations of the Agency. In the absence or incapacity of the

Treasurer, each officer of the Agency may countersign with the Chairman and with such

countersignature of the Chairman shall have (1) the power to sign all checks of the Agency for

the payment of money, (2) the power to pay out and disburse such moneys under the direction

of the Agency, and (3) the care and custody of all funds of the Agency and the power to deposit

the same in the name of the Agency in such bank or banks as the Agency may select.

Section 8. Appointment of Officers. All officers of the Agency except the first Chairman

shall be elected at the annual meeting of the Agency from among the members of the Agency,

and shall hold office for one year or until the successors are appointed.

Section 9. Vacancies. Should any office become vacant, the Agency shall elect a

successor from among its membership at the next regular meeting, and such appointment shall

be for the unexpired term of said office.

Section 10. Administrative Director. An Administrative Director shall be appointed by

the Agency, and shall have general supervision over the administration of the business and

affairs of the Agency, subject to the direction of the Agency. He shall be charged with the

management of all projects of the Agency. The Agency shall provide for the duties and

compensation of the Administrative Director pursuant to a written contract.

Section 11. Consultants. The Agency may from time to time employ consultants. Such

consultants shall have such duties and have such compensation as provided by written contract

with the Agency.

Section 12. Additional Personnel. The Agency may from time to time employ such

personnel as it deems necessary to exercise its powers, duties and functions as prescribed by the

New York State Industrial Development Act, as amended, and all other laws of the State of New

York applicable thereto. The selection and compensation of all personnel including the

Administrative Director shall be determined by the Agency subject to the laws of the State of

New York.

12178.0021/03:8934/08—31-98

ARTICLE IIIMEETINGS

Section 1. Annual Meetings. The annual meeting of the Agency will be held on the 3rd

Wednesday of April at a time to be determined by the Chairman at the regular meeting place

of the Agency or such other place as designated by the members. In event such day shall fall

on a legal holiday, the annual meeting shall be held as soon thereafter as is practicable but not

later than June 1.

Section 2. Regular Meetings. Regular meetings of the Agency will be held with notice

at such times and places as from time to time may be determined by resolution of the Agency

and in accordance with New York law.

Section 3. Special Meetins. The Chairman of the Agency may, as he deems it desirable,

and shall, upon the written request of the members of the Agency call a special meeting of the

Agency for the purpose of transacting any business designated in the call. The call for a special

meeting may be delivered to each member of the Agency or may be mailed to the business or

home address of each member of the Agency at least two days prior to the date of such special

meeting. Waivers of notice may be signed by any members failing to receive proper notice.

At such special meeting, no business shall be considered other than as designated in the call, but

if all the members of the Agency are present at a special meeting, with or without notice thereof,

any and all business may be transacted at such special meeting.

Section 4. Ouorum. At all meetings of the Agency, a majority of the members of the

Agency shall constitute a quorum for the purpose of transacting business.

Section 5. Order of Business. At the regular meetings of the Agency the following shall

be the order of business:

1. Roll Call2. Reading and approval of the minutes of the previous meeting

3. Bills and communications4. Report of the Treasurer5. Reports of Committees6. Unfinished business7. New Business8. Adjournment

All resolutions shall be in writing and shall be copied in a journal of the proceedings of

the Agency.

Section 6. Manner of Voting. The voting on all questions coming before the Agency shall

be by roll call, and yeas and nays shall be entered on the minutes of such meeting, except in the

case of appointments when the vote may be by ballot.

12178.0021/03: 893_4/08-31—98

ARTICLE IVAMENDMENTS

Section 1. Amendments to By-laws. The by-laws of the Agency shall be amended only

with the approval of at least a majority of all the members of the Agency at a regular or a

special meeting, but no such amendment shall be adopted unless at least seven days written

notice thereof has been previously given to all members of the Agency.

12178.0021/03: 893_4/08-31-98

EXHIBIT D

PUBLIC HEARING RESOLUTION

D-1012178/00069 Business 7555096v1

PUBLIC hEARING AND LAND ACQUISITION AGENT RESOLUTIONhILL & MARKES, INC. PROJECT

A regular meeting of Montgomery C’ounty Industrial Development Agency (the “Agency”) wasconvened in public session at the offices of the Agency located at the Old County Courthouse, Fonda,New York on April 9, 2009 at 5:30 o’clock p.m., local time.

The meeting was called to order by the Chairman and, upon roll being called, the Ibllowingmembers of the Agency were:

PRESENT:

ABSENT:

William HisertEugene RichardsCarol ShinemanRobert HoefsJoseph R. Emanuele, IllCharles Schwartz, Esq.Daniel Wilson

None.

ChairmanVice ChairmanSecretaryTreasurerMemberMemberMember

THE FOLLOWING PERSONS WERE ALSO PRESENT:

Kenneth RoseCrystal RicciutiSheila M. SnellBarbara A. ThomasPaul L. Woilman, Esq.A. Joseph Scott, III, Esq.

Chief Executive OfficerEconomic Development SpecialistEconomic Development SpecialistAdministrative AssistantAgency CounselBond Counsel

The following resolution was offered by Daniel Wilson, seconded by Eugene Richards, to wit:

Resolution No.

RESOLUTION AUTHORIZING THE CHIEF EXECUTIVE OFFICER OFMONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY TO HOLD APUBLIC HEARING REGARDING A PROPOSED PROJECT TO BE UNDERTAKENFOR THE BENEFIT OF HILL & MARKES, INC., AND NAMING HILL & MARKES,INC. AS AGENT OF THE AGENCY FOR THE PURPOSES SET FORTH HEREIN.

WHEREAS, the Agency is authorized and empowered by the provisions of Chapter 1030 of the1969 Laws of New York, constituting Title 1 of Article 18-A of the General Municipal Law, Chapter 24of the Consolidated Laws of New York, as amended (the “Enabling Act”) and Chapter 666 of the 1970Laws of New York, as amended, constituting Section 895-d of said General Municipal Law (said Chapterand the Enabling Act being hereinafter collectively referred to as the “Act”) to promote, develop,encourage and assist in the acquiring, constructing, reconstructing, improving, maintaining, equipping andfurnishing of manufacturing, warehousing, research, civic, commercial and industrial facilities, among

000161 01178 Business 6709600v2

others, for the purpose of promoting, attracting and developing economically sound commerce andindustry to advance the job opportunities, health, general prosperity and economic welfare of the peopleof the State of New York, to improve their prosperity and standard of Living, and to preventunemployment and economic deterioration; and

WHEREAS, to accomplish its stated purposes, the Agency is authorized and empowered underthe Act to acquire, construct, and install one or more “projects” (as defined in the Act) or to cause saidprojects to he acquired, constructed, and installed, and to convey said projects or to lease said projectswith the obligation to purchase; and

WI-IEREAS, in September 2008, Hill & Markes, Inc., a business corporation organized andexisting under the laws of the State of New York (the “Company”) submitted an application (the“Application”) to the Agency, a copy of which Application is on file at the office of the Agency, whichApplication requested that the Agency consider undertaking a project (the “Project”) for the benefit of theCompany, said Project consisting of the following: (A) (I) the acquisition of an interest in a parcel of landconsisting of a portion(s) of tax map parcel 54-2-2 and 54-1-7.12 and located on Highway 5S in the Cityof Amsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) the construction oftwo fticilities on the Land: (a) an approximately 100,000 square foot warehouse, and (b) an approximately15,000 square foot office building (both facilities being colLectively referred to as the “Facility”), (3) theacquisition and installation of certain machinery and equipment therein and thereon (the “Equipment”)(the Land, the Facility and the Equipment hereinafter collectively referred to as the “Project Facility”), allof the foregoing to constitute new warehousing and office facilities to support the growth of theCompany’s supply business and related activities; (B) the granting of certain “financial assistance”(within the meaning of Section 854(14) of the Act) with respect to the foregoing, including potentialexemptions from certain sales and use taxes, real property taxes, real estate transfer taxes and mortgagerecording taxes (the Financial Assistance”); and (C) the lease (with an obligation to purchase) or sale ofthe Project Facility to the Company or such other person as may be designated by the Company andagreed upon by the Agency; and

WHEREAS, in connection with the Project, the Company has asked to be appointed agent of theAgency for the purpose of gaining access to the Land to (a) take preparatory action in connection with theconstruction of the Facility, and (b) to appear before any governmental agencies in connection with theProject for the purpose of obtaining all permits and approvals required for the construction of the Facility;and

WHEREAS, according to the terms of an option agreement dated October 18, 2007 that wasentered into by and between the Agency and Carl Gottier (the “Option Agreement”), the Agency has theright to enter onto the Land for the purposes of taking preparatory action and the Option Agreement doesnot prohibit an agent of the Agency from entering onto the Land to take such preparatory action on behalfof the Agency; and

WHEREAS, pursuant to Section 859-a of the Act, prior to the Agency providing any “financialassistance” (as defined in the Act) of more than $100,000 to any project, the Agency, among other things,must hold a public hearing pursuant to Section 859-a of the Act with respect to said project; and

WHEREAS, the Agency desires to appoint the Company as its agent for the limited purposesreferenced in the recital clauses above and would like to authorize a public hearing to comply with theprovisions of Section 859-a of the Act with respect to the Project;

NOW, THEREFORE, BE IT RESOLVED BY THE MEMBERS OF MONTGOMERYCOUNTY INDUSTRIAL DEVELOPMENT AGENCY, AS FOLLOWS:

-2-000 61 01 78 Hus6iess 670Q600v2

Section 1. ‘l’he Agency hereby authorizes the Chief Executive Officer of the Agency, afterconsultation with the members of the Agency, Agency Counsel and Bond Counsel, (A) to establish thetime, date and place for a public hearing of the Agency pursuant to Section 859-a of the Act to hear allpersons interested in the Project (the “Public Hearing”); (B) to cause the Public ilearing to he held in acity, town or village where the Project Facility is or is to he located, and to cause notice of such PublicI learing to be given to the public by publishing a notice or notices of such Public Hearing in a newspaperof general circulation available to the residents of the governmental units where the Project Facility is oris to be located, such notice or notices to comply with the requirements of Section 859-a of the Act and tohe published no fewer than thirty (30) days prior to the (late established for such Public I learing; (C) tocause notice of the Public 1-learing to be given to the chief executive officer of the county and of eachcity, town, village and school district in which the Project Facility is or is to he located no fewer thanthirty (30) days prior to the date established for the Public Hearing; and (D) to cause a report of the PublicHearing fairly summarizing the views presented at such Public Hearing to be promptly prepared andcause copies of said report of the Public Hearing to be made available to the members of the Agency.

Section 2. The Company is hereby temporarily appointed the true and lawful agent of theAgency for the purposes of (a) gaining access to the Land to take preparatory action in connection withthe construction of the Facility, and (b) to appear before any governmental agencies in connection withthe Project for the purpose of obtaining all permits and approvals required for the construction of theFacility.

Section 3. In connection with the Company’s appointment as true and lawful agent of theAgency for the purposes set forth in Section 2 of this resolution, and before the Company is permitted toenter onto the Land, the Agency and the Company will enter into an agency agreement (the “AgencyAgreement”). Under the Agency Agreement, the Company, as agent of the Agency, must agree to releasethe Agency and its members, officers, agents and employees from any liability in connection with theCompanys actions while acting as agent of the Agency, and further agree to indemnify, defend and holdthe Agency and its members, officers, agents and employees harmless from and against any and allclaims, causes of action, judgments, liabilities, damages, losses, costs and expenses arising as a result ofthe Company’s use of the Land, including, but not limited to: (1) liability for loss or damage to propertyor bodily injury to or death of any and all Persons that may be occasioned, directly or indirectly, arisingby reason of or in connection with the occupation or the use thereof, (2) all claims arising from theexercise by the Company of the authority conferred on it pursuant to the Agent Agreement, and (3) allcauses of action and attorneys’ fees and other expenses incurred in connection with any suits or actionswhich may arise as a result of any of the foregoing. The foregoing indemnities shall applynotwithstanding the fault or negligence in part of the Agency or any of its officers, members, agents oremployees and notwithstanding the breach of any statutory obligation or any rule of comparative orapportioned liability.

Section 4. The Company shall provide the Agency with a certificate of insurance showingproof of the required coverage as set forth in Section 5 of this Resolution. Any deductibles ofself-insurance retention must be disclosed on the certificates of insurance. Such insurance shall bear thenames of the Company as named insured and the Agency as an additional insured party. When umbrellaor excess coverage is in effect, it must follow the form of the underlying coverage. All such insurancepolicies and certificates of insurance shall stipulate that should any of the above policies or certificates ofinsurance be canceled or modified before the expiration of the Term hereof, the issuing company shallgive thirty (30) days written notice to the Agency and it shall be the additional responsibility of theCompany to notify the Agency of such change or cancellation. Certificates of insurance (and allsubsequent insurance notices) shall be sent to the Agency not later than ten (10) days after the executionby both parties of the Agency Agreement.

-3-OOOIl (ii 178 Business 670’)600v2

Section 5. The Company and any successors or assigns o1 the Company shall obtain andmaintain Commercial General Liability Insurance with a combined single limit of $2,000,000 for bodilyinjury and property damage at all times during the term of the Agency Agreement.

Section 6. ‘[he Chairman, Vice Chairman andlor Chief Executive Officer of the Agency ishereby authorized and directed to distribute copies of’ this Resolution to the Company and to do suchfurther things or perform such acts as may he necessary or convenient to implement the provisions of thisResolution.

Section 7. This Resolution shall take efThct immediately.

‘[he question of the adoption of’ the foregoing Resolution was duly put to a vote on roll call,which resulted as follows:

William Hisert VOTING YesEugene Richards VOTING YesCarol Shineman VOTING YesRobert Hoefs VOTING YesJoseph R. Emanuele Ill VOTING YesCharles Schwartz, Esq. VOTING YesDaniel Wilson VOTING Yes

The foregoing Resolution was thereupon declared duly adopted.

-4-000161 01 178 Business 6709600v2



1, the undersigned (Assistant) Secretary of Montgomery County Industrial Development Agency(the “Agency”), DO HEREBY CERTIFY that I have compared the foregoing annexed extract of theminutes of the meeting of the members of the Agency, including the Resolution contained therein, held onApril 9, 2009 with the original thereof on file in my office, and that the same is a true and correct copy ofsaid original and of such Resolution contained therein and of the whole of said original so far as the samerelates to the subject matters therein referred to.

I FURTHER CERTIFY that (A) all members of the Agency had due notice of said meeting; (B)said meeting was in all respects duly held; (C) pursuant to Article 7 of the Public Officers Law (the“Open Meetings Law”), said meeting was open to the general public, and due notice of the time and placeof said meeting was duly given in accordance with such Open Meetings Law; and (D) there was a quorumof the members of the Agency present throughout said meeting.

I FURTHER CERTIFY that, as of the date hereof, the attached Resolution is in full force andeffect and has not been amended, repealed or rescinded.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Agency this9th day of April, 2009.

(Assistant) Secretary

(SEAL)

5000161/01178 Business 6709600v2

EXHIBIT E

PROOF OF MAILING OF NOTICE OF PUBLIC HEARING

E- 1O2178/OOO69 Business 7555096v1

STATE OF NEW YORK

AFFIDAVIT OF MAILINGOF NOTICE OF PUBLIC HEARING

ON PROPOSED PROJECT ANDFINANCIAL ASSISTANCE RELATING THERETO

))SS.:


The undersigned, being duly sworn, hereby states:

That on April 20, 2009, 1 mailed to the following individuals a copy of the “Notice of PublicHearing on Proposed Project and Financial Assistance Relating Thereto” in connection with MontgomeryCounty Industrial Development Agency’s proposed Hill & Markes, Inc. Project:

Board of SupervisorsMontgomery CountyCounty Annex BuildingP0 Box 1500Fonda, New York 12068-1500Attention: John B. Thomas, Chairman

Fonda Fultonville Central School District112 Old Johnstown RoadP0 Box 1501Fonda, New YorkAttention: Dr. James Hoffman, Superintendent

Sworn to before me this20th day of April, 2009.

Notary Public

City Hall61 Church StAmsterdam, NY 12010Attention: Ann M. Thane, Mayor

Town of Florida181 State Highway 161Amsterdam, New York 12010Attention: William Strevy, Supervisor

In witness thereof, I have hereunto set my hand this 20th day of April, 2009.

000161/01178 Business 6722184v1

EXHIBIT F

PROOF OF POSTING NOTICEOF THE PUBLIC HEARING

F-i012178/00069 Business 7555096v1

AFFIDAVIT OF POSTINGOF NOTICE OF PUBLIC HEARING

ON PROPOSED PROJECT ANDFINANCIAL ASSISTANCE RELATING THERETO




1. That on April 20, 2009, I posted a copy of a notice (the “Notice of Public Hearing onProposed Project and Financial Assistance Relating Thereto”) in connection with the proposed Hill &Markes, Inc. Project to be undertaken by Montgomery County Industrial Development Agency.

2. Said Notice of Public Hearing on Proposed Project and Financial Assistance Relating Theretowas posted on a bulletin board located at Town Hall, 167 Fort Hunter Road, in the Town of Florida,Montgomery County, New York.

In witness thereof, I have hereunto set my hand this 20th day of April, 2009.

____

II

Sworn to before me this20th day of April, 2009.

Notary Public

000161/01178 Business 6722180v1

EXHIBIT G

PROOF OF PUBLICATION OF NOTICE OF PUBLIC HEARING

G-1012178/00069 Business 7555096v1

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NOTICE OF PUBLIC HEARINGON PROPOSED PROJECTAND FINANCIAL ASSISTANCERELA11NG THERETONotice is hereby given that apublic hearing pursuant toSection 859-a(2) of the GeneralMunicipal Law of the State ofNew York (the “Act”) will be heldby Montgomery CountyIndustrial Development Agency(the “Agency”) on the 21st dayof May, 2009 at 9:30 o’clocka.m., local time, at TownHalI,167 Fort Hunter Road inthe Town- of Florida,Montgomery County, New York,in connection with the followingmatters:

Mill &- Markes, Inc. (the“Company”) submitted an application (the “Application”) to theAgency, a copy of whichApplication is on file at the officeof the Agency, which Applicationrequested that the Agency con-

LEGALSsider undertaking a project (the“Project”) for the benefit of theCompany, said Project consisting of the following: (A) (1) theacquisition of an interest in aparcel of land consisting of aportion(s) of tax map parcel 54-2-2 and 54-1-7.12 and locatedon Highway 5S in the City ofAmsterdam, Town of Florida,Montgomery County New York(the “Land”), (2) the construction of two facilities on the Land:(a) an approximately 100,000square foot warehouse, and (b)an approximately 15,000square foot office building (bothfacilities being collectivelyreferred to as the “Facility”), (3)the acquisition and installationof certain machinery and equipment therein and thereon (the“Equipment”) (the Land, theFacility and the Equipmenthereinafter collectively referredto as the “Project Facility”), all ofthe foregoing to constitute newwarehousing and office facilitiesto support the growth of theCompany’s supply businessand related activities; (B) thegranting of certain “financialassistance” (within the meaningof Section 854(14) of the Act)with respect to the foregoing,including potential exemptionsfrom certain sales and usetaxes, real property taxes, realestate transfer taxes and mortgage recording taxes (the“Financial Assistance”); and (C)the lease (with an obligation topurchase) or sale of the ProjectFacility to the Company or suchother person as may be designated by the Company andagreed upon by the Agency.The Agency is consideringwhether (A) to undertake theProject and (B) to provide certain exemptions from taxationwith respect to the Project,including (1) exemption from

LEGALSmortgage recording taxes withrespect to any documentsrecorded by the Agency withrespect to the Project in theoffice of the County Clerk ofMontgomery Count New Yorkor elsewhere, (2) exemptionfrom sales taxes relating to theacquisition, construction andinstallation of the ProjectFacility, (3) exemption fromdeed transfer taxes on any realestate transfers with respect tothe Project, and (4) exemptionfrom real property taxes (but notincluding special assessmentsand special ad valorem levies),subject to the obligation of theCompany to make payments inlieu of taxes with respect to theProject. If any portion of theFipancial Assistance to begranted by the Agency withrespect to the Project is notconsistent with the Agency’suniform tax exemption policy,the Agency will follow the procedures for deviation from suchpolicy set forth in Section874(4) of the Act prior to granting such portion of the FinancialAssistance.The Agency has not completedits environmental review of theProject. While the Agency hasnot yet made any determinations pursuant to Article 8 of theEnvironmental ConservationLaw (the “SEOR Act”) regardingthe potential environmentalimpact of the Project, theProject Facility will not beacquired, constructed andinstalled until the provisions ofthe SEOR Act have been satisfied, to the extent applicable.The Agency will at said time andplace hear all persons withviews on either the location andnature of the proposed ProjectFacility and the financial assistance being contemplated bythe Agency in connection with

LEGALSthe proposed Project. A €opy ofthe application filed by theCompany with respect to theProject is available for publicinspection during normal business hours at the office of theAgency.Dated: Apnl 20, 2009.MONTGOMERY COUNTYINDUSTRIAL DEVELOPMENTAGENCYBy: /sI William HisertChairman -

APR-58, 4/22

EXHIBIT H

REPORT OF PUBLIC HEARING

H-i012178/00069 Business 7555096v1

Hill & Markes, Inc. Public HearingMay 21, 2009, 9:30 a.m.

Town HallTown of Florida, NY

Present: Attorney Paul L. Woliman, MCIDA; Kenneth F. Rose, CEO MCIDA;Barbara A. Thomas, MCIDA

Attorney Woliman opened the public hearing at 9:30 a.m. by reading the publichearing notice as published in the Recorder. He further stated that he has the affidavits ofpublication, posting, and mailing for the Hill & Markes, Inc. public hearing.

After reading the notice, Attorney Wolhnan stated that it was 9:35 a.m. and askedif anyone would like to come forward and speak. Since no one came forward to speak,Attorney Woliman stated the hearing would be adjourned for ten minutes to allow foranyone to appear.

At 9:50 a.m. Attorney Woilman re-convened the public hearing; and since no oneappeared, the public hearing was adjourned at 9:51 a.m.

Respectfully submitted

Barbara A. ThomasAdministrative Assistant

—

_

0 0 p

EXHIBIT I

SEQR RESOLUTION

I—i012178/00069 Business 7555096v1

SEQR RESOLUTION - ADOPTING FINDINGSHILL & MARKES PROJECT

A regular meeting of Montgomery County Indusirial Development Agency (the “Agency”) wasconvened in public session at the offices of the Agency located at the Old County Courthouse, Fonda,New York on May 20, 2010 at 5:30 o’clock p.m., local time.

The meeting was called to order by the Chairman and, upon roll being called, the followingmembers of the Agency were:-

PRESENT:

William Hisert ChairmanEugene Richards Vice ChairmanCarol Shineman SecretaryRobert Hoefs TreasurerDaniel Wilson Member

ABSENT:Charles Schwartz, Esq. MemberJoseph Emanuele MemberA. Joseph Scott, Ill, Esq. Bond Counsel

TIlE FOLLOWING PERSONS WERE ALSO PRESENT:

Kenneth F. Rose ChiefExecutive OfficerBarbara A. Thomas Administrative AssistantSheila M. Snell ChiefFinancial OfficerCrystal Ricciuti Economic Development SpecialistPaul L. Wollman, Esq. Agency CounselBarbara Johnson Liaison

The following resolution was offered by Carol Shineman, seconded by Eugene Richards, to wit

Resolution No. 10-25

RESOLUTION CONCURRING iN THE DETERMINATION BY THE TOWN OFFLORIDA PLANNING BOARD, AS LEAD AGENCY FOR A CERTAINCOMMERCJAL PROJECT FOR HILL & MARKES, INC.

WHEREAS, the Agency is authorized and empowered by the provisions of Chapter 1030 of the1969 Laws of New York, constituting Title I of Article 18-A of the General Municipal Law, Chapter 24of the Consolidated Laws of New York, as amended (the “Enabling Act”) and Chapter 666 of the 1970Laws ofNew York, as amended, constituting Section 895-d of said General Municipal Law (said Chapterand the Enabling Act being hereinafter collectively referred to as the “Act”) to promote, develop,encourage and assist in the acquiring, constructing, reconstructing, improving, maintaining, equipping andfurnishing of industrial, warehousing, commercial, research and manufacturing facilities, among others,for the purpose of promoting, attracting and developing economically sound commerce and industry toadvance the job opportunities, health, general prosperity and economic welfare of the people of the State

McidaRes 10-25000161)01178 Business 7507029v1

of New York, to improve their prosperity and standard of living, and to prevent unemployment andeconomic deterioration; and

WHEREAS, to accomplish its stated purposes, the Agency is authorized and empowered underthe Act to acquire, construct and install one or more “projects” (as defined in the Act) or to cause saidprojects to be acquired, constructed and installed, and to convey said projects or to lease said projectswith the obligation to purchase; and

WHEREAS, in September 2008, Hill & Markes, Inc., a business corporation organized andexisting under the laws of the State of New York (the “Company”) submitted an application (the“Application”) to the Agency, a copy of which Application is on file at the office of the Agency, whichApplication requested that the Agency consider undertaking a project (the “Project”) for the benefit of theCompany, said Project consisting of the following: (A) (1) the acquisition of an interest in a 45.3+1- acreparcel of land (tax map parcel identification number 54-2-2.1) and located on Highway 5S in the City ofAmsterdam, Town of Florida, Montgomery County, New York (the “Land’), (2) the consiruction of twofacilities on the Land: (a) an approximately 100,000 square foot warehouse, and (b) an approximately15,000 square foot office building (both facilities being collectively referred to as the “Facility’), (3) theacquisition and installation of certain machinery and equipment therein and thereon (the “Equipment”)(the Land, the Facility and the Equipment hereinafter collectively referred to as the “Project Facility”), allof the foregoing to constitute new warehousing and office facilities to support the growth of theCompany’s supply business and related activities; (B) the granting of certain “financial assistance”(within the meaning of Section 854(14) of the Act) with respect to the foregoing, including potentialexemptions from certain sales and use taxes, real property taxes, real estate transfer taxes and mortgagerecording taxes (the “Financial Assistance’); and (C) the lease (with an obligation to purchase) or sale ofthe Project Facility to the Company or such other person as may be designated by the Company andagreed upon by the Agency; and

WHEREAS, pursuant to the authorization contained in a resolution adopted by the members ofthe Agency on April 9, 2009 (the ‘Public Hearing Resolution’), the Chief Executive Officer of theAgency (A) caused notice of a public hearing of the Agency pursuant to Section 859-a of the Act (the“Public Hearing”) to hear all persons interested in the Project and the Financial Assistance beingcontemplated by the Agency with respect to the Project, to be mailed on April 20, 2009 to the chiefexecutive officers of the county and of each city, town, village and school district in which the Project isto be located, (B) caused notice of the Public Hearing to be posted on April 20,2009 on a public bulletinboard located at the Old County Courthouse, Fonda, New York, (C) caused notice of the Public Hearingto be published on April 22, 2009 in The Recorder, a newspaper of general circulation available to theresidents of the Town of Florida, New York, (D) conducted the Public Hearing on May 21, 2009 at 9:30a.m., local time at the Town of Florida Town Hall, located at 214 Fort Hunter Road, in the Town ofFlorida, Montgomery County, New York, and (E) prepared a report of the Public Hearing (the ‘PublicHearing Report’) fairly summarizing the views presented at such Public Hearing and caused copies ofsaid Public Hearing Report to be made available to the members of the Agency; and

WHEREAS, pursuant to Article 8 of the Environmental Conservation Law, Chapter 43 B of theConsolidated Laws of New York, as amended (the “SEQR Act’), and the regulations (the “Regulations’)adopted pursuant thereto by the Department of Environmental Conservation of the State of New York(collectively with the SEQR Act, “SEQRA’), the Agency acknowledges that (1) the Town of FloridaPlanning Board (the “Planning Board’) acted as “lead agency” in connection with the Agency’s priorrequest (the “Request’) to convert the Land from Commercial C-i to Industrial Business Park, (2) thePlanning Board issued a Determination of Non Significance on March 30, 2009 (the “NegativeDeclaration,” a copy of which is attached hereto as Exhibit A) in connection with the Planning Board’sapproval of the Request, and, (3) in connection with the Planning Board’s approval of the necessarymcida Res 10-25

2000161/01178 Business 7507029v1

permits required to construct and install the Project Facility, the Planning Board reviewed the Project andhas determined, in reliance upon the scope of the Request and Negative Declaration, that the Project willnot have a “significant effect on the environment” and (b) an environmental impact statement need not beprepared with respect to the Project; and

WHEREAS, the Agency is an “involved agency” with respect to the Project and the Agency nowdesires to concur in the determination by the Planning Board, as “lead agency” with respect to the Project,to acknowledge receipt of a copy of the Negative Declaration and to indicate whether the Agency has anyinformation to suggest that the Planning Board was incorrect in determining that the Project will not havea “significant effect on the environment” pursuant to SEQRA and, therefore, that no environmentalimpact statement need be prepared with respect to the Proj ect;

NOW, THEREFORE, BE IT RESOLVED BY THE MEMBERS OF MONTGOMERYCOUNTY INDUSTRIAL DEVELOPMENT AGENCY AS FOLLOWS:

Section 1. The Agency has received the Application and the Negative Declaration(collectively the “Reviewed Documents’) and, based upon said Reviewed Documents, the Agency herebyratifies and concurs in the designation of the Planning Board as “lead agency” with respect to the Projectunder SEQRA (as such quoted term is defined in SEQRA).

Section 2. The Agency hereby determines that the Agency has no information to suggestthat the Planning Board was incorrect in determining that the Project will not have a “significant effect onthe environment” pursuant to the SEQRA and, therefore, that no environmental impact statement need beprepared with respect to the Project (as such quoted phrase is used in SEQRA).Section 3. The Chief Executive Officer of the Agency is hereby directed to noti1i thePlannmg Board of the concurrence by the Agency that the Planning Board shall be the “lead agency” withrespect to the Project, and to further indicate to the Planning Board that the Agency has no information tosuggest that the Planning Board was incorrect in its determinations contained in the Negative Declaration.

Section 4. This Resolution shall take effect immediately.

The question of the adoption of the foregoing Resolution was duly put to a vote on roll call,which resulted as follows:

William Hisert VOTING YesEugene Richards VOTiNG YesCarol Shineman VOTING YesRobert Hoefs VOTING YesCharles Schwart Esq. VOTING AbsentDaniel Wilson. VOTING YesJoseph Emanuele VOTING Absent

The foregoing Resolution No. 10-25 was thereupon declared duly adopted.

nEidaReSIO-25

3000161101178 Business 7507029v1

EXHIBrrA

NEGATWE DECLARATION

—SEE ArrACHED_

A-I000161/01178 Business7S07029y1

TOWN OF FLORIDA TOWN BOARD

Reo1ution EstabLishingNegative Declaration

RESOLUTION BY WILLIAM STREVY, SUPERVISOR

WHEREAS, THE town of F) orida Town Board has received a request from theMCII)A to amend the zoning map of the Town of Florida for several parcels of land dnRoute 5S amounting to 134.3 acres from Commercial C-I. to industrial Business ParkIBP, said prceis are specifically shown on a map prepared by Joim M. McDonaldEngineering, dated October 2008, entitles “Conceptual Site Plan Florida Business ParkN/F Carl Ciottier, and

WHEREAS, the Town board has completed an Environmental review of thezoning amendment in accordance with Artiol.e 8 of Environmental conservation Law, and

W1l.FREAS, THE town Board has completed the SEQRA review of the prolect asit pertains to the rezoning of said parcels on Routc 55,

NOW THEREFORE BE IT RESOLVED THAT

A. For the reason stated in the Notice of Determination of non-significance attachedand made part of this resolution, this action will not have a significant effect onthe environment, and the Town Roard will not cause an Environmental impactStatement to be prepared.

B. The supervisor of the Town of Florida is authorized to sign Full EnvironmentalAssessment Foim indicating that an Evironmenta1 impact Statement will not beprepared, and cause notice o. Determination to be filed as required by law.

The Resolution was seconded by Ronald Phillips, Councilman and carded.

MACII 30, 2009

TOWN OF FLORIDA TOWN BOARD

Negative DeclarationNotice of Determination of Non-Significance

This notice is issued pursuant to part 617 of the implementing regulations pertaining to Article 8 of theEnvironmental Conservation Law (SEQRA).

The Town Board of the Town of Florida, as Lead Agency, has determined that the proposed actiondescribed below will not have a significant effect on the environment and that an Environmental ImpactStatement will not be prepared.

Name of Action: Town of Florida Business Park Expansion — Route 5S

SEQR Status: Type I

Description of Action: The Applicant (MCIDA) is requesting a change of zone for four (4) parcels from C-I,Commercial to IBP — Industrial Business Park. The parcels are located on NYS Route5S, approximately 3.1 miles west of the Route 30 Interchange. The total acreage to berezoned is 134.3 acres of which 61.4 acres is on the north side of Route 5S, and 72.9acres on the south side of Route SS. It is proposed that parcels will be developed ascommercial/distribution centers or as other permitted uses in IBP zoning.

Location: Town of FloridaNYS Route 5S approximately 3.1 miles west of Route 30 Interchange bounded by theNYS Thruway, NYS Route 5S.

Information Submitted:

The following information has been provided to the Town Board and used in its review of the change of zonerequest:

• Conceptual Site Plan prepared by McDonald Engineering dated October 2008, which presents a conceptdevelopment proposal consisting of four building sites, with a total building square footage of approximately400,000 SF.

• Part I of the Full Environmental Assessment Form dated October 6, 2008 for the parcels to be rezoned.

SEQRA Milestone Dates:

• The Planning Board accepts Lead Agency Status at its meeting of March 16, 2009.• Lead Agency coordination letter sent to all Involved Agencies March 17, 2009.• The Planning Board conducts a Public Hearing on the proposed change of zone application on November 3,

2008. This public hearing was in addition to several meetings conducted by the Planning Board. There werenumerous public submissions and much public comment at all meetings, all of which has been made a part ofthe record.

• The Town Board completes Part 2 of the Full EAF on March 30, 2009.

Reasons Supporting this Determination:

The Town Board has reviewed Part 1 and 2 of the Full Environmental Assessment Form (FEAF), pursuantto 6 NYCRR § 617.7, and has considered all matters for determining the significance and importance to theenvironment of adopting this amendment to the Town of Florida Zoning Ordinance as identified below.

• The parcels to be rezoned are currently zoned Commercial C-i District. Properties directly adjacent are alsozoned Commercial C-i. Approximately 1,100 feet westerly on the north side of Route 5S is the TargetFacility, which is zoned IBP. The easterly side of Route 5S across from the Target Facility is zoned C-2Commercial. In view of the existing zoning of the surrounding parcels, the impacts of rezoning from C-i toIBP are incrementally insignificant. Further, the permitted uses under the current C-i zoning couldpotentially have a larger impact than the permitted uses under IBP zoning.

• A traffic impact study has been completed on the potential traffic volumes from the development of theparcels using build-out of the concept plan. Under that concept plan, existing roadway facilities are adequateto handle the projected traffic volumes without any significant degradation of Level of Service. The TrafficStudy is under review by NYSDOT, and will require that any impacts from the individual site developmentwill be mitigated prior to NYSDOT approval.

-

• The Town requires that a full EAF will be required with specifics for each site as part of the site planapplication.

• The action will not produce a substantial adverse change in existing air quality, ground or surface waterquality or quantity, traffic or noise levels; a substantial increase in potential for erosion, flooding, leaching ordrainage problems.

• The action will not involve the removal or destruction of large quantities of vegetation or fauna; substantialinterference with the movement of any resident or migratoiy fish or wildlife species; impacts on a significanthabitat area; substantial adverse impacts on a threatened or endangered species of animal or plant, or thehabitat of such a species; or other significant adverse impacts to natural resources.

• The action will not cause the impairment of the environmental characteristics of a Critical EnvironmentalArea as designated pursuant to subdivision 617.14(g) of this Part.

• The action will not create a material conflict with a community’s current plans or goals as officiallyapproved or adopted, although it revises the existing comprehensive plan and proposes changes to existingland use regulations.

• The action will not impair the character or quality of important historical, archaeological, architectural, oraesthetic resources or of existing community or neighborhood character.

The action will not cause a major change in the use of either the quantity or type of energy.The action will not cause the creation of a hazard to human health.

• The action will not cause a substantial change in the use, or intensity of use, of land including agricultural,open space or recreational resources, or in its capacity to support existing uses.

• The action will not cause the creation of a material demand for other actions that would result in one of theabove consequences.

• The action will not cause changes in two or more elements of the environment; no one of which has asignificant impact on the environment, but when considered together result in a substantial adverse impact onthe environment.

• The action is consistent with the goals and objectives of the Town of Florida Comprehensive Plan asoutlined in the attached Supplement.

Contact Person: William Stevy, ChairmanTown of Florida Town Board

Address: 214 Fort Hunter RoadAmsterdam,NY 12010

Date Issued: March 30, 2009

Supplement to Findings Statement for the MCIDA Chanae of Zone Application

The Town of Florida Comprehensive Plan identifies five goals and objectives which define the principles thatshould be used to guide the town’s future growth and development. Listed below are the five goals and anarrative that demonstrate that the proposed change of zone is consistent with the comprehensive plan.

Goal No. 1 — Preserve Farming

Objective No. I — Continue the promotion of and the participation in the New York State AgriculturalDistricts Program.

Objective No. 2— Promote the preservation of farmland through appropriate land use control&

The proposed propen)’ is zoned C-i under the current zoning. It was not intendedfor this property to bepreserved asfarmianiL

Goal No. 2—Improve Employment Opportunities for the Residents of the Area

Objective No. I — While maintaining farming as a primary industry, promote industrial development as anadditional source of employment.

Objective No. 2 — Designate a viable area of the town for industrial development if adequate space is notcurrently available. This development should be in an area that may be serviced by sewer and water, hasadequate transportation infrastructure, has adequate fire protection capacity and is large enough toaccommodate a mix of light manufacturing industries.

IBP zoning of these parcels is consistent with the Comprehensive Plan. Theseparcels are located adjacent tothe existing IBP zoning and will generate newjobs within the Town ofFlorida.

The parcels to be rezoned are adjacent to the current IBP zoning making it a viable areafor development. Itwill be served by water and sewer, and has adequate transportation infrastructure as confirmed in apresentation made by NYSDOT Engineer Ken Andela at the Planning Board meeting of January 5, 2009.Fire protection will be provided byfire hydrants capable ofproducing over 1,000 gpm, which is adequate toserve a mix oflight industrial uses.

Goal No. 3—Preserve the Town’s Rural Character and Open Spaces

Objective No. I — Allow cluster housing and/or small lot residential subdivisions in areas where eithersewer and water are available or where soil conditions support such development.

Objective No. 2 — Allow limited, clustered, small scale commercial development contiguous to existingcommercial areas while avoiding a linear commercial sprawl appearance.

Objective No. 3 — Limit industrial and large scale commercial development to an area of the town where itwill have the least impact on the overall rural character of the community. Such development should beas close as possible to existing built up areas.

Objective No. 4— Enhance and maintain existing recreational areas.

Theproposedparcels being adjacent to the existing developed commercial/industrial areas makesfor an idea!location and is consistent with the above objectives.

Under the current C-I zoning, the land could be developed in a linear commercial sprawl appearance whichwould be in contravention with Objective No. 2 above.

January 20, 2009 — Page I of 2

Goal No. 4— Cooperate with the Town’s Adjacent Municipalities and with Montgomery County

Objective No. I — Institute land use policies, where practical, that also promote regional economicdevelopment and environmental goals.

Objective No. 2 — Allow the extension of sewer and water where necessary to compliment land useobjectives. In particular, development of sewer and water systems for development should be limited tothat required either for the protection of the natural resources or to service light industrial orcommerciaL/light industrial development that require these services. All costs associated with thedevelopment or extension of sewer or water systems should be borne by the developer and/or thoseutilizing the services.

Objective No. 3 — Continue to support the two fire departments, state police and the county sheriff’sdepartment.

The change of zone will promote regional economic development through the retention and growth ofemployment opportunities in Montgomery County.

The extension of water and sewer to serve the parcels is complimentary and consistent with this goal ofserving light industrial or commercial areas. The Town Board has commenced proceedings to extend thewater and sewer to this area and all costs associated with the extension ofthe water and sewer system will beborne by the developer consistent with this goaL

Goal No.5— Enhance and EncouraEe Preservation of the Town’s Historical Character

Objective No. I — Preserve the town’s historic character through appropriate land use controls.

Objective No. 2 — Promote small scale tourism while avoiding a heavily commercial tourist-trapatmosphere.

The change ofzone of this parcelfrom Commercial to Industrial Business Park will have no impact on theTown’s historic character.

In summary, the change of zone of these parcels from Commercial C-I, to Industrial Business Park, IBP isconsistent with the goals and objectives of the Comprehensive Plan.

January 20, 2009— Page 2 of 2

EXHIBIT J

APPROVING RESOLUTION

J- 1012178/00069 Business 7555096v1

APPROVING RESOLUTIONHILL & MARKES REALTY, LLC PROJECT

A regular meeting of Montgomery County Industrial Development Agency (the “Agency”) wasconvened in public session at the offices of the Agency located at the Old County Courthouse, Fonda,New York on June 30, 2010, at 9:30 o’clock a.m., locaL time.

The meeting was called to order by the (Vice) Chairman and, upon roll being called, thefollowing members of the Agency were:

PRESENT:

William Hisert ChairmanRobert Hoefs TreasurerCharles Schwartz, Esq. MemberJoseph R. Emanuele, III Member

ABSENT:Carol Shineman SecretaryEugene Richards Vice ChairmanDaniel Wilson Member

THE FOLLOWING PERSONS WERE ALSO PRESENT:

Kenneth Rose Chief Executive OfficerSheila Snell Chief Financial OfficerCrystal Ricciuti Ec. Dev. SpecialistPaul L. Woliman, Esq. Agency Counsel

The following resolution was offered by Charles Schwartz, Esq., seconded by Robert Hoefs, towit:

Resolution No. 10-30

RESOLUTION AUTHORIZING EXECUTION OF DOCUMENTS TN CONNECTIONWITH A LEASE/LEASEBACK TRANSACTION FOR A PROJECT FOR HILL &MARKES REALTY, LLC.

WHEREAS, the Agency is authorized and empowered by the provisions of Chapter 1030 of the1969 Laws of New York, constituting Title 1 of Article 18-A of the General Municipal Law, Chapter 24of the Consolidated Laws of New York, as amended (the “Enabling Act”) and Chapter 666 of the 1970Laws of New York, as amended, constituting Section 895-d of said General Municipal Law (said Chapterand the Enabling Act being hereinafter collectively referred to as the “Act”) to promote, develop,encourage and assist in the acquiring, constructing, reconstructing, improving, maintaining, equipping andfurnishing of industrial, warehousing, commercial, research and manufacturing facilities, among others,

for the purpose of promoting, attracting and developing economically sound commerce and industry toadvance the job opportunities, health, general prosperity and economic welfare of the people of the Stateof New York, to improve their prosperity and standard of living, and to prevent unemployment andeconomic deterioration; and

WHEREAS, to accomplish its stated purposes, the Agency is authorized and empowered underthe Act to acquire, construct and install one or more “projects” (as defined in the Act) or to cause saidprojects to be acquired, constructed and installed, and to convey said projects or to lease said projectswith the obligation to purchase; and

WHEREAS, in September, 2008, Hill & Markes Realty, EEC (the “Company”) presented anapplication (the “Application”) to the Agency, which Application requested that the Agency considerundertaking a project (the “Project”) for the benefit of the Company, said Project to include the following:(A) (1) the acquisition of an interest in a 45.3+!- acre parcel of land (tax map parcel identification number54-2-2.1) and located on Highway 5S in the City of Amsterdam, Town of Florida, Montgomery County,New York (the “Land”), (2) the construction of two facilities on the Land: (a) an approximately 100,000square foot warehouse, and (b) an approximately 15,000 square foot office building (both facilities beingcollectively referred to as the “Facility”), (3) the acquisition and installation of certain machinery andequipment therein and thereon (the “Equipment”) (the Land, the Facility and the Equipment hereinaftercollectively referred to as the “Project Facility”), all of the foregoing to constitute new warehousing andoffice facilities to support the growth of the Company’s supply business and related activities; (B) thegranting of certain “financial assistance” (within the meaning of Section 854(14) of the Act) with respectto the foregoing, including potential exemptions from certain sales and use taxes, real property taxes, realproperty transfer taxes and mortgage recording taxes (collectively, the “Financial Assistance”); and (C)the lease (with an obligation to purchase) or sale of the Project Facility to the Company or such otherperson as may be designated by the Company and agreed upon by the Agency; and


WHEREAS, pursuant to Article 8 of the Environmental Conservation Law, Chapter 43-B of theConsolidated Laws of New York, as amended (the “SEQR Act”) and the regulations (the “Regulations”)adopted pursuant thereto by the Department of Environmental Conservation of the State of New York,being 6NYCRR Part 617, as amended (collectively with the SEQR Act, “SEQRA”), by resolutionadopted by the members of the Agency on May 20, 2010 (the “SEQR Resolution”), the Agency(A) ratified the determination by the Town of Florida Planning Board (the “Planning Board”) to act as“lead agency” with respect to the Project, (B) acknowledged receipt of a copy of a negative declarationissued by the Planning Board on March 30, 2009 (the “Negative Declaration”), and (C) indicated that the

2

Agency had no information to suggest that the Planning Board was incorrect in authorizing the issuanceof the Negative Declaration; and

WHEREAS, the Agency intends to sell the Land to the Company according to the terms of a realestate purchase contract (the “Contract”) and warranty deed (the “Deed” and together with the Contract,collectively referred to as the “Purchase Contract”); and

WHEREAS, in satisfaction of Section 2897(6)(d)(ii) of the New York State Public AuthoritiesLaw, on April 1, 2009, the Agency filed an explanatory with the parties referenced in such statute for thepurpose of explaining the circumstances of the sale of the Land and beginning the ninety day waitingperiod required by such statute; and

Whereas, as required by Section 2897(7)(b) of the New York State Public Authorities Law, theAgency’s members have received (A) a full description of the Land that is being sold to the Company;(B) an appraisal (the “Appraisal”) of the Land that indicates that the appraised value of the Land is$235,000, (C) information, including the Appraisal and the Contract, that indicates that the Land is beingtransferred for less than fair market value; and (D) information, including the Application, that the Land isbeing sold for less than fair market value to (i) induce the Company to remain in Montgomery County,(ii) to preserve the competitive position of the Company, and (iii) to allow the Company to retain 141jobs, and create an additional 97 jobs over the course of the next five years;

WHEREAS, the Agency has given due consideration to the Application, and to representationsby the Company that (A) the granting by the Agency of the Financial Assistance with respect to theProject will be an inducement to the Company to undertake the Project in Montgomery County, NewYork and (B) while the completion of the Project Facility may result in the removal of a plant or facilityof the Company or an occupant of the Project Facility from one area of the State of New York to anotherarea of the State of New York and in the abandonment of one or more plants or facilities of the Companyor an occupant of the Project Facility located in the State of New York, such removal and abandonment isreasonably necessary to preserve the competitive position of the Company or an occupant of the ProjectFacility in their respective industries; and

WHEREAS, the Agency desires to encourage the Company to preserve and advance the jobopportunities, health, general prosperity and economic welfare of the people of Montgomery County,New York by undertaking the Project in Montgomery County, New York; and

WHEREAS, in order to consummate the Project and the granting of the Financial Assistancedescribed in the notice of the Public Hearing, the Agency proposes to enter into the following documents(hereinafter collectively referred to as the “Agency Documents”): (A) a certain lease to Agency (the“Underlying Lease”) by and between the Company, as landlord, and the Agency, as tenant pursuant towhich the Company will lease to the Agency the Land and all improvements now or hereafter located onthe Land (collectively, the “Premises”); (B) a lease agreement (and a memorandum thereof) (the “LeaseAgreement”) by and between the Agency and the Company, pursuant to which, among other things, theCompany agrees to undertake the Project as agent of the Agency and the Company further agrees to leasethe Project Facility from the Agency and, as rental thereunder, to pay the Agency’s administrative feerelating to the Project and to pay all expenses incurred by the Agency with respect to the Project; (C) apayment in lieu of tax agreement (the “Payment in Lieu of Tax Agreement”) by and between the Agencyand the Company, pursuant to which the Company will agree to pay certain payments in lieu of taxes withrespect to the Project Facility; (D) a real estate purchase contract (the “Contract”) and warranty deed (the“Deed” and together with the Contract, the “Purchase Contract”) to be entered into by and between theAgency and the Company for the purpose of transferring ownership of the Land to the Company; (E) one

3

or more mortgages and any other security documents and related documents (collectively, the“Mortgage”) from the Agency and the Company to the Company’s lenders with respect to the Project (the“Lender”), which Mortgage will grant liens on and security interests in the Project Facility to secure oneor more loans from the Lender to the Company with respect to the Project (collectively, the “Loan”); (F)all building loan and other agreements requested by the Lender in connection with the Loan (collectivelywith the Mortgage, the “Loan Documents”); and (G) various certificates relating to the Project (the“Closing Documents”);

NOW, THEREFORE, BE IT RESOLVED BY THE MEMBERS OF MONTGOMERYCOUNTY INDUSTRIAL DEVELOPMENT AGENCY AS FOLLOWS:

Section 1. All action taken by the Chief Executive Officer of the Agency with respect to thePublic Hearing with respect to the Project is hereby ratified and confirmed.

Section 2. The law firm of Hodgson Russ LLP is hereby appointed Special Counsel to theAgency with respect to all matters in connection with the Project. Special Counsel for the Agency ishereby authorized, at the expense of the Company, to work with the Company, counsel to the Company,counsel to the Agency and others to prepare, for submission to the Agency, all documents necessary toeffect the transactions contemplated by this Resolution. Special Counsel has prepared and submitted aninitial draft of the Agency Documents to staff of the Agency.

Section 3. All information required to be furnished to the Agency’s members pursuant toSection 2897(7)(b) of the New York State Public Authorities Law has been received by the Members.Based on such information, the Agency finds and determines that:

(A) By transferring the Land for less than its fair market value, the Agency isallowing the Company to (i) remain in Montgomery County, (ii) construct larger office space andwarehousing facilities that will allow the Company to preserve its competitive position, and (iii) retain141 jobs and create an additional 97 jobs over the course of the next five years;

(B) Other than the owners of the Company, there are no private interests involved inthe sale of the Land; and

(C) No other offers to purchase the Land have been received by the Agency.

Section 4. The Agency hereby finds and determines that:

(A) By virtue of the Act, the Agency has been vested with all powers necessary andconvenient to carry out and effectuate the purposes and provisions of the Act and to exercise allpowers granted to it under the Act;

(B) The Project constitutes a “project,” as such term is defined in the Act;

(C) The Project site is located entirely within the boundaries of Montgomery County,New York;

(D) It is estimated at the present time that the costs of the planning, development,acquisition, construction, reconstruction and installation of the Project Facility (collectively, the“Project Costs”) will be approximately $12,127,083;

4

(E) While the completion of the Project Facility may result in the removal of a plantor facility of the Company or an occupant of the Project Facility from one area of the State ofNew York to another area of the State of New York and in the abandonment of one or moreplants or facilities of the Company or an occupant of the Project Facility located in the State ofNew York, such removal and abandonment is reasonably necessary to preserve the competitiveposition of the Company or an occupant of the Project Facility in their respective industries.

(F) The Project Facility does not constitute a project where facilities or property thatare primarily used in making retail sales of goods or services to customers who personally visitsuch facilities constitute more than one-third of the total cost of the Project;

(G) The granting of the Financial Assistance by the Agency with respect to theProject will promote and maintain the job opportunities, general prosperity and economic welfareof the citizens of Montgomery County, New York and the State of New York and improve theirstandard of living, and thereby serve the public purposes of the Act;

(H) The Agency has reviewed the Public Hearing Report and has fully considered allcomments contained therein; and

(I) It is desirable and in the public interest for the Agency to enter into the AgencyDocuments.

Section 5. In consequence of the foregoing, the Agency hereby determines to: (A) proceedwith the Project; (B) acquire the Project Facility; (C) lease the Project Facility to the Company pursuantto the Lease Agreement; (D) enter into the Payment in Lieu of Tax Agreement; (E) secure the Loan byentering into the Loan Documents; and (F) grant the Financial Assistance with respect to the Project.

Section 6. The Agency is hereby authorized (A) to acquire a leasehold interest in thePremises pursuant to the Underlying Lease and (B) to acquire title to the Equipment pursuant to a bill ofsale (the “Bill of Sale to Agency”) from the Company to the Agency, and (C) to do all things necessary orappropriate for the accomplishment thereof, and all acts heretofore taken by the Agency with respect tosuch acquisitions are hereby approved, ratified and confirmed.

Section 7. The Agency is hereby authorized to acquire, construct and install the ProjectFacility as described in the Lease Agreement and to do all things necessary or appropriate for theaccomplishment thereof, and all acts heretofore taken by the Agency with respect to such acquisition,construction and installation are hereby ratified, confirmed and approved.

Section 8. The form and substance of the Agency Documents (in substantially the formpresented to this meeting) are hereby approved. The Chairman (or Vice Chairman) of the Agency, withthe assistance of Agency Counsel, is authorized to negotiate and approve the form and substance of all ofthe Agency Documents.

Section 9. (A) The Chairman (or Vice Chairman) of the Agency is hereby authorized, onbehalf of the Agency, to execute and deliver the Agency Documents, and, where appropriate, theSecretary (or Assistant Secretary) of the Agency is hereby authorized to affix the seal of the Agencythereto and to attest the same, all in the forms thereof as the Chairman (or Vice Chairman) shall approve,the execution thereof by the Chairman (or Vice Chairman) to constitute conclusive evidence of suchapproval.

5

(B) The Chairman (or Vice Chairman) of the Agency is hereby furtherauthorized, on behalf of the Agency, to designate any additional Authorized Representatives of theAgency (as defined in and pursuant to the Lease Agreement).

Section 10. The officers, employees and agents of the Agency are hereby authorized anddirected for and in the name and on behalf of the Agency to do all acts and things required or provided forby the provisions of the Agency Documents, and to execute and deliver all such additional certificates,instruments and documents, to pay all such fees, charges and expenses and to do all such further acts andthings as may be necessary or, in the opinion of the officer, employee or agent acting, desirable andproper to effect the purposes of the foregoing Resolution and to cause compliance by the Agency with allof the terms, covenants and provisions of the Agency Documents binding upon the Agency.

Section 11. This Resolution shall take effect immediately.

The question of the adoption of the foregoing Resolution was duly put to a vote on roll call,which resulted as follows:

William Hisert VOTING YesEugene Richards VOTING AbsentCarol Shineman VOTING AbsentRobert Hoefs VOTING YesCharles Schwartz, Esq. VOTING YesDaniel Wilson VOTING AbsentJoseph R. Emanuele Ill VOTING Yes

The foregoing Resolution No. 10-30 was thereupon declared duly adopted.

6

STATE OF NEW YORK )) SS.:


I, the undersigned (Assistant) Secretaiy of Montgomery County Industrial Development Agency(the “Agency”), DO HEREBY CERTIFY that I have compared the foregoing annexed extract of theminutes of the meeting of the members of the Agency, including the Resolution contained therein, held onJune 30, 2010 with the original thereof on file in my office, and that the same is a true and correct copy ofsaid original and of such Resolution contained therein and of the whole of said original so far as the samerelates to the subject matters therein referred to.

I FURTHER CERTIFY that (A) all members of the Agency had due notice of said meeting; (B)said meeting was in all respects duly held; (C) pursuant to Article 7 of the Public Officers Law (the“Open Meetings Law”), said meeting was open to the general public, and due notice of the time and placeof said meeting was duly given in accordance with such Open Meetings Law; and (D) there was a quorumof the members of the Agency present throughout said meeting.

I FURTHER CERTIFY that, as of the date hereof, the attached Resolution is in full force andeffect and has not been amended, repealed or rescinded.

IN WiTNESS WHEREOF, I have hereunto set my hand and affixed the seal of the Agency this30th day of June, 2010.

,ei21,4(Assistant) Secreta6v’

(SEAL)

01217M)0069 Business 7575755v1

7

CLOSING ITEM NO.: B-2

CERTIFICATE REGARDINGNO CONFLICTS OF INTEREST

I, the undersigned (Vice) Chairman for Montgomery County Industrial Development Agency (the“Agency”), DO HEREBY CERTIFY, as follows:

1. The Agency is an industrial development agency duly established under Title 1 of Article18-A of the General Municipal Law of the State of New York, as amended, and Chapter 666 of the Lawsof 1970 of the State of New York, as amended (collectively, the “Act”) and is a corporate governmentalagency constituting a public benefit corporation of the State of New York.

2. In accordance with the Act, the Agency has determined, pursuant to a resolution dulyadopted by the members of the Agency on June 30, 2010 (the “Approving Resolution”) and in accordancewith the provisions of a certain lease agreement dated as of June 1, 2010 (the “Lease Agreement”) by andbetween the Agency and Hill & Markes Realty, LLC (the “Company”), to undertake a project (the“Project”) consisting of following: (A) (1) the acquisition of an interest in a 45.3+!- acre parcel of land(tax map parcel identification number 54-2-2.1) and located on Highway 5S in the City of Amsterdam,Town of Florida, Montgomery County, New York (the “Land”), (2) the construction of two facilities onthe Land: (a) an approximately 100,000 square foot warehouse, and (b) an approximately 15,000 squarefoot office building (both facilities being collectively referred to as the “Facility”), (3) the acquisition andinstallation of certain machinery and equipment therein and thereon (the “Equipment”) (the Land, theFacility and the Equipment hereinafter collectively referred to as the “Project Facility”), all of theforegoing to constitute new warehousing and office facilities to support the growth of the Company’ssupply business and related activities; (B) the granting of certain “financial assistance” (within themeaning of Section 854(14) of the Act) with respect to the foregoing, including potential exemptionsfrom sales and use taxes, real property transfer taxes, mortgage recording taxes and real estate taxes(collectively, the “Financial Assistance”); and (C) the lease of the Project Facility to the Companypursuant to the terms of the Lease Agreement.

3. Pursuant to the Approving Resolution, the Agency further determined to: (A) completethe acquisition, construction and installation of the Project Facility, or cause the Project Facility to beacquired, constructed and installed; and (B) lease the Project Facility to the Company pursuant to theLease Agreement and certain other documents related thereto and to the Project (collectively with theLease Agreement, the “Basic Documents”). Pursuant to the Lease Agreement, among other things, theCompany is obligated (1) to pay all costs incurred by the Agency with respect to the Project Facility,including all costs of operation and maintenance, all taxes and other governmental charges, any requiredpayments in lieu of taxes, and the reasonable fees and expenses incurred by the Agency with respect to orin connection with the Project Facility and (2) to comply with the provisions of the Act applicable tobeneficiaries of financial assistance from the Agency.

4. I have made careful inquiry of each member, officer and employee of the Agency havingthe power or duty to (a) negotiate, prepare, authorize or approve the Basic Documents or authorize orapprove payment thereunder, (b) audit bills or claims under the Basic Documents, or (c) appoint anofficer or employee who has any of the powers or duties as set forth above, as to whether or not such

012178/00069 Business 7555120v1

member, officer or employee has an “interest” (as defined pursuant to Article 18 of the General MunicipalLaw of the State of New York) in any of the Basic Documents. Upon information and belief, as a resultof such inquiry, no such member, officer or employee has any such interest in any of the BasicDocuments, unless otherwise noted below:

(i) Except as disclosed on Exhibit A attached hereto, no member, officer oremployee of the Agency directly or indirectly owns stock of the Company or has a partnershipinterest in the Company.

(ii) Except as disclosed on Exhibit A attached hereto, no member, officer oremployee of the Agency is an officer or employee of the Company.

(iii) Except as disclosed on Exhibit A attached hereto, no member, officer oremployee of the Agency is a member of the board of directors of the Company.

(iv) If any member has publicly disclosed the nature and extent of such interest inwriting to the members of the Agency, such written disclosure has been made a part of and setforth in the official minutes of the Agency, and a true, correct and complete copy of such writtendisclosure is annexed hereto as Exhibit A.

-2-012178/00069 Business 7555120v1

IN WITNESS WHEREOF, I have hereunto set my hand this jday of July, 2010.

()Liee) Chairman

-3-000161/01178 Business 7555120v1

EXHIBIT A

WRITTEN DISCLOSURES OF CONFLICTS OF INTEREST

---NONE--

A-i012178/00069 Business 7555120v1

IN THE MATTER OF TAXATION

OF




The undersigned, being duly sworn, deposes and says that:

1. He resides in Montgomery County, New York, and is the Chief Executive Officer ofMontgomery County Industrial Development Agency (the “Agency”) a public benefit corporation of theState of New York, established by Title 1 of Article 18-A of the General Municipal Law of the State ofNew York and Chapter 666 of the Laws of 1970 of the State of New York (collectively, the “Act”).

2. On or about June 30, 2010, the Agency acquired an interest in a 45.3+!- acre parcel of

land (tax map parcel identification number 54-2-2.1) located on Highway 5S in the Town of Florida,

Montgomery County, New York (the “Land”), pursuant to a license to Agency dated as of June 1, 2010

(the “License to Agency”) from Hill & Markes Realty, LLC (the “Company”) to the Agency and a certain

lease dated as of June 1, 2010 (the “Underlying Lease”) between the Agency and the Company, said Landbeing more particularly described in Exhibit A attached hereto.

3. Pursuant to Section 874 of the Act and Section 1405(b)(l) of the Tax Law of the State ofNew York, no real estate transfer tax is due upon the instruments conveying the Land to the Agency.

4. On or about June 30, 2010, the Agency will grant certain “financial assistance” within themeaning of the Act (the “Financial Assistance”) in connection with a project (the “Project”) beingundertaken by the Agency consisting of the following: (A) (1) the acquisition of an interest in a 45.3+!-acre parcel of land (tax map parcel identification number 54-2-2.1) and located on Highway 5S in the Cityof Amsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) the construction oftwo facilities on the Land: (a) an approximately 100,000 square foot warehouse, and (b) an approximately15,000 square foot office building (both facilities being collectively referred to as the “Facility”), (3) theacquisition and installation of certain machinery and equipment therein and thereon (the “Equipment”)(the Land, the Facility and the Equipment hereinafter collectively referred to as the “Project Facility”), allof the foregoing to constitute new warehousing and office facilities to support the growth of theCompany’s supply business and related activities; (B) the granting of certain “financial assistance”(within the meaning of Section 854(14) of the Act) with respect to the foregoing, including potentialexemptions from sales and use taxes, real property transfer taxes, mortgage recording taxes and real estatetaxes (collectively, the “Financial Assistance”); and (C) the lease of the Project Facility to the Companypursuant to the terms of a lease agreement dated as of June 1, 2010 (the “Lease Agreement”) by andbetween the Company and the Agency, pursuant to which the Company will agree (1) to cause the Projectto be undertaken and completed, and (2) as agent of the Agency, to undertake and complete the Project

012178/00069 Business 7577053v1

and (D) the Agency will lease the Project Facility to the Company for a lease term ending on the earlier tooccur of (1) December 31, 2023 or (2) the date on which the Lease Agreement is terminated pursuant tothe optional termination provisions thereof. The Lease Agreement grants to the Company certain optionsto acquire the Project Facility from the Agency.

5. In order to finance a portion of the costs of the Project, the Company will obtain a loan inthe principal sum of up to $8,363,843.00 (the “Loan”) from RBS Citizens, N.A. (the “Lender”), whichLoan will be secured by (1) a mortgage and security agreement (the “Mortgage”) dated as of June 30,2010, and (2) an assignment of leases and rents (the “Assignment of Rents”) dated as of June 30, 2010from the Agency and the Company to the Lender.

6. Pursuant to the terms of the Lease Agreement, the Underlying Lease, the License toAgency, the Mortgage, and the Assignment of Rents, the Agency has agreed to record the Mortgage, theUnderlying Lease (or a memorandum thereof), the License to Agency, and the Lease Agreement (ormemorandum thereof) in the office of the County Clerk of Montgomery County, New York, or in suchother office as may at the time be provided by law as the proper place for the recordation thereof.

7. Pursuant to Article 1 8-A of the General Municipal Law, the Agency is regarded asperforming a governmental function and is generally not required to pay taxes or assessments upon anyproperty acquired by it or under its jurisdiction or control or supervision or upon its activities, and anybonds or notes issued by the Agency, together with the income therefrom, as well as the property of theAgency, together with the income therefrom, as well as the property of the Agency, pursuant to suchlegislation, are exempt from taxation, except for transfer and estate taxes.

8. Deponent submits that no mortgage tax should be imposed upon the Underlying Lease(or a memorandum thereof), the License to Agency, the Lease Agreement (or a memorandum thereof),the Assignment of Rents or the Mortgage (collectively, the “Recording Documents”) because (A) saidRecording Documents are being executed and delivered under the state authority creating the Agency, (B)the use by the Agency of its powers to assist in the acquisition, construction and installation of the ProjectFacility is deemed by Article 18-A of the General Municipal Law to be a public purpose essential to thepublic interest and (C) both the New York State Department of Taxation and Finance (the “Department”)and the Counsel to the Department have expressed their opinion that the recording of similar documentsby similar agencies are operations of said agencies entitled to exemption from the mortgage recording tax.

-2-

012178/00069 Business 7577053v1

Sworn to before me this30th day of June, 2010.

Notary Public

.PAULL.WOLLMANOTARY PUBtIC STATE OF NEW YORKOIJALIFIEOINMONTGOMERYCOUNJY

REG #02W09730185MY COMM E YP J ULY 31 20

-3-

012178/00069 Business 7577053v1


BY:Lic) Chairman

EXHIBIT A


- SEE ATTACHED -

A-i012178/00069 Business 7577053v1

SCHEDULE A




I.) South 67°-03’-52” East, a distance of 40.53 feet to a point;


3.) South 63°-Il ‘-18” East, a distance of 198.52 feet to a point;




7.) South 70°-18’-lS” East, a distance of 163.75 feet to a point located on the westerlybounds of land now or formerly of Itla Agosta on the east and lands herein described on the west; thencealong said division line the following course and distance:





2.) North 82°-SI’-! 7” West, a distance of 763.31 feet to a point;


A-201217800069 Business 7577053v1



A-301217800069 Business 7577053v1


MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCYOld County Courthouse, Park Street

Fonda, New York 12068

July 7,2010

To Whom It May Concern:

Re: New York State Sales or Use Tax ExemptionMontgomery County Industrial Developmen gy ‘ —

Hill & Markes Realty, LLC Project—4

Pursuant to TSB-M-87(7) issued by the New York State Depa ment of Taxation and Finance on April 1,1987 (the “Policy Statement”), Hi & Markes Realty, LLC (the “Companyj has requested a letter fromMontgomery County Industrial lielopment Agence “Agency”),-7public benefit corporationcreated pursuant to Chapter 1030 bfL 969 Laws of ‘VThk constituting Title 1 of Article 18-A of theGeneral Municipal Law, Chapterf the Consojrdated La of New York as amended (the “EnablingAct”) and Chapter 666 of the 1 97Jaws of Nev York, as aitended, constituting Section 895-d of saidGeneral Municipal Law (said Chr and the EnNht2tieing hereinafter collectively referred to asthe “Act”), containing the informa required b( the Policy S’tatement regarding the sales tax exemptionwith respect to the captioned project (the “Project”) located on State Routes 5S in the Town of Florida,Montgomery County, New York (“Project Sit “).

The Company has applied to and lJ approved or financial ssistance frojj the Agency in the matter ofcompletion of the Project on the Prct Site. The Project includes the following: (A) (1) the acquisitionof an interest in a 45.3+!- acre parel of land (tax ip pared identification1umber 54-2-2.1) and locatedon Highway 5S in the City of sterdam, Toi of F1oida, Montgoniey County, New York (the‘Land”), (2) the construction of facilities the Land a) an approximately 100,000 square footwarehouse, and (b) an approximati 15,000 squaejoot offi building (both facilities being collectivelyreferred to as the “Facility”), (3) acquisition a ms.f1ation of certain machinery and equipmenttherein and thereon (the “Equipmé) (the Land, the Facility and the Equipment hereinafter collectivelyreferred to as the “Project Facili), all of the foregoing to constituteliew warehousing and officefacilities to support the growth of the Company’.siipplybiisiusiess and related activities; (B) the grantingof certain “financial assistance” (within the meani ffn 854(14) of the Act) with respect to theforegoing, including potential exemptions from sales au taxes, real property transfer taxes, mortgagerecording taxes and real estate taxes (collectively, the “Fj1cial Assistance”), and (C) the lease of theProject Facility to the Company pursuant to the terof lease agreement’dated as of June 1, 2010 (the“Lease Agreement”) by and between the Agencyantt’tITe€oiipany Please be advised that on or aboutJune 30, 2010, the Agency executed and delivered the Lease Agreement, rsuant to which the Agencyappointed the Company as agent of the Agency to acquire, construct and install the Project Facility.

The Company, as agent of the Agency, is authorized to make purchases ofmãterials to be incorporated inthe Project and machinery and equipment constituting a part of the Projeci’ and purchases or rentals ofsupplies, tools, equipment, or services necessary to acquire, construct, reconstruct or install the Project.

0i2i78/00069 Business 7555137v1

July 7,2010Page 2

To ensure that the above purchases or rentals are exempt from any sales or use tax imposed by the Stateof New York or any governmental instrumentality located within the State of New York, the vendor mustidentify the Project on each bill and invoice for such purchases and indicate on the bill or invoice that theCompany as agent for the Agency was the purchaser (e.g., “Hill & Markes Realty, LLC, as agent forMontgomery County Industrial Development Agency”). In addition, the following procedures should beobserved:

1. Each bill and invoice should identify the date of delivery and indicate the place ofdelivery.

2. Payment should be made by the Company acting as agent, directly to the vendor fromeither a requisition from a special project fund of the payor.

3. Deliveries should be made to the Project Site, or under certain circumstances (such aswhere the materials require additional fabrication before installation on the Project Site or for storage toprotect materials from theft or vandalism prior to installation at the Project Site) deliveries may be madeto a site other than the Project Site, providing the ultimate delivery of the materials is made to the ProjectSite. Where delivery is made to a site other than the Project Site, the purchases should be billed orinvoiced by the vendor to the Company as agent of the Agency, identify the date and place of delivery,the Agency’s full name and address and the Project Site where the materials will ultimately be deliveredfor installation.

Pursuant to Section 874(8) of the Act, the Company, as agent of the Agency, must annually file astatement with the New York State Department of Taxation and Finance, on a form and in such a manneras is prescribed by the Commissioner of Taxation and Finance, of the value of all sales tax exemptionsclaimed by the Company under the authority granted by the Agency. The penalty for failure to file such astatement under Section 874(8) of the Act shall be the removal of authority to act as an agent for theAgency.

Pursuant to Section 874(9) of the Act, the Company, as agent of the Agency, must file within thirty (30)days of the date the Agency designates the Company as agent of the Agency, a statement with the NewYork State Department of Taxation and Finance, on a form and in such manner as prescribed by theCommissioner of Taxation and Finance, identifying the Company as agent of the Agency.

This letter shall serve as proof of the existence of an agency contract between the Agency and theCompany for the SOLE EXPRESS PURPOSE OF SECURING EXEMPTION FROM NEW YORKSTATE SALES TAXES FOR THE PROJECT ONLY. NO OTHER PRINCIPAL/AGENTRELATIONSHIP BETWEEN THE AGENCY AND THE COMPANY IS INTENDED OR MAY BEIMPLIED OR INFERRED BY THIS LETTER.

It is hereby further certified that, under the Policy Statement, since the Agency is a public benefitcorporation, neither the Agency nor the Company as its agent, is required to furnish an “ExemptOrganization Certificate” in order to secure exemption from any sales or use tax for such items orservices.

Under the Policy Statement, a copy of this letter received by any vendor or seller to the Company as agentfor the Agency, may be accepted by such vendor or seller as a “statement and additional documentaryevidence of such exemption” as provided by New York State Tax Law Section 1 132(c)(2), therebyrelieving such vendor or seller from the obligation to collect sales and use tax on purchases or rentals ofsuch materials, supplies, tools, equipment, or services by the Agency through its agent, the Company.

012178/00069 Business 7555137v1

July 7,2010Page 3

relieving such vendor or seller from the obligation to collect sales and use tax on purchases or rentals ofsuch materials, supplies, tools, equipment, or services by the Agency through its agent, the Company.

THIS LETTER SHALL BE IN EFFECT UNTIL JULY 1,2011.

In the event you have any questions with respect to the above, please do not hesitate to call Kenneth Rose,Executive Director of the Agency, at 518-853-8334.

Very truly yours,


By:________(tic) Chairman

000161/01178 Business 7555137v1

lW-I 12-a (I /)5) (knnerly lA-4 12-a) New York Stale Board ol Real Property Services

INDUSTRIAL DEVELOPMENT AGENCIESAPPI.ICA liON FOR REAL l>ROl’ERIY FAX EXEMP’flON

Real Property lax Law. Scciion P2—a and ( ;cneril Municipal law. Section 871)

a. Assessment roll description (tax map no../roll year) e.

___________________________________________________

54-2-2.l

________________________________________

h. Street address hIGhWAY 5S g.

c. City. Town or Village AMSTERDAM

4. GENERAL DESCRIPTION OF PROPERTY (ilnecessary. attach plans or speciticationsia. l3rief description (include property use) WAREHOUSING AND OFFICE FACILItIES

b. Type of construction 11w construction of 2 facilities

c. Square footage 115.000 (est) f. Projected expiration of exemption (i.e. dale when property is nod. Total cost $12,127,083 longer possessed, controlled, supervised or under the jurisdictione. Date construction commenced____________________ of IDA) December 31. 2022

5. SUMMARIZE AGREEMENT (IF ANY) AND METHOD TO BE USED FOR PAYMENTS TO BE MADE TO MUNICIPALITYRECA RDLESS OF STATUTORY EXEMPTION(attach copy of the agreement or extract otthe terms relating to the project).

a. Formula for payment See Attached Payment in Lieu of Tax Agreement

b. Projected expiration date of agreement_ December 3 I. 2022

INI)USTRIAL DEVELOPMENT AGENCY (ll)A)

Name MON’I(IOMERY COUNIY INI)USlRIALl)EVFLOPMENT AGENCY

Street P.O. IIOX 1501), UI.!) COUNIY COURTI lOUSE

(ity FONI)A. NEW YORK 12068

Day _J.L3-8334Felephone no.

Evening I

Contact KENNEl)) ROSE

lille CI IIEF EXECUTIVE OFFICER

3. I)ESCRIPTION OF PARCEL

2. OCCUPANT (IF OThER rIIAN IDA) (It more than oneoccupant attach separate list lug)

Name llll.L i\Nl) MARKES REALlY. l.LC

Street 120 El)SON StREET

City AMSIERI)AM. NEW YORK 12010

l)ay (518) 842-2410Iclephone no.

Evening _j_..j

Contact NEAL IACKER

litle Cl IIEF OPER,V11NG OFFICER

d. School District FONI)A FULIONVILLE CENTRAL SChOOLDISTRICTCounty MontgomeryCurrent assessment $lease to IDA (date recorded liber and page)

U 12178/00069 Business 757611 lvi

l. l’crson or entity responsible br ymcntC. ‘.1 LIi)1ci1).il (Uipt)r;itiOnS to o. liich payinclils vill be iii,ide

VlS NO

(‘olinty jtgjjiery [1 [=1lown/city HoridLjinstcrdain [I LI

_________________________

Village LI (}Scti. just. londa ILiItOiIVIlh [J LI

e. Is the IDA the owner of the property? Yes No (circle one)If “No” identify owner and explain lI)i ‘hts or interest inin attached statement.

6. is the property receiving or has the property ever received any other exemption from real property taxation? (check one) LI YesONo7. II’ yes, list the statutory exemption relërence and assessment roll year on which granted:Cxempuon

________________________________________________

assessment roll year

__________________________________________

A COI)Y ui this application, including all attachments, has been mailed or delivered on

_____________________________

official of each municipality, within which the project is located as indicated in Item 3.

CERTIFICATION

I. fIsEeir

________________________

NameMoN [GOMFRY COUNIY INDUSTRIAL DEVILOPMENTAG INCY

Organization

_July 7,2010

________________________________________

Dale

I. l)ate application flIed

2. Applicable taxable status date

_________________________________________________________________

3. a. Agreement (or extract) date

_____________________________________________________________

3. b. Projected exemption expiration (year)

4. Assessed valuation of parcel in first year of exemptionS

5. Special assessments and special ad valorem levies for which the parcel is liable:

Assessor’s signature

Name NcaI Packertitle (1üefOperatin Olticer

Address 120 Edson Streel

Amsterdam, NY 12010

I’elephone (518) 842-241()

.(date) to the chief executive

I),L4ce Chairman

Title

hereby certify that this informaion on this application andaccompanying papers constitutes a true statement ot’ facts.

Signature

FOR USE BY

ASSESSOR

Date

012178/00069 Business 7576t I lvi

(‘tA)SIN(i I’[LM NO.: A-8

MONFG()MERY COUNTY INDUSTRIAL I)LVEL()PMEN’F A( ENCY

A N I)


PAYMENT IN LIEU OF TAX AGREEMENT

DATED AS OF JUNE 1,2010

RELATING TO THE PREMISES LOCATED ON STATE ROUTE 5S INTHE TOWN OF FLORIDA, MONTGOMERY COUNTY, NEW YORK.

O2178JooO&9 Business 7535194v)

IA I IL ( )F ( ( )NFF.N I’S

this I’ahle of Contents is not part of the Payment in I ieu ol I’xA reeinent and is br eoiiveiiience of retreiice only.)

PAR [IFSRFC’[FALS

ARtiCLE I

REPRESENTiVflONS AND WARRANFIES

Section I .01. Representations of and Warranties by the Agency 1Section I .02. Representations of and Warranties by the C’ompany 4

ARTICLE II


Section 2.01. Fax-Exempt Status ol the Project Facility 6Section 2.02. Payments in Lieu of Taxes6Section 2.03. Credit for Faxes Paid

11Section 2.04. Late Payment12

ARTICLE III

LIMITED OBLIGATION

Section 3.0!. No Recourse; Limited Obligation of the Agency 13

ARTICLE IV

EVENTS OF DEFAULT

Section 4.01. Eventsof Default14Section 4.02. Remedies on Default14Section 4.03. Payment of Attorney’s Fees and Expenses 15Section 4.04. Remedies; Waiver and Notice15

ARTICLE V

MISCELLANEOUS

Section 5.01. Term16Section 5.02. Form of Payments16Section 5.03. Company Acts16Section 5.04. Amendments16Section 5.05. Notices16Section 5.06. Binding Effect18Section 5.07. Severability18

‘)I2t7iOOO69 L3usiness 753514vI

Section 5 OR. (uttitrerpurts. SSection 5.09. ApplicableLaw.is

ILSEIMON lii M.19SIGNAI’URLiS.19,\CKNOWLED(FMENFS

.20

LXIII BIT A - Description of the Leased LandA—I

H2178/000o9 Business 7535194v1

PAYMENt’ IN I IEIJ ( )F I’AX A( iRFEMENI’

tills PAYv1EN I’ IN LIEU ( )F FAX A(JRFEMFiN’F dated as of June 1, 201() (the “Payment inlieu ut l’ax \.rcement”) by md between MONT’GOMERY COUNtY INI)IJSIRIALl)EVEI A)IMENT AGENCY, a public benefit corporation organized and existing under the laws of theState of’ New York having an oltice for the transaction of’ business located at Old County (‘ouilhouse,Park Street. Fonda. New York (the “Agency”), and HILL & MARKES REALTY, LLC, a limited liabilitycoiiipauy uranized and existing under the laws of’ the State of New York having an office for thetransactkrn ot business located at I 2() Fdsoii Street, Amsterdam, New York (the “Company”):

WI ‘F N F. S SE T lI:

WIIFRE3AS, Title I of Article 18-A of the General Municipal Law of the State of New York (the“Enabling Act”) was duly enacted into law as Chapter 1030 of the Laws of 1969 of the State of NewYork; and

WHEREAS, the Enabling Act authorizes and provides for the creation of industrial developmentagencies for the benefit of the several counties, cities, villages and towns in the State of New York (the“State”) and empowers such agencies, among other things, to acquire, construct, reconstruct, lease,improve, maintain, equip and dispose of land and any building or other improvement, and all real andpersonal properties, including, but not limited to, machinery and equipment deemed necessary inconnection therewith, whether or not now in existence or under construction, which shall be suitable formanuthcturing, warehousing, research, commercial or industrial purposes, in order to advance the jobopportunities, health, general prosperity and economic welfare of the people of the State and to improvetheir standard of living; and

WHEREAS, the Enabling Act further authorizes each such agency, for the purpose of carrying outany of its corporate purposes, to lease or sell any or all of its facilities, whether then owned or thereafteracquired; and


WHEREAS, in September, 2008, the Company presented an application (the “Application”) tothe Agency, which Application requested that the Agency consider undertaking a project (the ‘Project”)for the benefit of the Company, said Project to include the following: (A)(I) the acquisition of an interestin a 45,3+1- acre parcel of land (tax map parcel identification number 54-2-2.1) and located on Highway5S in the City of Amsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) theconstruction of two facilities on the Land: (a) an approximately 100,000 square foot warehouse, and (b)an approximately 15,000 square foot office building (both facilities being collectively referred to as the“Facility”), (3) the acquisition and installation of certain machinery and equipment therein and thereon(the “Equipment”) (the Land, the Facility and the Equipment hereinafter collectively referred to as the“Project Facility”), all of the foregoing to constitute new warehousing and office facilities to support thegrowth of the Company’s supply business and related activities; (B) the granting of certain “financialassistance” (within the meaning of Section 854(14) of the Act) with respect to the foregoing, includingpotential exemptions from certain sales and use taxes, real property taxes, real property transfer taxes andmortgage recording taxes (collectively, the “Financial Assistance”); and (C) the lease (with an obligation

OI2I7Si000ô9 Bisiness 75351’)4v1

to purchase) or sale ,i the l’rojcct Facility to the ( ‘otiipaiiy r uc h 1 her person is may he lcsu.natec1 bythe Company and agreed upon by the Agency; and

W II FR EAS, Pursuant to the authoritation conta med in a resolitt ion adopted by he members of’the Agency on April 9, 2009 (the “Public I learing Resolution’), the Chief’ Fxecu(ive ( )tiicer of theAgency (A) caused notice of a public hearing of’ the Agency pursuant to Section 859—a of the Act (theiuhlic I learing”) to hear all C1SOflS interested in the Prolect and the Financial Assistance beingcontemplated by the Agency with respect to the Project, to be mailed on April 20, 2009 to the chiefexecutive officers of’ the county and of each city, town, village and school district in which the Project isto he located. (11) caused notice of’ the Public ((earing to he posted on April 20, 2009 on a public bulletinhoard located at the Old County Courthouse, Fonda, New York, (C) caused notice of the Public I (earingto be published on April 22, 2009 in [he Recorder, a newspaper of’ general circulation available to theresidents of the Fown of Florida, New York, (D) conducted the Public I fearing on May 21, 2009 at 9:30afln., local time at the Town of Florida [‘own I (all, located at 2 14 Fort I luntcr Road, in the [‘own ofFlorida, Montgomery County, New York. and (F) prepared a report of the Public Hearing (the “PublicI tearing Report”) tirly summarizing the views presented at such Public Hearing and caused copies ofsaid Public Hearing Report to be made available to the members of the Agency; and

WHEREAS, pursuant to Article 8 of the Environmental Conservation Law, Chapter 43-13 of theConsolidated Laws of New York, as amended (the “SEQR Act”) and the regulations (the “Regulations”)adopted pursuant thereto by the Department of Environmental Conservation of the State of New York,being 6NYCRR Part 617, as amended (collectively with the SEQR Act, “SEQRA”), by resolutionadopted by the members of the Agency on May 20, 2010 (the “SEQR Resolution”), the Agency(A) ratified the determination by the Town of Florida Planning Board (the “Planning Board”) to act aslead agency” with respect to the Project, (B) acknowledged receipt of a copy of a negative declarationissued by the Planning Board on March 30, 2009 (the “Negative Declaration”), and (C) indicated that theAgency had no information to suggest that the Planning Board was incorrect in authorizing the issuanceof the Negative Declaration; and


WFIEREAS, pursuant to the terms of the Lease Agreement, (A) the Company will agree (1) tocause the Project to be undertaken and completed, and (2) as agent of the Agency, to undertake andcomplete the Project and (B) the Agency has leased the Project Facility to the Company for a lease termending on the earlier to occur of (1) December 31, 2022 or (2) the date on which the Lease Agreement isterminated pursuant to the optional termination provisions thereof and


WHEREAS, simultaneously with the execution and delivery of the Lease Agreement (the“Closing”), (A) the Company will execute and deliver to the Agency (I) a certain lease to agency dated asof June 1, 2010 (the “Lease to Agency”) by and between the Company, as landlord, and the Agency, astenant, pursuant to which the Company will lease to the Agency a portion of the Land and allimprovements now or hereafter located on said portion of’ the Land (collectively, the “Leased Premises”)for a lease term ending on December 31, 2022; (2) a certain license agreement dated as of’ June I, 2010(the “License to Agency”) by and between the Company, as licensor, and the Agency, as licensee,

-2-01217S/(J0069 Business 75sg4vi

PursLII1t to which the ( ompally Will grant to the Agency (a) a I icense to enter upon the balance ol theI and ( the “I ,iccnsed Premises’’) for the purpose of’ undertaking and completing the Project amid (b), in theevent of au occurrence of an Fvcnt of l)etiult by the Company, an additional license to enter upon iheI icensed Premises for the purpose of pursuing its remedies under the Lease Agreement: and (3) a bill ofate dated as of June I. 2010 (the ‘ifill of’ Sale to Agency”), which conveys to the Agency all right, titlemd interest of’ the Company in the Equipment, (B) the Compafly and the Agency will execute and deliveri payment in lieu of tax agreement dated as of’ June I 20 10 (the “Payment in Lieu of Fax igreernent”) bymud between the Agency and the Company, pursuant to which the Company will agree to pay certainpayments in lieu of taxes with respect to the Project Facility, (C’) the Agency will tile with the assessormud mail to the chief executive of licer of each “alhcted tax jurisdiction” (within the meaning of’ such(1uoted term iii Section 854(16) of the /ct) a copy of a New York State Board of’ Real Property ServicesForm 412-a (the form required to he filed by the Agency in order for the Agency to obtain a real propertytax exemption with respect to the Project Facility under Section 412-a of the Real Property Fax Law) (the“Real Property Fax Exemption Form”) relating to the Project Facility and the Payment in Lieu of Fax,greement, (I)) I he Agency will execute and deliver to the Company a sales tax exemption letter (the“Sales Fax Exemption Letter”) to ensure the granting of’ the sales tax exemption which forms a part of theFinancial Assistance and (E) the Agency will tile with the New York State Department of Taxation andFinance the form entitled “IDA Appointment of Project Operator or Agent for Sales Tax Purposes” (theForm required to he tiled pursuant to Section 874(9) of the Act) (the Thirty-Day Sales Fax Report”); and

WHEREAS, under the present provisions of’ the Act and Section 412-a of the Real Property FaxLaw of the State of New York (the “Real Property Tax Law”), the Agency is required to pay no taxes orassessments upon any of’ the property acquired by it or under its jurisdiction or supervision or control; and

WHEREAS, pursuant to the provisions of Section 6.6 of the Lease Agreement, the Company hasagreed to make payments in lieu of taxes with respect to the Project Facility in an amount equivalent tonormal taxes, provided that, so long as this Payment in Lieu of Tax Agreement shall be in effect, theCompany shall during the term of’ this Payment in Lieu of Tax Agreement make payments in lieu of taxesin the amounts and in the manner provided in this Payment in Lieu of Tax Agreement, and during suchperiod the provisions of Section 6.6 of the Lease Agreement shall not control the amounts due as paymentin lieu of taxes with respect to that portion of the Project Facility which is covered by this Payment inLieu of Tax Agreement; and

WHEREAS, all things necessary to constitute this Payment in Lieu of Tax Agreement a valid andbinding agreement by and between the parties hereto in accordance with the terms hereof have been doneand performed, and the creation, execution and delivery of this Payment in Lieu of Tax Agreement havein all respects been duly authorized by the Agency and the Company;

NOW, THEREFORE, in consideration of the matters above recited, the parties hereto formallycovenant, agree and bind themselves as follows, to wit:

-3-)I2I7Xi00069 Btisiness 7535194vi

\RlIL’l.1 I

REPRFSEN’l’All( )NS ANt) WARRANTIES

SECTION 1.0). REPRESENTATIONS OF ANt) WARRANTIES 1W [lIE A(ENCY. [lie Agencydoes hereby represent, warrant and covenant as tol lows:

(A) P°ci. [he Agency isa public benetit corporation of the State, has been duly establishedunder the provisions of the Act, is validly existing tinder the proViSions of the Act and has the powerunder the laws of the State of New York to enter into the transactions coiitemplated by this Payment inLieu of Tax Agreement and to carry out the transactions contemplated hereby and to peribrin and carryout all covenants and obligations on its part to he performed under and pursuant to this Payment in Lieuof Tax Agreement hereunder.

(B) Authorization. The Agency is authorized and has the corporate power under the Act, itsby-laws and the laws of the State to enter into this Payment in Lieu of Tax Agreement and thetransactions contemplated hereby and to perform and carry out all the covenants and obligations on itspart to be performed under and pursuant to this Payment in Lieu of Tax Agreement. By proper corporateaction on the part of its members, the Agency has duly authorized the execution, delivery andiertbrmance of this Payment in Lieu of Tax Agreement and the consummation of the transactions hereincontemplated.

(C) Conflicts. The Agency is not prohibited from entering into this Payment in Lieu of TaxAgreement and discharging and performing all covenants and obligations on its part to be performedtinder and pursuant to this Payment in Lieu of Tax Agreement by the terms, conditions or provisions ofany order, judgment, decree, law, ordinance, rule or regulation of any court or other agency or authorityof government, or any agreement or instrument to which the Agency is a party or by which the Agency isbound.

SECTION 1.02. REPRESENTATIONS OF AND WARRANTIES BY THE COMPANY. TheCompany does hereby represent, warrant and covenant as follows:

(A) Power. The Company is a limited liability company duly organized and validly existingunder the laws of’ the State of New York, is duly authorized to do business in the State of New York andhas the power under the laws of the State to enter into this Payment in Lieu of Tax Agreement and thetransactions contemplated hereby and to perform and carry out all covenants and obligations on its part tobe performed under and pursuant to this Payment in Lieu of Tax Agreement, and by proper action of itsboard of directors has been duly authorized to execute, deliver and perform this Payment in Lieu of TaxAgreement.

(B) Authorization. The Company is authorized and has the power under its Articles ofOrganization, Operating Agreement and the laws of the State to enter into this Payment in Lieu of TaxAgreement and the transactions contemplated hereby and to perform and carry out all covenants andobligations on its part to be performed under and pursuant to this Payment in Lieu of Tax Agreement. Byproper action of its board of directors, the Company has duly authorized the execution, delivery andperformance of this Payment in Lieu of Tax Agreement and the consummation of the transactions hereincontemplated.

(C) Conflicts. The Company is not prohibited from entering into this Payment in Lieu of TaxAgreement and discharging and performing all covenants and obligations on its part to be performed

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I itdcr iiid pu rsii.iiit to iii is I ‘aylneilt n I icu of l’ax A reeinent by (anl the execiit ion, de Ivery and)er()rinance of this I’ayment in I ,icu of I’ax Agreement, the consummation of the transactionsoiitemplated hereby and the Iiilhllmcnt of and compliance with the provisions of this Payment in Lieu ofFax Agreement will miot con Ilict with or violate or constitute a breach of or a (lelault under) the terms.conditions or provisions of its Certificate of Incorporation or By—laws or any other restriction, law, rule,regulation or order of any court or other agency or authority of government, or any contractual limitation,restriction or outstanding indenture, deed of trust, mortgage, loan agreement, other evidence ofindebtedness or aiiy other agreement or instrument to which the Company is a party or by which it or anyni its property is hound, and neither the Company’s entering into this Payment in Lieu of Fax Agreementnor the (‘ompany’s discharging and performing all covenants and obligations on its part to he performedunder and pursuant to this Payment in Lieu of Fax Agreement will be in conflict with or result in a breachof or constitute (with due notice and/or lapse of time) a detuIt tinder any of the foregoing, or result in thecreation or imposition of any lien of any nature upon any of the property of the Company under the termsof any of the foregoing, and this Payment in Lieu of Tax Agreement is the legal, valid and bindingobligation of the Company enforceable in accordance with its terms, except as enforceability may belimited by applicable bankruptcy, insolvency, reorganization. moratorium and other laws relating to orallecting creditors’ rights generally and by general principles of equity (regardless of whetherenforcement is sought in a proceeding in equity or at law).

(D) Governmental Consent. No consent, approval or authorization oi or filing, registrationor qualification with, any governmental or public authority on the part of the Company is required as acondition to the execution, delivery or performance of this Payment in Lieu of Tax Agreement by theCompany or as a condition to the validity of this Payment in Lieu of Tax Agreement.

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II

COVENANTS i\NI) A( iREEMENFS

SECTION 2.01. FAX-EXEMPT STAFLJS OF [I IE PROJECT FACII.[FY. (A) Assessifle,it ol theProject Facility. Pursuant to Section 874 ol the Act and Section 412-a of the Real Property Fax Law, theparties hereto understand that, upon acquisition of the Project Facility by the Agency and the tiling by theAgency of a New York Stale Board of Real Property Services Form RP-4 I 2-a (a “Real Property l’axtxernption Form”) with respect to the Project Facility, and tr so long thereafter as the Agency shall ownthe Project Facility, the Project Facility shall be assessed by the various taxing entities having jurisdictionover the Project Facility, including, without limitation, any county, city, school district, town, village orother political unit or units wherein the Project Facility is located (such taxing entities being sometimescollectively hereinafter referred to as the “Taxing Entities,” and each of such Faxing Entities beingsometimes individually hereinafter referred to as a “Taxing Entity”) as exempt upon the assessment rollsof the respective Faxing Entities prepared subsequent to the acquisition by the Agency of the leaseholdinterest to the Project Facility created by the Underlying Lease and the tiling of the Real Property TaxExemption Forms. [he Company shall, promptly following acquisition by the Agency of the leaseholdinterest to the Project Facility created by the Underlying Lease, take such action as may he necessary tocnsure that the Project Facility shall be assessed as exempt upon the assessment rolls of the respectiveFaxing Entities prepared subsequent to such acquisition by the Agency, including ensuring that a RealProperty Tax Exemption Form shall be tiled with the appropriate officer or officers of each respectiveFaxing Entity responsible for assessing properties on behalf of each such Taxing Entity (each such officerbeing hereinafter referred to as an “Assessor”). For so long thereafter as the Agency shall own suchleasehold interest in the Project Facility, the Company shall take such further action as may be necessaryto maintain such exempt assessment with respect to each Taxing Entity. The parties hereto understandthat the Project Facility shall not be entitled to such tax-exempt status on the tax rolls of any TaxingEntity until the first tax year of such Taxing Entity following the tax status date of such Taxing Entityoccurring subsequent to the date upon which the Agency becomes the owner of record of such leaseholdinterest in the Project Facility and the Real Property Tax Exemption Forms are filed with the Assessors.Pursuant to the provisions of the Lease Agreement, the Company will be required to pay all taxes andassessments lawfully levied and/or assessed against the Project Facility, including taxes and assessmentslevied for the current tax year and all subsequent tax years until the Project Facility shall be entitled toexempt status on the tax rolls of the respective Taxing Entities. The Agency will cooperate with theCompany to obtain and preserve the tax-exempt status of the Project Facility.

(B) Special Assessments. The parties hereto understand that the tax exemption extended tothe Agency by Section 874 of the Act and Section 412-a of the Real Property Tax Law does not entitle theAgency to exemption from special assessments and special ad valorem levies. Pursuant to the LeaseAgreement, the Company will be required to pay all special assessments and special ad valorem levieslawfully levied and/or assessed against the Project Facility.

SECTION 2.02. PAYMENTS IN LIEU OF TAXES. (A) Agreement to Make Payments. TheCompany agrees that it shalt make annual payments in lieu of property taxes in the amounts hereinafterprovided to the respective Taxing Entities entitled to receive same pursuant to the provisions hereof. TheCompany also agrees to give the Assessor a copy of this Payment in Lieu of Tax Agreement. Thepayments due hereunder shall be paid by the Company to the respective appropriate officer or officers ofthe respective Taxing Entities charged with receiving payments of taxes for such Taxing Entities (suchofficers being collectively hereinafter referred to as the “Receivers of Taxes”) for distribution by theReceivers of Taxes to the appropriate Faxing Entities entitled to receive same pursuant to the provisionshereot

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II) (I) I he value of the Propect Facility for purposes ofdetermining payments iii lieu of taxes due hereunder (hereinaller referred to as the Assessed Value”)shall be determined by the appropnate Assessors. [lie Company agrees to give the Assessors a copy ofthis Payment in Lieu of I’ax Agreement. [he parties hereto agree that the Assessors shall (a) appraise theI Sand in the same manner as other similar properties in the general area of the Land, (b) place an AssessedValue upon the Land, equalized ii necessary by using the appropriate equalization rates as apply in theassessment and levy at real property taxes, (c) appraise the Facility and any portion at the Equipmentassessable as real property pursuant to the New York Real Property [ax Law (collectively with thel’acility, the irnproverncnts”) in the same manner as other similar properties in the general area of’ theImprovements, and (b) place an Assessed Value upon the Improvements, equalized ii necessary by usingthe appropriate equalization rates as apply in the assessment and levy of real property taxes. [heCompany shall he entitled to written notice at the initial determination of the Assessed Value of theImprovements and at any change in the Assessed Value of the Land or the Improvements.

(2) If the Company is dissatisfied with the amount of the Assessed Value of theImprovements as initially established or with the amount of the Assessed Value of the Land or theImprovements as changed, and if the Company shall have given written notice of suchdissatisfaction to the appropriate Assessor and the Agency within thirty (30) days of receipt bythe Company of written notice of the initial establishment of such Assessed Value of theImprovements, or of a change in such Assessed Value of the Land or the Improvements, then theCompany shall be entitled to protest before, and to be heard by, the appropriate Assessor and theAgency. If the Agency, the Company and any Assessor shall fail to reach agreement as to theproper Assessed Value of the Project Facility for purposes of determining payments in lieu oftaxes due under this Payment in Lieu of Fax Agreement, then such Assessor, the Company andthe Agency shall each select one arbitrator in accordance with the rules of the AmericanArbitration Association, each of whom shall be a qualified real estate appraiser, experienced invaluation for the purposes of tax assessment in the general area of the Project Facility, whicharbitrators shall, at the sole cost and expense of the Company, determine whether the AssessedValue has been properly established by the Assessor. It is understood that the arbitrators areempowered to confirm the Assessed Value or to determine a higher or a lower Assessed Value.Any payments in lieu of taxes due upon the Project Facility may not be withheld by the Companypending determination of the Assessed Value by the arbitrators.

(C) Amount of Payments in Lieu of Taxes. The payments in lieu of taxes to be paid by theCompany to the Receivers of Taxes annually on behalf of each Taxing Entity pursuant to the terms of thisPayment in Lieu of Tax Agreement shall be computed separately for each Taxing Entity as follows:

(I) First, determine the amount of general taxes and general assessments (hereinafterreferred to as the “Normal Tax”) which would be payable to each Taxing Entity if the Land wasowned by the Company and not the Agency by multiplying (a) the Assessed Value of the Landdetermined pursuant to Subsection (B) of this Section 2.02, by (b) the tax rate or rates of suchTaxing Entity that would be applicable to the Land if the Land was owned by the Company andnot the Agency.

(2) In each tax year during the term of this Payment in Lieu of Tax Agreement,commencing on the first tax year following the date on which the Land shall be assessed asexempt on the assessment roll of any Taxing Entity, the amount payable by the Company to theReceivers of Taxes on behalf of each Taxing Entity as a payment in lieu of property tax pursuantto this Payment in Lieu of Tax Agreement with respect to the Land shall be an amount equal to

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)I1C hundred percent (I 00%) ol the Normal Fax due each lax tug Fiit ity wi ill respect to the I andbr such tax year.

(3) Next, determine the Normal Tax which would he payaLle to cacti Faxiuig Entityit’ the Facbity and any portion of the Equipment assessable as real property pursuant to the NewYork Real Property ‘I’ax Law (collectively with the Facility, the Improvements”) were owned bythe Company and not the Agency by multiplying (a) the Assessed Value of the Improvementsdetermined pursuant to Subsection (B) of this Section 2.02, by (b) the tax rate or rates of suchFaxing Entity that would he applicable to the Improvements if (he Improvements were owned bythe Company and not the Agency.

(4) In each tax year during the term of this Payment in Lieu of Fax Agreement.commencing on the first tax year following the dale on which the Improvements shall he assessedas exempt on the assessment roll of any Faxing Entity, the amount payable by the Company tothe Receivers of Faxes on behalf of each [axing Entity as a payment in lieu of property taxpursuant to this Payment in Lieu of Tax Agreement with respect to the Improvements shall be anamount equal to the applicable percentage of the Normal Tax due each ‘Faxing Entity with respectto the Improvements for such tax year, as shown in the following table:

County ‘Fax City Tax School TaxFax Year Existing Percentage of Percentage of Percentage ofCommencing Assessed Value Assessed Value Assessed Value Assessed Valuein Calendar Year of the Land of the Projct of the Project of the ProjectFacility Facility Facility

2010 100% N/A N/A N/A2011 100% N/A N/A N/A2012 100% 0% 0% 0%2013 100% 10% 10% 10%2014 100% 20% 20% 20%2015 100% 30% 30% 30%2016 100% 40% 40% 40%2017 100% 50% 50% 50%2018 100% 60% 60% 60%2019 100% 70% 70% 70%2020 100% 80% 80% 80%2021 100% 90% 90% 90%2022 100% 100% 100% 100%

Thereafter 100% 100% 100% 100%

(5) In each tax year during the term of this Payment in Lieu of Tax Agreement,commencing on the first tax year following the date on which any portion of the Project Facilityshall be assessed as exempt on the assessment roll of any Taxing Entity, the amount payable bythe Company to the Receivers of Taxes on behalf of each Taxing Entity as a payment in lieu ofproperty tax pursuant to this Payment in Lieu of Tax Agreement with respect to the ProjectFacility shall be the sum of (a) the amount due each Taxing Entity with respect to the Land forsuch tax year, as determined pursuant to Subsection (C)(2) hereof, plus (b) the amount due each

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laxing Lutity vvith respect to the Improvements tr such tax year, as (leterinhiled l)hlrsuant toSubsection (C)( I) hereof.

(I)) AlitionalAmotiutsiLicuofix. Commencing on the first tax year tillowing thedate on which any structural addition shall he made to the Project Facility or any portion thereof or anyadditional building or other structure shall be constructed on the Land (such structural additions andadditional buildings and other structures being hereinafter referred to as “Additional Facilities”) theCompany agrees to make additional annual payments in lieu of property taxes with respect to suchAdditional Facilities (such additional payments being hereinafter collectively referred to as “AdditionalPayments”) to the Receivers of Faxes with respect to such Additional Facilities, such AdditionalPayments to be computed separately flr each l’axing Foitity as flllows:

I ) I)ctermine the amount of general taxes and general assessments (hereinafterreferred to as the “Additional Normal Fax”) which would he payable to each Taxing Entity withrespect to such Additional Facilities if such Additional Facilities were owned by the Companyand not the Agency as tiallows: (a) multiply the Additional Assessed Value (as hereinafterdefined) of such Additional Facilities determined pursuant to subsection (E) of this Section 2.02by (b) the tax rate or rates of such [‘axing Entity that would be applicable to such AdditionalFacilities if such Additional Facilities were owned by the Company and not the Agency, and (c)reduce the amount so determined by the amounts of any tax exemptions that would be afforded tothe Company by such ‘Faxing Entity if such Additional Facilities were owned by the Companyand not the Agency.

(2) In each fiscal tax year during the term of this Payment in Lieu of Tax Agreement(commencing in the fiscal tax year when such Additional Facilities would first appear on theassessment roll of any Faxing Entity) if such Additional Facilities were owned by the Companyand not the Agency, the amount payable by the Company to the Receivers of Taxes on behalf ofeach Taxing Entity as a payment in lieu of property tax with respect to such Additional Facilitiespursuant to this Payment in Lieu of Tax Agreement shall be an amount equal to one hundredpercent (100%) of the Normal Tax due each Taxing Entity with respect to such AdditionalFacilities for such fiscal tax year (unless the Agency and the Company shall enter into a separatewritten agreement regarding payments in lieu of property taxes with respect to such AdditionalFacilities, in which case the provisions of such separate written agreement shall control).

(E) Valuation of Additional Facilities. (I) The value of Additional Facilities for purposes ofdetermining payments in lieu of taxes due under Section 2.02(D) hereof shall be determined by theAssessors of each respective Taxing Entity. The parties hereto agree that the Assessors shall (a) appraisethe Additional Facilities in the same manner as other similar properties in the general area of the ProjectFacility, and (b) place a value for assessment purposes (hereinafter referred to as the ‘AdditionalAssessed Value”) upon the Additional Facilities, equalized if necessary by using the appropriateequalization rates as apply in the assessment and levy of real property taxes. The Company shall beentitled to written notice of the initial establishment of such Additional Assessed Value and of any changein such Additional Assessed Value.

(2) If the Company is dissatisted with the amount of the Additional Assessed Valueof the Additional Facilities as initially established or as changed, and if the Company shall havegiven written notice of such dissatisfaction to the appropriate Assessor and the Agency withinthirty (30) days of receipt by the Company of written notice of the initial establishment of suchAdditional Assessed Value, or of a change in such Additional Assessed Value, then the Companyshall be entitled to protest before, and to be heard by, the appropriate Assessor and the Agency.If the Agency, the Company and any Assessor shall fail to reach agreement as to the proper

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Additional Assessed Value of’ the Additional Facilities k)r purposes )i determ tiling paylileilts iilieu of taxes due tinder this Payment in Lieu of’ Fax Agreement, then such Assessor, the ( ‘ollipanymd the Agency shall each select one arbitrator in accordance with the rules of the AmericanArbitration Association, each of whom shall he a qualified real estate appraiser, experienced invaluation lbr the purposes of tax assessment in the general area of the Project Facility, whicharbitrators shall, at the sole cost and expense of the Company, determine whether the AdditionalAssessed Value of the Additional Facilities has been properly established by the Assessor. It isunderstood that the arbitrators are empowered to confirm the Additional Assessed Value or todetermine a higher or lower Additional Assessed Value. Any payments in lieu of taxes due uponsuch Additional Facilities pursuant to Section 2.02(D) hereof may iiot be withheld by theCompany pending determination of the Additional Assessed Value by the arbitrators.

(F) Statements. Pursuant to Section 858(15) of the Act, the Agency agrees to give eachFaxing Entity a copy of this Payment in Lieu of Tax Agreement within fifteen (15) days of the executionand delivery hereof, together with a request that a copy hereof be given to the appropriate officer orofficers of the respective Taxing Entities responsible for preparing the tax rolls for said Fax Entities(each, a “‘Fax Billing Officer”) and a request that said ‘Fax Billing Officers submit to the Company and tothe appropriate Receiver of Taxes periodic statements specifying the amount and due date or dates of thepayments due each ‘Faxing Entity hereunder, such periodic statements to be submitted to the Company atipproxiinately the times that tax bills are mailed by such Faxing Entities.

(G) Time of Payments. Fhe Company agrees to pay the amounts due hereunder to theReceivers of ‘Faxes for the benefit of each particular ‘faxing Entity in any fiscal tax year to the appropriateReceiver of Taxes within the period that such ‘faxing Entity allows payment of taxes levied in such fiscaltax year without penalty. ‘[he Company shall be entitled to receive receipts for such payments.

(I-I) Method of Payment. All payments by the Company hereunder shall be paid to theReceivers of Taxes in lawful money of the United States of America. The Receivers of Taxes shall inturn distribute the amounts so paid to the various Taxing Entities entitled to same.

SECTION 2.03. CREDIT FOR TAXES PAID. (A) Amount of Credit. The parties heretoacknowledge and agree that the obligation of the Company to make the payments provided in Section2.02 of this Payment in Lieu of Tax Agreement shall be in addition to any and all other taxes andgovernmental charges of any kind whatsoever which the Company may be required to pay under theLease Agreement. It is understood and agreed, however, that, should the Company pay in any fiscal taxyear to any ‘Faxing Entity any amounts in the nature of general property taxes, general assessments,service charges or other governmental charges of a similar nature levied and/or assessed upon the ProjectFacility or the interest therein of the Company or the occupancy thereof by the Company (but notincluding, by way of example, (I) sales and use taxes, and (2) special assessments, special ad valoremlevies or governmental charges in the nature of utility charges, including but not limited to water, solidwaste, sewage treatment or sewer or other rents, rates or charges), then the Company’s obligation to makepayments in lieu of property taxes attributed to such fiscal tax year to such Taxing Entity hereunder shallbe reduced by the amounts which the Company shall have so paid to such Taxing Entity in such fiscal taxyear, but there shall be no cumulative or retroactive credit as to any payment in lieu of property taxes dueto any other Taxing Entity or as to any payment in lieu of property taxes due to such Taxing Entity in anyother fiscal tax year.

(B) Method of Claiming Credits. If the Company desires to claim a credit against anyparticular payment in lieu of tax due hereunder, the Company shall give the governing body of theaffected Taxing Entity and the Agency prior written notice of its intention to claim any credit pursuant tothe provision of this Section 2.03, said notice to be given by the Company at least thirty (30) days prior to

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the (late )n which such payineiit Hi I icti {)t tax is due pursuant to the prOVISIOnS ot Section 2.02(( i) hercot.lii the event that the governing body ot the appropriate Faxing Liittty desires to contest the (_‘ornpany’sri!ht to claim such redit. then said governing body, the Agency and the Company shall each select anarbitrator in accordaice with the rules of the /\mcrican Arbitration Association, each of whom shall meetthe qualifications set forth in Section 2.02( B) hereof, which arbitrators shall, at the sole cost and expenseof the Company, determine whether the Company is entitled to claim any credit pursuant to the provisionsof this Section 2.03 and, ii so, the amount of the credit to which the Company is entitled. It is understoodthat the arbitrators are empowered to coiiiinn the amount of the credit claimed by the Company or todetermine a lower or higher credit. When the (ompany shall have given notice, as provided herein, that itclaims a credit, the amount of any payment in lieu of property taxes due hereunder against which thecredit may be claimed may he withheld (to the extent of the credit claimed by the Company, but only tothe extent that such credit may he claimed against said payment in lieu of taxes pursuant to the provisionsof this Section 2.03) until the decision of the arbitrators is rendered. After the decision of the arbitratorsis rendered, the payment in lieu of taxes due with respect to any reduction or disallowance by thearbitrators in the amount of the credit claimed by the Company shall, to the extent withheld as aibresaid,he immediately due and payable and shall he paid by the Company within thirty (30) days of saiddecision.

SECTION 2.04. LA FE PAYMENTS. (A) First Month. Pursuant to Section 874(5) of the Act, if theCompany shall thu to make any payment required by this Payment in Lieu of Tax Agreement when due,the Company shall pay the same, together with a late payment penalty equal to five percent (5%) of theamount due.

(B) Thereafter. If the Company shall fail to make any payment required by this Payment inLieu of Tax Agreement when due and such delinquency shall continue beyond the first month, theCompany’s obligation to make the payment so in default shall continue as an obligation of the Companyto the atiected Taxing Entity until such payment in default shall have been made in full, and the Companyshall pay the same to the affected Taxing Entity together with (I) a late payment penalty of one percent(1%) per month for each month, or part thereof that the payment due hereunder is delinquent beyond thefirst month, plus (2) interest thereon, to the extent permitted by law, at the greater of(a) one percent (1%)per month, or (b) the rate per annum which would be payable if such amount were delinquent taxes, untilso paid in full.

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012 i00()’ 8siness 7535194v1

\Rll(l.l Ill

I IM [FED ( )BI J( iA FI( )N

SECTION 3.01. NO RECOURSE: LIMITED OE3LIGA’flON OF fl IF A( ;ENCY. (A) N_jççge.All ohligations, covenants, and agreetnents of the Agency contained in this Payment in Lieu of FaxAgreement shall he (teemed to be the obligations, covenants, and agreements of the Agency and not ofany member, olticer. agent, servant or employee o the Agency in his individual capacity, and no recourseonder or upon any obligation, covenalit or agreement contained in this Payment in I .icu ot FaxAgreement, or otherwise based UOfl or in respect of this Payment in Lieu of Tax Agreement, or ir anyclaim based thereon or otherwise in respect thereot shall he had against any past, present or futureimmeinher, ollicer, agent (other than the Company), servant or employee, as such, of the Agency or any‘uccessor public benefit corporation or political subdivision or any person executing this Payment in Lieuof Fax Agreement on behalf of the Agency, either directly or through the Agency or any successor publichenelit corporation or political subdivision or any person so executing this Payment in Lieu of TaxAgreement, it being expressly understood that this Payment in Lieu of Tax Agreement is a corporateobligation, and that no such personal liability whatever shall attach to, or is or shall he incurred by, anysuch member, officer, agent (other than the Company), servant or employee of the Agency or of anysuccessor public benefit corporation or political subdivision or any person so executing this Payment inLieu of Fax Agreement under or by reason of the obligations, covenants or agreements contained in thisPayment in Lieu of Tax Agreement or implied therefrom: and that any and all such personal liability of,and any and all such rights and claims against, every such member, ot’f’icer, agent (other than theCompany), servant or employee under or by reason of the obligations, covenants or agreements containedin this Payment in Lieu of Tax Agreement or implied therefrom are, to the extent permitted by law,expressly waived and released as a condition of and as a consideration for, the execution of this Paymentin Lieu of Tax Agreement by the Agency.

(B) Limited Obligation. The obligations, covenants and agreements of the Agency containedherein shall not constitute or give rise to an obligation of the State of New York or Montgomery County,New York, and neither the State of New York nor Montgomery County, New York shall be liablethereon, and further such obligations, covenants and agreements shall not constitute or give rise to ageneral obligation of the Agency, but rather shall constitute limited obligations of the Agency payablesolely from the revenues of the Agency derived and to be derived from the lease, sale or other dispositionof the Project Facility (except for revenues derived by the Agency with respect to the Unassigned Rights,as defined in the Lease Agreement).

(C) Further Limitation. Notwithstanding any provision of this Payment in Lieu of TaxAgreement to the contrary, the Agency shall not be obligated to take any action pursuant to any provisionhereof unless (1) the Agency shall have been requested to do so in writing by the Company, and (2) ifcompliance with such request is reasonably expected to result in the incurrence by the Agency (or any ofits members, officers, agents, servants or employees) of any liability, fees, expenses or other costs, theAgency shall have received from the Company security or indemnity and an agreement from theCompany to defend and hold harmless the Agency satisfactory to the Agency for protection against allsuch liability, however remote, and for the reimbursement of all such fees, expenses and other costs.

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\ 1(11(1 .I IV

I:Vl:NTS ( )F (WEAL ii;i’

SEC’I’ION 4.01. LVLNl’S ( )F I)FFAIJI .1. Any one or more of the lollowing events shall constitutem event of default under this Payment in Lieu of ‘Fax Agreement. and the terms 1vent of Default” ordefauIt” shall mean, whenever they are used in this Payment in Lieu of ‘Fax Agreement, any one or moreol the following events:

(A) Failure of the Company to pay when due any amount due and payable by the Companypursuant to this Payment in Lieu of ‘Fax Agreement and continuance of said failure for a period of fifteen(I 5) days alter written notice to the Compafly stating that such payment is due and payable;

(B) Failure of the Company to observe and perform any other covenant, condition oragreement on its part to be observed and performed hereunder (other than as referred to in paragraph (A)above) and continuance of such failure for a period of thirty (30) days after written notice to the Companyspecif’ing the nature of such failure and requesting that it be remedied; provided that if such defaultcannot reasonably he cured within such thirty (30) day period and if the Company shall have commencedaction to cure the breach of covenant, condition or agreement within said thirty (30) day period andthereafter diligently and expeditiously proceeds to cure the same, such thirty (JO) day period shall beextended for so long as the Company shall require in the exercise of due diligence to cure such default, itbeing agreed that no such extension shall be for a period in excess of ninety (90) days in the aggregatefrom the date of default; or

(C) Any warranty, representation or other statement by or on behalf of the Companycontained in this Payment in Lieu of Tax Agreement shall prove to have been false or incorrect in anymaterial respect on the date when made or on the effective date ot’this Payment in Lieu of Tax Agreementand (1) shall be materially adverse to the Agency at the time when the notice referred to below shall havebeen given to the Company and (2) if curable, shall not have been cured within thirty (30) days afterwritten notice of such incorrectness shall have been given to a responsible officer of the Company,provided that if such incorrectness cannot reasonably be cured within said thirty-day period and theCompany shall have commenced action to cure the incorrectness within said thirty-day period and,thereafter, diligently and expeditiously proceeds to cure the same, such thirty-day period shall beextended for so long as the Company shall require, in the exercise of due diligence, to cure such default.

SECTION 4.02. REMEDIES ON DEFAULT. (A) General. Whenever any Event of Default shallhave occurred with respect to this Payment in Lieu of Tax Agreement, the Agency (or if such Event ofDefault concerns a payment required to be made hereunder to any Taxing Entity, then with respect tosuch Event of Default such Taxing Entity) may take whatever action at law or in equity as may appearnecessary or desirable to collect the amount then in default or to enforce the performance and observanceof the obligations, agreements and covenants of the Company under this Payment in Lieu of TaxAgreement.

(B) Cross-Default. In addition, an Event of Default hereunder shall constitute an event ofdefault under Article X of the Lease Agreement. Upon the occurrence of an Event of Default hereunderresulting from a failure of the Company to make any payment required hereunder, the Agency shall have,as a remedy therefor under the Lease Agreement, among other remedies, the right to terminate the LeaseAgreement and convey the Project Facility to the Company, thus subjecting the Project Facility toimmediate full taxation pursuant to Section 520 of the Real Property Tax Law of the State.

- 13-01217S/00069 Business 7535194v1

SeparateSuits. Lach such Event of l)etatilt shall give rise to .t separate cause ii actionhereunder and separate stilts may be brought hereunder as each cause of action arises.

(I)) Venue. [he Company irrevocably agrees that any suit, action or other legal proceedingurising out ol this Payment in Lieu of Fax Agreement may he brought in tile CourtS of record of the State.consentS to the jurisdiction ot each such court in any such Suit, action or proceeding, and waives anyobjection which it nay have to the laying of the venue o any such suit, action or proceeding in any ofsuch courtS.

SEC’l’ION 4.03. PAYMEN’F OF ALFORNEY’S FEES AND EXPENSES. Pursuant to Section74(6) o the Act. if the Company should defiuit in pertbrming any of its obligations, covenants oragreements under this Payment in Lieu of Tax Agreement and the Agency or any Faxing Entity shouldemploy attorneys or incur other expenses kr the collection of any amounts payable hereunder or fbi theenforcement of perfbrmance or observance of any obligation, covenant or agreement on the part of theCompany herein contained, the Company agrees that it will, on demand theretbr, pay to the Agency orsuch Faxing Entity, as the case may be, not only the amounts adjudicated due hereunder, together with thelate payment penalty and interest due thereon, but also the reasonable fees and disbursements of suchattorneys and all other expenses, costs and disbursements so incurred, whether or not an action iscommenced.

SECTION 4.04. REMEDIES; WAIVER AND NOTICE. (A) No Remedy Exclusive. No remedyherein conferred upon or reserved to the Agency or any Faxing Entity is intended to be exclusive of anyother available remedy or remedies, but each and every such remedy shall be cumulative and shall be inaddition to every other remedy given under this Payment in Lieu of Tax Agreement or now or hereafterexisting at law or in equity or by statute.

(B) Delay. No delay or omission in exercising any right or power accruing upon theoccurrence of any Event of Default hereunder shall impair any such right or power or shall be construedto be a waiver thereof, but any such right or power may be exercised from time to time and as often asmay be deemed expedient.

(C) Notice Not Required. In order to entitle the Agency or any Taxing Entity to exercise anyremedy reserved to it in this Payment in Lieu of Tax Agreement, it shall not be necessary to give anynotice, other than such notice as may be expressly required in this Payment in Lieu of Tax Agreement.

(D) No Waiver. In the event any provision contained in this Payment in Lieu of TaxAgreement should be breached by any party and thereafter duly waived by the other party so empoweredto act, such waiver shall be limited to the particular breach so waived and shall not be deemed to be awaiver of any other breach hereunder. No waiver, amendment, release or modification of this Payment inLieu oI Tax Agreement shall be established by conduct, custom or course of dealing.

- 14 -

fl12178/0006Q Business 7515t94v1

ARtICLE V

MISCEI.LANE()IJS

SEC’I’R)N 5i) I. tERM. (A) ( let era. this Payment in Lieu of Fax Agreement shall becomeeffective and the obligations of the Company shall arise absolutely amid unconditionally IIOfl the approvalo this Payment in Lieu of Fax Agreement by resolution ol the Agency and the CXCCLltiOfl and delivery othis Payment in Lieu of Tax Agreement by the Company and the Agency. Unless otherwise provided byamendment hereol. this Payment in Lieu of Fax Agreement shall continue to remain in effect until theearlier to occur of (I) December 3 I, 2022 or (2) the (late on which the I’roject Facility is reconveyed bythe Agency to the Company pursuant to Article X or XI of the Lease Agreement.

(B) Extended Term. In the event that (I) the Project Facility shall he reconveyed to theCompany, (2) on the date on which the Company obtains the Agency’s interest in the Project Facility, theProject Facility shall be assessed as exempt upon the assessment roll of any one or more of the FaxingEntities, and (3) the Fact of obtaining title to the Agency’s interest in the Project Facility shall notimmediately obligate the Company to make pro-rata tax payments pursuant to legislation similar toChapter 635 of the 1978 Laws of the State (codified as subsection 3 of Section 302 of the Real PropertyFax Law and Section 520 of the Real Property Fax Law), this Payment in Lieu of Tax Agreement shallremain in lull force and effect and the Company shall he obligated to make payments to the Receiver ofFaxes in amounts equal to those amounts which would be due from the Company to the respective TaxingEntities if the Project Facility were owned by the Company and not the Agency until the first tax year inwhich the Company shall appear on the tax rolls of the various Faxing Entities having jurisdiction overthe Project Facility as the legal owner of record of the Project Facility.

SECTION 5.02. FORM OF PAYMENTS. The amounts payable under this Payment in Lieu of TaxAgreement shall be payable in such coin and currency of the United States of America as at the time ofpayment shall be legal tender for the payment of public and private debts.


SECTION 5.04. AMENDMENTS. This Payment in Lieu of Tax Agreement may not be effectivelyamended, changed, modified, altered or terminated except by an instrument in writing executed by theparties hereto.


(B) Notices Given by Taxing Entities. Notwithstanding the foregoing, notices of assessmentor reassessment of the Project Facility and other notices given by a Taxing Entity under Article II hereofshall be sufficiently given and shall be deemed given when given by the Taxing Entity in the samemanner in which similar notices are given to owners of taxable properties by such Taxing Entity.

- 15 -

)I2I7/OOO69 Business 753519$vI

Addresses. Flie addresses to wh icli m 1 ices, certi licates and other C0111111L111 icatu )I1Shereunder shall be delivered are as hollows:

IF F() II IF COMPANY:

I liii & Markes Realty, LLCI 20 Cdsoui StreetAmsterdam, New York 12010Attention: Neal Packer, COo

WITh (‘()PIES l’O:

I lodgson Russ LLP55 East Main Street, Suite 100Johnstown, New York I 2095Attention: Mario J. Papa, Esq.

MacKenzie & Fallent42 Church StreetCanajoharie. New York I 13 17Attention: Charles Fallent, Esq.

IF TO THE AGENCY:


WITH A COPY TO:

Law Offices of Paul L. Woilman41 Market StreetAmsterdam, New York 12010Attention: Paul L. Woliman, Esq.

- 16-012178/00069 Business 7535194v1

I)) (‘opjçs. A copy of any ilotice given hcretuidcr by the ( ompaiiy which at h.cts iii my waya taxing Entity shall Ilst) he given to the chief executive ol ticer of such Faxing lutity.

E) (1umgçfildress. the Agency and the (‘oinpany may, by notice given hereunder.designate any thither or different addresses to which subsequent notices, certificates and othercommunicationS shall he sent.

SECflON 5.06. BINDIN(; EFFECF. this Payment in Lieu of Fax Agreement shall inure to thebenefit of. and shall he binding LipOfl. the Agency, the Company and their respective successors andassigns. the provisions of this Payment in Lieu of Fax Agreement are intended to he for the benefit i)the Agency and the respective Faxing Entities.

SECTION 5.07. SEVERABILITY. If any article, section, subdivision, paragraph, sentence, clause,phrase, provision or portion of this Payment in Lieu of Fax Agreement shall for any reason be held oradjudged to he invalid or illegal or unenforceable by any court of competent jurisdiction, such article,section, subdivision, paragraph, sentence, clause, phrase, provision or portion so adjudged invalid, illegalor unenforceable shall be deemed separate, distinct and independent and the remainder of this Payment inLieu of Tax Agreement shall be and remain in full force and effect and shall not he invalidated orrendered illegal or unenforceable or otherwise affected by such holding or adjudication.

SECTION 5.08. COUNTERPARTS. This Payment in Lieu of Tax Agreement may be simultaneouslyexecuted in several counterparts, each of which shall be an original and all of which shall constitute butone and the same instrument.

SECTION 5.09. APPLICABLE LAW. This Payment in Lieu of Tax Agreement shall be governed byand construed in accordance with the laws of the State of New York.

- 17-)I2I7/OOO69 Business 7535 19$vi

IN WIlNlSS WI IlRI( )F, the \‘.zeiicy iiid ihe ( nipany have .aused this RiniciiL ill IJCLI 01lax Arceiueiit to be executed iii their respective IBLI11CS by duly iiithoriied ol licers thereol, il I beingk iie as )I the date Ii rst aboVe writ ten.

M( )NI’G( )rv1LRY COIJNI’Y INDuSTRIAl.I )IVFEA)PMFN’F A( ENCY

BY:

___

__

cc) (liairman

I HIL & MARKES REAI;E’Y, tIC

BY:

______________

Authorized OlTicer

—18—

OOl6ofO1 178 Business 7535194I

IN WI I NISS WI lI’.RI.( )l. the ,\CIiCv uid the I. ollipally have caiiscd this l’aineiit iii I len otlax Agreciiieiit to he L\CclILd iii their respect ie iiaiiies by duly auihoriied olhicers thicreol, all hcngclone as ol the date ira ubove iiiteii.

\1( )NI( ( )M1,RY COIJNI’Y INI)USlR IAI.I )IV Fi.( )lv1 IN’I’ i\(ilNCY

HY:

( Vice) (‘Iiairinan

I liii. & MARKIS RIAl:IY LI.(’

/: \uthorized v’1eiuber

-18-01217g,000o9 I1usines 75351940

SEA [F. OF NEW YORK

)ss:( OUNFY OF MON’F(IOMERY

)n the 0h day ot J iiiie, in the year 2010. befiire me, the undersigned, Personally appearedWILLIAM I IISERF, personally known to me or proved to me on the basis ol satistactory evidence to hethe individual whose name is subscribed to the within instrtimnent and acknowledged to me that heexecuted the same in his capacity, and that by his signature on he instniment, the individual, or theperson upon hehaliof which the indivl(Iual acted, executed the instrument.

Notary Public

:,)I

- 19-UI 2178/0fl069 Business 7535194v1

S [A IF 01: NF\V Y( RK

COUN lY (N: H )I1( )N

iL)n the ) day 1 .J iilv. ii i lie year () 0. hcflre ne, the undersigned, personally appeared N FALPACKFR. I)erso11illy knowii to tile or )rovcd to ne on the basis of satisfhctory evidence to he theindividual Iiose IiH1lC IS aibcrihed to the tUiiii iiistriiinent and acknowledged to me that he executedthe Same in his capacity, and that by his sigilature on the instrument, the individual, or I son uponbehalf of Ii acli the itidi v idtial acted. eweited the instrument.

)tuhC

20 -Ji2i78/00069 Business753t94vI

ixi iii’r

I)FSC’RIp’rJç) OF II IF Li\NI)

- SFE AFTACIIED -

A- IH2I78/OOO69 Business 7535I94v)

SChEDULE A

ALL THAT ‘rRACT OR PARCEL OF LAND ituatc in the Fown of Florida, County otMontgomery and State ot New York, being more particularly described as follows:ltcin Lot I as shown ofl the map entitled “Map Showing Proposed Subdivision lands now orormerly of Carl E. Uottier L. 66), P. 217 & Lands now or formerly ut Montgomery County Industriall)evelopment Agency 1.. 1655, P.75” prepared by ABE) Engineers & Surveyors, dated 3/23/09, moreparticularly bounded and descnbcd as follows:

Beginning at a point located on the southerly boundary otNYS Route 5S at its intersection withhe division line between Lot I on the east and Lot 2 on the west and proceeding in a clockwise directionthe following seven (7) courses and distances:

I.) South 67°-03’-52” East, a distance of 40.53 feet to a point;2.) South 68°4I’-07” East, a distance of 376.96 feet to a point;3.) South 63°-Il ‘-18” Fast, a distance of 198.52 feet to a point;4.) South 59°-22’-36” East, a distance of 287.23 feet to a point;


6.) Along a curve to the left, having a radius of 1466.00 feet, an arc distance of 297.20 feet toa point, said curve containing a chord S 64° 29’ 43”E a distance of 296.69 feet;7.) South 70°-18’-l5” East, a distance of 163.75 feet to a point located on the westerlybounds of land now or formerly of Itla Agosia on the east and lands herein described on the west; thencealong said division line the following course and distance:

I.) South 06°39’ 15” West, a distance of 200.00 feet to a point on the southerly boundary oflands now or formerly Itla Agosta on the north and the lands herein described on the south; thence alongsaid division line the following course and distance:


L) South 57° 38’ 30” West, a distance of 796.64 feet to a point on the northerly boundary ofthe NYS Thruway on the south and the lands herein described on the north; thence along said divisionline the following three (3) courses and distances:

I.) North 85°-50’-44” West, a distance of 553.58 feet to a point;2.) North 82°-5 I’-l 7” West, a distance of 763.3 I feet to a point;3.) North 86°42’28” West, a distance of 3 10.17 feet to a point on the northerly boundary ofthe land now or formerly of Gilbert & Raymond Soodol on the south and the lands herein described onthe north; thence along said division line the following course and distance:

A-2012t75/00069 Business 7535 jQ4vI

I.) North 3X°-19’29” West, a distance oI 201,63 tèetto a point at its intersection with thedivision line with Lot 2 on ihe west and the lands herein described on the cast; thence along saiddivision line the tllowing course and distance:

I.) North 23°-34’1)9” Fast a distance of 1247.R7 to the POINT OF BEGINNING, being45.25 acres, more or less.

A-3012178/00069 Business 7535 l94v1

STATE OF NEW YORK

AFFIDAVIT OF MAILING OFPAYMENT IN LIEU OF TAX AGREEMENT

))SS.:

ANDRP-41 2(a)

COUNTY OF ALBANY )


That on September 8, 2010, 1 mailed an executed copy of the Payment in Lieu of Tax Agreementand Application of Real Property Tax Exemption (RP-412-a) relating to the Montgomery CountyIndustrial Development Agency’s Hill & Markes Realty, LLC Project to the following:

Board of SupervisorsMontgomery CountyCounty Annex BuildingP0 Box 1500Fonda, New York 12068-1500Attention: Vito L. Greco, Chairman

7007 2680 0001 6501 3767

City of AmsterdamCity Hall61 Church StAmsterdam, NY 12010Attention: Ann M. Thane, Mayor

7007 2680 0001 6501 3774

Fonda Fultonville Central School District112 Old Johnstown RoadP0 Box 1501Fonda, New YorkAttention: Dr. James Hoffman, Superintendent

7007 2680 0001 6501 3781

Town of Florida181 State Highway 161Amsterdam, New York 12010Attention: William Strevy, Supervisor

7007 2680 0001 6501 3798

The Greater Amsterdam School District11 Liberty StreetAmsterdam, New York 12010Attention: Thomas F. Perillo, Superintendent

7007 2680 0001 6501 3804uny or Amsterc1a1City Hall61 Church StAmsterdam, NY 12010Attention: Calvin N. Cline, Assessor

Town of Florida233 Millers Corners Rd.Amsterdam, NY 12010Attention: Wilda Lang-Holloway, Assessor

7007 2680 0001 6501 3811

In witness thereof, I have hereunto set my hand this 8th day of September, 2010.

(h —

Adam Carson

Sworn to before me this8 day, of September, 2010.

‘Notary Public

JULIA A. BOEHMNotary Public, State of New York

Qualified in Albany CountyNo. 01B06079037

Commlss:on Expires Aug. 12

______

7010 0290 0002 2966 6404

012178 00069 Business 7772476vl

.JuIi:i ,‘.. IiocIipiI

IIephsii iI .IiI Its, I

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September 8. 2010 HodgsonS I F ) It r (

CEI{TIFIIi) MAILlUI’U RN RFCFIPT REQU KSTFI)

I 3oa rd of SUpervIsorsMontgomery County( ‘ounty Annex Bir 11W rigI() Box 1500l:LNlda, New York 12068—I 500Attention: Vito L. Greco, Chairman

Fonda Etiltonvi lie Central School [)istrictI 2 Old Johnstown Road

P() Box 1501Fonda. New YorkAttention: I)r. James I loliman, Superintendent

I he ( reater Amsterdam School DistrictII Liberty StreetAmsterdam, New York 12010Attention: Thomas F. Peril lo, Superintendent

City of’ AmsterdamCity Hall61 Church StAmsterdam. NY 12010Attention: Calvin N. Cline, Assessor

(‘it of AmsterdamCity I hill61 Church StAmsterdam, NY I 2010Attention: Ann M. [bane, Mayor

[own of Florida181 State Highway 161Amsterdam, New York 120 10Attention: William Strevy, Supervisor

Town of’ Florida233 Millers Corners Rd.Amsterdam, NY 12010Attention: Wilda Lang-[lol loway, Assessor

Re: MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCYHILL & MARKES REALTY, LLC PROJECT

Ladies and Gentlemen:

Enclosed herewith please find an executed copy of the Payment in Lieu of Tax Agreement andthe Application of Real Property Tax Exemption (RP-412(a)) by and between Montgomery CountyIndustrial Development Agency and Hill & Markes Realty, LLC regarding the above-captionedtransaction.

me.It’ you have any questions or comments regarding the foregoing, please do not hesitate to contact

Very truly yours,

.c‘., .—‘“

Julia BoehmLegal Assistant

Enclosurescc: Kenneth Rose (w/enc.)

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SENDER: COMPLETE THIS SECTION

• Complete Items 1,2, and a Also completeitem 4 if Restricted DeliVery Is desired.

• Print your name and address on the reverseso that we can return the card to you.

• Attachthlscardtothebackof the maliplece,or on the front If space permits.

1. ArtlcleAddressedto:

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C&yc( AS+erc4-v.c-Co1..kc)YCAA 544frV*-S4LYr3W& JzbJt (30 I

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4. Restricted Delivery? (Ecfra Fee) 0 yes

2. ArtIcle Number(7nstftemsenlce1abe ‘OO- c)(0C) CCC) I (O I ‘3’9-i

PS Form 3811 , February 2004 DomestIc Return Receipt


• Complete Items 1,2, and 3. Also completeitem 4 if Restricted Delivery Is desired.

• Print your name and address on the reverse

_______________________________________

so that we can return the card to you.• Attach this card to the back of the maliplece,

or on the front if space permits.

1. ArtIcle Addressed to:

CZCk’” QV’&(A5)(_5)r

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2. Article Number LIsferhvmsetvlcelabel) )r a ,‘ic,C

PS Form 3811, February 2004 DomestIc Return Receipt 102595.02.M-1 5401

D. is delivery address different Ilom Item 1?’ 0 YesIf YES, enter delivery address below: C No

aservicerype

artnIed Mall I] Cffi55 MallU Registered etum Receipt for MerchandiseU Insured Mall 00.0.0.

1O2595-02M.154O

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0. Is delIvery address different Scm Item ii I] YsliVES, enter delivery address below: C No

3. Speg2 CentScI MallO RegisteredC Insured Mall

U Express Mall,d Return Receipt for MerchandiseU C.0.D.

4. Restricted Delivery? (Exf,a Fee) 0 Yes


• Complete Items 1, 2, and aAlsocomplete A.

• Print your name and address on the reverse

_______________________________

Item 4 If Restricted Delivery Is desired. xso that we can return the card to you. B. Received by (F1nted Name) C. Date of DeIe.y

• Attach this card to the back of the mailpiece, q /9jjoronthefnntIfspacepermlts.D. Is delivery address different from Item 1? J YeS

1. ArtIcle Addressed to: YES, enter delivery address below: C No

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r (O-71-, LJ) rUfied Mall U Express Mall‘U Registered Uim Receipt for Merchandise

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4. Restricted Deilvery?(ExScFee) DYes

2. ArtIcle NumbermsceIaeo kD- C$ c OCOI (c) 3J

PS Form 3811, February 2004 DomestIc Return Receipt 1O2595.024l-154O

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New York State Department of Taxation and Finance s1’6(:)IDA Appointment of Project Operator or AgentFor Sales Tax Purposes (7/02)

The industrial development agency or authority (IDA) must submit this form within 30 days of the appointment of a project operator or agent, whetherappointed directly by the IDA or indirectly by the operator or another agent. For IDA use onlyName of IDA IDA project number (use OSC numbering system for projects alter 1998)MONTGOMERY COUNTY INDUSTRIAL DEVELOPMENT AGENCY 2702-10Street address Telephone numberOLD COUNTY COURTHOUSE, 9 PARK STREET, P0 BOX 1500 1(518) 853-8334City Istate IZIP codeFONDA jNEW YORK 112068Name of IDA project operator or agent Dheck box if directly Employer identification or social security numberHILL & MARKES REALTY, LLC ppointed by the IDA: Il 27-2466803Street address rI’elephone Number rimary operator or agent?120 EDSON STREET k518) 842-2410 Yes Q NoCity ;tate ip codeAMSTERDAM JEW YORK 12010Name of Project turpose of project (see instructions)HILL & MARKES REALTY, LLC )THER (WAREHOUSING AND OFFICE FACILITIES)Street address of project siteHIGHWAY 5S, TAX MAP # 54-2-2.1, CITY OF AMSTERDAM, TOWN OF FLORIDA. MONTGOMERY COUNTY, NEW YORKCity tate ip CodeAMSTERDAM EW YORK 12010Description of goods and services intended to be exempted from sales and use taxesMACHINERY AND EQUIPMENT TO BE USED IN CONNECTION WITH NEW WAREHOUSING AND OFFICE FACILITIES

Mm dd yyyy mm dd yyyyDate project operator 07 07 2010 Date project operator or 07 01 2011or agent appointed agent status endsEstimated value of goods and services to be exempted from sales and use taxes as a result of the project’s designation as an IDA project:$225,000

Privacy notificationThe Commissionu of Taoauon and F’ustocr nay onlicet and maintain personal infomtaliou pnrmano to the Ncw Yods SlateTa Law. inctudota bat not hooted to. moron. 171, 171... 217. 305. 429. 475. 5415, 697. 096, 42, and 1415 of thatLow, and may reqwre dlaetosuee of sonud scanty nambren purnant 042 USC 405(c)(2)IC)li).

This nfoentaiion w,O be used to determine and administer Ian liabtilties at4 what utottorined by law, for nertain tan offsetand escbaoge 01109 information p.ogsnnu a. well as for any other tawird pnrpoae.

Information toeceuning qaarterly wages paid to employers is provided to tannin sate ngencion for pnepo.es of fetadpreventioo. soppor enfo,cen.enl. evaitatton of the effrclincnenn of cenntn employment and teatmog p.ovsms nod other purposesaushoneed by law

Fallow to provide the required information may mhjntl you to orvil or onmtral penaltie.. or bath. otdee the Tax Low.

This information is maintained y the Direator of Rerorda Management and Data Entty, NYS Tax Drparttnenl.WA Harriman Campu.. Albany, NY 12227; telephone I atm 225.51129. Front aaron outside the United Staten and outsideCanada. taIl (5 I 11) 4s5-6a00

Need help?Telephone assistance is available from 8a.m. to 5:55 p.m. (easterntime). Monday through Friday.

Businesa tax information: I 800 972-1233Forms and publicationa: I 800 462-8100From areas outside the U.S. and outside Canada’ (518) 485-6800Fax-on-demands forms: I 800 748-3676Hearing and speech impaired (telecommunications device for the

deaf (TDD) callera only): I 800634-2110(8 am, to 5:55 p.m.,eastern time).

Internet access: www.tax.slale.ny.us

t1, Persons with disabilities: In compliance with the Americans wtth‘° Disabilities Act, we will ensure that our lobbies, offices, meetingrooms, and other facilities are accessible to persons with disabilities. If youhave questions about special accommodations for persons with disabilities.please call I 800 225-5829.

Print name of ofTiqer or employee signing on behalf of the IDA Print Title1ifiT kv CHAIRMAN

Date Telephone NumberLLq.P’” July 7, 2010 k5I8 853-8334

InstructionsFiling RequirementsAn IDA must file this form within 30 days of the date the IDA designates a projectoperator of appoints a person as agent of the IDA, for purposes of extending a salesand compensating use tax exemption.

The IDA must file a separate form for each project operator or agentappointed, whether directly or indirectly, and regardless of whether it is the primaryoperator or agent. If the IDA authorizes an operator or agent toappoint other agents, the operator or agent making such an appointmentwithin 30 days of the new agent’s appointment. The IDA need not file this agentsof the IDA. The IDA need not file this form if there are no sales oruse tax exemption benefits authorized for a project as a result of theproject’s designation as an IDA project.

Purpose of project

For Purpose ofproject, enter one of the following:- Services - Construction- Agriculture, forestry, fishing - Wholesale trade- Finance, insurance, real estate - Retail trade- Transportation, communication - Manufacturing

electric, gas, sanitary services - Other (speciti)Mailing instructions

Mail completed form to: NYS Tax Department, IDA Unit, Building 8Room 738, W A Harriman Campus, Albany NY 12227

t2Si If you need to write, address your letter to: NYS Tax Deparment,““ TaxPayer Contact Center, WA Harriman Campus, Albany NY 12227.

012178/00069 Business 7575952v1

AFFIDAVIT OF MAILINGOF THIRTY-DAY SALES TAX REPORT (ST-60)


COUNTY OF ALBANY )


That on July 15, 2010, I mailed a copy of a Thirty-Day Sales Tax Report (ST-60) by and betweenMontgomery County Industrial Development Agency (the “Agency”) and Hill & Markes Realty, LLC(the “Company”), both relating to the Agency’s Hill & Markes Realty, LLC Project, to the following:

NYS Tax DepartmentIDA UnitBuilding 8, Room 738W.A. Harriman CampusAlbany, New York 12227

In witness thereof, I have hereunto set my hand this 15th day of July, 2010.

Adam Carson

Sworn to before me this15(h day of July, 2010.

1No1ary Public

IJULA A. BOEHMNotary Public, State of New York

Qualified in Albany CountyNo. 01B06079037

Commission Expires Aug. 12, —

012178r00069 Business 7664803v1

Hodgson RussTelephone: 5l.433 2413 AT TO A NE VS

j hoe hrn hodgsonruss. corn

7009 341g 00g 736 0374

July 15, 2010

CERTIFIED MAILRETURN RECEIPT REQUESTED

NYS Tax DepartmentIDA UnitBuilding 8, Room 738WA. Harriman CampusAlbany, New York 12227

Re: Montgomery County Industrial Development AgencyHill & Markes Realty, LLC Project

Ladies/Gentlemen:

Enclosed herewith please find an executed Tax Form ST-60 - IDA Appointment of ProjectOperator or Agent for Sales Tax Purposes regarding the above-captioned transaction.

If you have any questions or comments regarding the foregoing, please do not hesitate to contactme.

Sincerely yours,

cLfl—Julia A. BoehmLegal Assistant

CMM/jabEnclosure

O2I78/OOO69 ausmess 7664804v1

677 Bmodwiv • Suite .OI • Albani’, New York /2207 • telephone 5/8.465.2333 • facsimile 5/6.465. 1567.4/bony • Boca Raton • Biifflulo • John ,irown • New York • Pa/ni Beach • Toronto • u./ir,dç’sonri,i s. ( )n1

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Certified Fee

Return Receipt Fee - H(EndorsementRequired) -

Restricted Dellveiy Fee(Endorsement Required)

Total Postage&F‘..(

Twc pal rq ‘-cSent To IDA Unit

—

—

I City. State. ZIP+4 VV.M. I ‘a’ iiii iw- Uarflpus1v ,.w-.,.—.v..—

PS Form 3800. August zU -se flevr-,se to, Instru,

U.S. Postal ServiceCERTIFIED MAIL. RECEIPT(Domestic Mail Only; No Insurance Coverage Provided)

• Complete items 1, 2. and 3. 44180 completeitem 4 if Restricted Delivery is desired.

• Print your name and address on the reverseso that we can return the card to you.

• Attach this card to the back of the mailpiece,or on the front If space permits.

1. Article Addressed to:

B. Received by (Printed Name) Date of Deliveiy

It ‘it :‘: •i’t

-

3. Servloe Type,ZCertlfied Mail D Express Mall

-- D-Registered.. Return Receipt for MemhandiseD Insured Mail C C.O.D.

4. RestrIcted Delivery? (Extra Fee)

SENDER: COMPLETE THIS SECTION COMPLETE THIS SECTION ON DELIVERY

A. Signature

x C AgentC Addressee

&jadreds dlIt 4r4nI1? C] YesC No

JUL 162810NYS Tax DepartmentIDA UnitBuildingS, Room 738WA Harriman CampusAlbany, NY L

2. ArtIcle Number(Transfer hvm service Iaie 9 3’(t ° 3

PS Form 3811, Februa,y 2004 DomestIc Return Receipt 1o2eo2-M-154o

C Yes


SPECIAL COUNSEL DISCLOSURE STATEMENT

Pursuant to Section 858(8)(b) of the General Municipal Law of the State of New York, asamended, Hodgson Russ LLP (the “Firm”) hereby certifies as follows:

SECTION 1. DESCRIPTION OF THE TRANSACTION. (A) General. The transaction which is thesubject of this Disclosure Certificate (the “Transaction”) is the following: The Firm is acting as specialcounsel (“Special Counsel”) to Montgomery County Industrial Development Agency (the “Agency”) inconnection with the project described below (the “Project”) being undertaken by the Agency for thebenefit of Hill & Markes Realty, LLC (the “Company”).

(B) The Agency. The Agency is a public benefit corporation organized and existingpursuant to Chapter 1030 of 1969 Laws of New York, constituting Title I of Article 18-A of theGeneral Municipal Law, Chapter 24 of the Consolidated Laws of New York, as amended (the“Enabling Act”) and Chapter 666 of the 1970 Laws of New York, as amended, constitutingSection 895-d of said General Municipal Law (said Chapter and the Enabling Act beinghereinafter collectively referred to as the “Act”).

(C) The Project. The Project consists of the following: (A) (1) the acquisition of aninterest in a 45.3+!- acre parcel of land (tax map parcel identification number 54-2-2.1) andlocated on Highway 5S in the City of Amsterdam, Town of Florida, Montgomery County, NewYork (the “Land”), (2) the construction of two facilities on the Land: (a) an approximately100,000 square foot warehouse, and (b) an approximately 15,000 square foot office building(both facilities being collectively referred to as the “Facility”), (3) the acquisition and installationof certain machinery and equipment therein and thereon (the “Equipment”) (the Land, the Facilityand the Equipment hereinafter collectively referred to as the “Project Facility”), all of theforegoing to constitute new warehousing and office facilities to support the growth of theCompany’s supply business and related activities; (B) the granting of certain “financialassistance” (within the meaning of Section 854(14) of the Act) with respect to the foregoing,including exemption from certain sales and use taxes, real property taxes, real property transfertaxes and mortgage recording taxes (collectively, the “Financial Assistance”); and (C) the lease(with an obligation to purchase) of the Project Facility by the Agency to the Company pursuant tothe terms of a lease agreement dated as of June 1, 2010 (the “Lease Agreement”) by and betweenthe Agency and the Company.

(D) Additional Parties. Prior to or simultaneously with the execution and delivery ofthe Lease Agreement, the Company and the Agency will execute and deliver the followingdocuments: (1) a certain lease to agency dated as of June 1, 2010 (the “Lease to Agency”),pursuant to which the Company will lease to the Agency a portion of the Land and allimprovements now or hereafter located on said portion of the Land (collectively, the “LeasedPremises”) for a lease term ending on December 31, 2022; (2) a certain license agreement datedas of June 1, 2010 (the “License to Agency”) by and between the Company, as licensor, and theAgency, as licensee, pursuant to which the Company will grant to the Agency (a) a license toenter upon the balance of the Land (the “Licensed Premises”) for the purpose of undertaking andcompleting the Project and (b) in the event of an occurrence of an Event of Default by theCompany, an additional license to enter upon the Licensed Premises for the purpose of pursuingits remedies under the Lease Agreement; (3) a bill of sale dated as of June 1, 2010 (the “Bill of

012178/00069 Business 7555173v1

Sale to Agency”) from the Company to the Agency, pursuant to which the Company will conveyto the Agency its interest in the portion of the Project Facility constituting fixtures and otherpersonal property (including but not limited to the Equipment); (4) the Lease Agreement; (5) apayment in lieu of tax agreement dated as of June 1, 2010 (the “Payment in Lieu of TaxAgreement”) by and between the Company and the Agency, pursuant to which the Company willagree to pay certain payments in lieu of taxes with respect to the Project Facility to the AffectedTax Jurisdictions; (6) a mortgage dated as of July 7, 2010 (the “Mortgage”) from the Agency andthe Company to RBS Citizens, N.A. (the “Lender”); and (7) various certificates and otherdocuments relating to the Project (the “Closing Documents”).

(E) Listing of Parties. Based upon the foregoing, the parties to the transaction (the“Parties”) are as follows: the Agency, the Company and the Lender.

SECTION 2. OTHER REPRESENTATION. Exhibit A attached hereto (A) identifies each Party whichhas a relationship with the Transaction, (B) indicates whether the Firm is representing such Party in theTransaction, (C) indicates whether such Party is separately represented (i.e., has counsel other than theFirm in the Transaction), and (D) indicates whether the Firm has represented such client in mattersindirectly related to the Transaction.

SECTION 3. DESCRIPTION OF SERVICES. If Exhibit A indicates that the Firm is providing legalservices to any party other than the Agency, Exhibit B attached hereto contains a description of the natureof the legal services provided by the Firm to all of the Parties (including the Agency).

SECTION 4. AFFIRMATION. I hereby affirm that, to the best of my knowledge and belief, allinformation contained or described herein is true, correct and complete.

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IN WITNESS WHEREOF, I have hereunto set my hand this 7th day of July, 2010.

HODGSON RUSS LLP

BYA. III

012178/00069 Business 7555173v1-3-

EXHIBIT A

PARTIES TO THE TRANSACTION

PARTY DOES THE DOES THIS DOES THE HAS THE FIRMFIRM PARTY HAVE FIRM PROVIDEDREPRESENT SEPARATE OTHERWISE INDIRECTTHIS PARTY IN COUNSEL IN REPRESENT COUNSEL TOTHE THE THIS PARTY THIS PARTY INTRANSACTION1 TRANSACTION THIS

TRANSACTION

Montgomery County Yes Yes Yes YesIndustrialDevelopmentAgency

Hill & Markes Yes Yes Yes YesRealty, LLC

RBS Citizens, N.A. No Yes Yes No

1 The Agency by resolution and the Company by letter have both waived any potential conflict of Hodgson RussLLP acting as Special Counsel to the Agency and counsel to the Company. Both the Agency and theCompany also have local counsel separately representing them in this matter.

A-i012178/00069 Business 7555173v1

EXHIBIT B

DESCRIPTION OF SERVICES

CLIENT DESCRIPTION OF SERVICES PROVIDED BYTHE FIRM

Montgomery County Industrial The Firm represents the Agency as Special Counsel. AsDevelopment Agency Special Counsel, the Firm has provided legal services to

the Agency in connection with the following:(I) preparation of all major documentation related to theTransaction; and (2) rendering certain legal opinionsrequired to establish that the Transaction has beenproperly undertaken.

Hill & Markes Realty, LLC The Firm represents the Company in connection withthe loan obtained by the Company to finance theProject. The Company retained separate counsel toreview and negotiate the documents relating to theFinancial Assistance being granted by the Agency.

B-I012178/00069 Business 7555 173v1

CLOSING ITEM NO.: C-I

GENERAL CERTIFICATE

OF


This certificate is made in connection with the execution by Hill & Markes Realty, LLC (the“Company”) of a lease agreement dated as of June 1, 2010 (the “Lease Agreement”) by and between theCompany and the Agency (as hereinafter defined), the Underlying Lease, the Memorandum ofUnderlying Lease, the License to Agency, the Bill of Sale to Agency, the Memorandum of LeaseAgreement, the Payment in Lieu of Tax Agreement, the Project Benefits Agreement, the Mortgage, (aseach of said documents is defined in the Lease Agreement) and any other document to be executed by theCompany (all of the preceding documents being collectively referred to as the “Company Documents”) inconnection with the undertaking by Montgomery County Industrial Development Agency (the “Agency”),a public benefit corporation created pursuant to Chapter 1030 of 1969 Laws of New York, constitutingTitle I of Article 18-A of the General Municipal Law, Chapter 24 of the Consolidated Laws of NewYork, as amended (the “Enabling Act”) and Chapter 666 of the 1970 Laws of New York, as amended,constituting Section 895-d of said General Municipal Law (said Chapter and the Enabling Act beinghereinafter collectively referred to as the “Act”), of a project (the “Project”) consisting of the follpwing:(A) (1) the acquisition of an interest in a 45.3+!- acre parcel of land (tax map parcel identification number54-2-2.1) and located on Highway 5S in the City of Amsterdam, Town of Florida, Montgomery County,New York (the “Land”), (2) the construction of two facilities on the Land: (a) an approximately 100,000square foot warehouse, and (b) an approximately 15,000 square foot office building (both facilities beingcollectively referred to as the “Facility”), (3) the acquisition and installation of certain machinery andequipment therein and thereon (the “Equipment”) (the Land, the Facility and the Equipment hereinaftercollectively referred to as the “Project Facility”), all of the foregoing to constitute new warehousing andoffice facilities to support the growth of the Company’s supply business and related activities; (B) thegranting of certain “financial assistance” (within the meaning of Section 854(14) of the Act) with respectto the foregoing, including potential exemptions from sales and use taxes, real property transfer taxes,mortgage recording taxes and real estate taxes (collectively, the “Financial Assistance”); and (C) the leaseof the Project Facility to the Company pursuant to the terms of the Lease Agreement.

Capitalized terms which are not otherwise defined herein shall have the meanings ascribed tothem in the Lease Agreement, except that, for purposes of this certificate, (A) all definitions with respectto any document shall be deemed to refer to such document only as it exists as of the date of thiscertificate and not as of any future date, and (B) all definitions with respect to any Person shall be deemedto refer to such Person only as it exists as of the date of this certificate and not as of any future date or toany successor or assign.

THE UNDERSIGNED OFFICER OF THE COMPANY HEREBY CERTIFIES THAT:

1. 1 am a member of the Company and am duly authorized to execute and deliver thiscertificate in the name of and on behalf of the Company.

012178/00069 Business 7555334v1

2. The Company (A) has been duly formed, is validly existing and is in good standing as alimited liability company under the laws of the State of New York, (B) is authorized to do business in theState of New York with full legal power and authority to own its Property, conduct its business andexecute, deliver and perform its obligations under the Company Documents and (C) has taken all actionsand obtained all approvals required in connection therewith.

3. Attached hereto as Exhibit A is a true, correct and complete copy of the Articles ofOrganization of the Company, together with all amendments thereto, certified by the State of New YorkDepartment of State, Corporations Unit, as the same is in full force and effect on and as of the date of thiscertificate.

4. Attached hereto as Exhibit B is a true, correct and complete copy of the OperatingAgreement of the Company, together with all amendments thereto, as the same is in full force and effecton and as of the date of this certificate.

5. Attached hereto as Exhibit C is a true, correct and complete copy of a certificate of goodstanding relating to the Company from the New York State Department of State, Corporations Unit.

6. Attached hereto as Exhibit D is a true, correct and complete copy of the resolution of themembers of the Company (the “Company Resolution”) approving and authorizing execution and deliveryof the Company Documents. Such Company Resolution was duly adopted by the members of theCompany, has not been amended or modified since its adoption and is in full force and effect on the dateof this certificate in accordance with its terms.

7. Attached hereto as Exhibit E is a list of all material pending litigation relating to theCompany. Except as set forth in Exhibit E, there is no action, suit, proceeding, inquiry or investigation, atlaw or in equity, or before or by any court, public board or body, pending or, to the best of ourknowledge, threatened against or affecting the Company, (nor to the best of our knowledge is there anybasis therefor), wherein an unfavorable decision, ruling or finding would adversely affect (A) thetransactions contemplated by the Company Resolution, (B) the validity or the enforceability of theCompany Resolution or the Company Documents or the transactions contemplated therein, (C) theorganization or existence of the Company, or (D) the business, prospects, Property or condition of theCompany.

8. I have been duly designated to act as an “Authorized Representative” of the Companypursuant to and in accordance with the provisions of the Lease Agreement.

9. There are no Liens against or overdue taxes, assessments, fees or other governmentalcharges payable by the Company to the United States, the State, or, to my knowledge, to any other stateor municipality in the United States.

10. The execution, delivery and performance of all agreements, certificates and documentsrequired to be executed, delivered and performed by the Company in order to carry out, give effect to andconsummate the transactions contemplated by the Company Documents have been duly authorized by allnecessary action of the Company. The Company Documents are in full force and effect on and as of thedate hereof, and no authority for the execution, delivery or performance of the Company Documents hasbeen repealed, revoked or rescinded.

11. The execution, delivery and performance of the Company Documents, the consummationof the transactions therein contemplated and compliance with the provisions of each by the Company donot and will not (A) violate the Company’s Articles of Organization or Operating Agreement, (B) require

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consent under (which has not heretofore been received) or result in a breach of or default under any creditagreement, purchase agreement, indenture, mortgage, deed of trust, commitment, guaranty, lease or otheragreement or instrument to which the Company is a party or by which the Company may be bound oraffected, or (C) conflict with or violate any existing law, rule, regulation, judgment, order, writ, injunctionor decree of any government, governmental instrumentality or court, domestic or foreign, havingjurisdiction over the Company or any of the Property of the Company.

12. The Company has duly authorized the taking of and has taken any and all actionsnecessary to carry out and give effect to the transactions contemplated to be performed on its part by theCompany Documents.

13. No Event of Default specified in any of the Company Documents has occurred and noevent which with notice or lapse of time or both would become such an Event of Default has occurred andis continuing.

14. Each of the representations and warranties of the Company contained in each of theCompany Documents is true, accurate and complete on and as of the date of this certificate with the sameforce and effect as though such representations and warranties were made on and as of the date hereof.

15. The Company Documents have been each duly executed, acknowledged, whereappropriate, and delivered on behalf of the Company by an authorized officer of the Company; thesignattire of said officer thereon is the genuine signature of said officer; and said executed CompanyDocuments are in substantially the same form as the forms thereof presented to the members of theCompany and approved by the Company Resolution.

16. The Company is not contemplating instituting bankruptcy, insolvency or any similarproceedings against itself.

17. The Company has complied with all of the agreements and satisfied all of the conditionson its part to be performed or satisfied by the terms of the Company Documents at or prior to the ClosingDate.

18. As of the Closing Date, there has been no material adverse change in the business,condition, Property or prospects (financial or otherwise) of the Company.

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IN WITNESS WHEREOF, the undersigned has set his signature as an authorized officer of theCompany this 7thday of July, 2010.


BY:_____/‘ uthorize Mefiber

The undersigned, Charles Tallent, counsel to the Company, hereby certifies that the signature ofthe officer of the Company subscribed to and contained in the foregoing General Certificate of theCompany is true and genuine.

Charles Tallent

-4-012178/00069 Business 7555334v1

EXHIBIT A

ARTICLES OF ORGANIZATION OF THE COMPANY

A-i012178/00069 Business 7555334v1

STATE OF NEW YORK

DEPAR TMENT OF STA TE

I hereby certify that the annexed copy has been compared with theoriginal document in the custody of the Secretary of State and that the sameis a true copy of said original.

WITNESS my hand and official seal ofthe Department of State, at the City ofAlbany, on May 21, 2010.

Daniel E. ShapiroFirst Deputy Secretary of State

Rev. 06/07

100406000 32)_ARTICLES OF ORGANIZATION

OF


Under Section 203 of theLimited Liability Company Law

FIRST: The name of the limited liability company is HILL & MARKESREALTY, LLC.

SECOND: The county within this state in which the office of the limited liabilitycompany is to be located is Montgomery.

THIRD: The Secretary of State is designated as agent of the limited liabilitycompany upon whom process against it may be served. The post office address within or without thisstate to which the Secretary of State shall mail a copy of any process against the limited liabilitycompany served upon him or her is: 120 Edson Street, Amsterdam, New York 12010.

FOURTH: The limited liability company may provide for classes or groups ofmembers having such relative rights, powers, preferences and limitations, now or in the future, as thelimited liability company’s duly adopted Operating Agreement may provide.

FIFTH: The limited liability company is to be member-managed under the NewYork Limited Liability Company Law and may provide for classes or groups of managers having suchrelative rights, powers, preferences and limitations as the limited liability company’s duly adoptedOperating Agreement may provide.

IN WITNESS WHEREOF, this Certificate has been subscribed this 5th day of April,2010. by the undersigned who affirms that the statements made herein arc true under the penaities ofpenury.

c’.NamSt?zanne Gruff /L}Title: Organizer

O4Oe9LVUO2I B,,ii.c,. 7401 608v1

100406000532

ARTICLES OF ORGANIZATION

OF

1011 4O6OOO55

1


Under Section 203 of the Limited Liability Company Law

Customer Reference #30596

LCSDRA WDOWN - #AL

ccSTMt OF NWOR —

DEPARTMENT OF STATEFILED APR !910

BY:Filer:Hodgson Russ LLP55 East Main Street, Suite 100Johnstown, NY 12095

EXHIBIT B

OPERATING AGREEMENT OF THE COMPANY

B-i012178/00069 Business 7555334v1

OPERATING AGREEMENT

OF


A New York Limited Liability Company

Dated June_, 2010

OPERATING AGREEMENT

OF


THIS OPERATING AGREEMENT is entered into as of the day of June, 2010by and among those Persons who have executed this Agreement, and whose names and addresses areset forth on Schedule I hereto.

HILL & MARKES REALTY, LLC was organized, in accordance with the New YorkLimited Liability Company Law, by the tiling of Articles of Organization with the office of the NewYork Secretary of State on April 6, 2010. The parties now wish to fully set forth their agreement.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I

Definitions

1.1 Certain Definitions. As used herein, the following terms have the followingmeanings:

(a) Adjusted Book Value: With respect to any Company property theadjusted basis of such property for federal income tax purposes, un less such property has beencontributed to the Company or revalued as referenced in Section 5.1 (b)(i), in which event it means thefair market value of such property at the date of such contribution or revaluation minus allDepreciation taken with respect to such property.

(b) Affiliate: When used with reference to a specified Person, (a) anyPerson who directly or indirectly through one or more intermediaries controls, is controlled by, or isunder common control with the specified Person, (b) any Person who is a member of the ImmediateFamily of such Person, or (c) any Person in which such Person or an Immediate Family member ofsuch Person has a substantial beneficial and pecuniary interest or as to which such Person serves as atrustee or general partner or in a similar fiduciary capacity. A Person will be deemed to control aPerson if it and/or any Immediate Family member owns at least fifty percent (50%) of the ownershipinterest in such Person or otherwise has the power to direct the management, operations or business ofsuch Person.

(c) Articles: The Articles of Organization of the Company, as from timeto time amended.

(d) Buy-Sell Agreement: That certain Buy-Sell Agreement, dated June2010, by and among the Members and the Company.

(e) Capital Account: The account to be maintained by the Company foreach Economic Interest Holder in accordance with the following provisions:

(i) a Member’s Capital Account will he increased by theMember’s Capital Contributions, the amount of any Company liabilities assumed by theMember (or that are secured by Company property distributed to the Member), the Member’sshare of Profit and any item in the nature of income or gain specially allocated to the Memberpursuant to the provisions of Article 5; and

(ii) a Member’s Capital Account will be decreased by the amountof money and the fair market value of any Company property distributed to the Member, theamount of any liabilities of the Member assumed by the Company (or that are secured byproperty contributed by the Member to the Company), the Member’s share of Loss and anyitem in the nature of expenses or losses specially allocated to the Member pursuant to theprovisions of Article 5.

If the Adjusted Book Value of Company property is adjusted pursuant toSection 5.l(b)(i), the Capital Account of each Member will be adjusted to reflect the aggregateadjustment in the same manner as if the Company had recognized gain or loss equal to the amount ofthat aggregate adjustment as of the date of such revaluation.

(1) Capital Contribution: The fair market value of any contribution by aMember to the capital of the Company in cash or property (other than any promissory note for whichthe contributing Member also is the maker). If such a promissory note is contributed, the Member’scapital account will be increased in accordance with Treasury Regulation Section 1 .704-I (b)(2)(iv)(d)(2).

(g) Code: The Internal Revenue Code of 1986, as amended, or thecorresponding provisions of any successor statute.

(h) Company: HILL & MARKES REALTY, LLC.

(i) Depreciation: For each Fiscal Year or other period, an amount equalto the depreciation, amortization or other cost recovery deduction allowable with respect to an assetfor such year or other period, except that if the fair market value of property contributed to theCompany differs from its adjusted basis for federal income tax purposes at the date of contribution oras a result of revaluation pursuant to Section 5.l(b)(i), Depreciation will be an amount which bearsthe same ratio to such beginning fair market value as the federal income tax depreciation,amortization or other cost recovery deduction for such year or other periods bears to such beginningadjusted tax basis, provided, however, that if the adjusted basis for federal income tax purposes of anasset at the beginning of such Fiscal Year is zero, Depreciation will be determined with reference tosuch beginning fair market value using any reasonable method selected by the Manager.

(j) Fiscal Year: The calendar year ending December 3 1, provided,however, the Manager will have the authority to change the ending date of the Fiscal Year if theManager determines in good faith that such change is necessary or appropriate for the Company.

(k) Immediate Family: A Person’s spouse, child, stepchild or otherfamily member residing in such Person’s household or to whom such Person provides materialfinancial support.

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(I) i: New York Limited Liability Company Law.

(m) Manager: The Manager of the Company, who has been elected by theMembers pursuant to this Agreement to manage the Company and who has such powers as providedin Article 6 and elsewhere in this Agreement, or any other Person that succeeds him or her as amanager pursuant to this Agreement.

(n) Member: Each Person who or which executes a counterpart of thisAgreement as a Member and each Person who or which becomes a Member of the Company.

(o) Membership Interest: A Member’s aggregate rights in the Company,including, without limitation, the Member’s right to a share of the profits and losses of the Company,the right to receive distributions from the Company and the right to vote and participate in themanagement, as applicable, of the Company all as more further described in this Agreement.

(p) Modified Capital Account Balance: A Member’s Capital Accountbalance increased by an amount equal to an amount the Member is deemed obligated to restorepursuant to the Treasury Regulations promulgated pursuant to Code Section 704(b) and decreased bythe items described in Treasury Regulations Section l.704-l(b)(2)(ii)(d)(4), (5) and (6).

(q) Percentage Interest: As to a Member, the percentage interest set forthafter the Member’s name on Schedule I, as amended from time to time as may be provided for in thisAgreement.

(r) Person: Any individual, corporation, governmental authority, limitedliability company, partnership, trust, unincorporated association or other entity.

(s) Profits and Losses: For any fiscal period, an amount equal to theCompany’s taxable income or loss for the year or period, determined in accordance with CodeSection 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be statedseparately pursuant to Code Section 703(a)(l) will be included in taxable income or loss), with thefollowing adjustments:

(i) any income of the Company that is exempt from federalincome tax and not otherwise taken into account in computing Profits and Losses will beadded to taxable income or loss;

(ii) any expenditures of the Company described in CodeSection 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant toTreasury Regulation Section 1 .704-1 (b)(2)(iv)(i), and not otherwise taken into account incomputing Profits and Losses will be subtracted from taxable income or loss;

(iii) gain or loss resulting from any taxable disposition ofCompany property will be computed by reference to the Adjusted Book Value of the propertydisposed of, notwithstanding the fact that the Adjusted Book Value differs from the adjustedbasis of the property for federal income tax purposes; and

-3-

(iv) in lieu of the depreciation, amortization or cost recoverydeductions allowable in computing taxable income or loss, there will be taken into accountthe Depreciation for such Fiscal Year or other period.

(t) Transfer: When used as a noun, any gift, sale, hypothecation, pledge,assignment, attachment or other transfer, and, when used as a verb, give, sell, hypothecate, pledge,assign or otherwise transfer.

(u) Transferee: A transferee of a Member’s Membership interest.

(v) Transferor: A Member Transferring a Membership Interest.

(w) Treasury Regulations: All proposed, temporary and final regulationspromulgated under the Code as from time to time in effect.

ARTICLE 2

Organization

2.1 Formation. The Company was formed as a limited liability companypursuant to the Law.

2.2 Articles of Organization. The Articles were filed in the Office of the NewYork Secretary of State on April 6,2010. The Company will execute such further documents(including, without limitation, amendments to the Articles) and take such further action asappropriate to comply with all requirements of law for the formation and operation of a limitedliability company in the State of New York and all other counties and states where the Company mayelect to do business.

2.3 Name. The name of the Company is HILL & MARKES REALTY, LLC, butthe business of the Company may be conducted under any other name designated by the Manager.The Manager will notify the Members of any name change within 30 days after the name change.

2.4 Character of Business. The purpose of the Company is to engage in allpurposes set forth in the Articles, and all business activities necessary, convenient or incidentalthereto.

2.5 Principal Place of Business. The principal place of business of the Companyand the office of the Manager is 120 Edson Street, Amsterdam, New York, 12010, or such otherlocation as the Manager, in the Manager’s discretion, may determine appropriate, provided thatnotice thereof is furnished to the Members as promptly as possible following any such determinationand all requisite filings have been made.

2.6 Agent for Process. The Secretary of the State of New York is herebydesignated as the agent of the Company upon whom process in any action or proceeding against itmay be served, and the address to which the Secretary of State shall mail a copy of any processserved on him against the Company is 120 Edson Street, Amsterdam, New York, 12010.

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2.7 Fiscal Year. The fiscal year of the Company is the Fiscal Year.

ARTICLE 3

Capital Contributions

3.1 Capital Contributions. Each Member will make an initial cash CapitalContribution to the Company in an amount set forth on Schedule I.

3.2 Additional Contributions. Except as set forth in Section 3.1, no Member willbe required to make any additional Capital Contributions. The Members may make additionalCapital Contributions only with the written consent of all the Members, in which case the Managerwill be authorized to amend Schedule I in order to reflect any changes in Percentage Interests of theMembers, if any, in the manner in which the Members have unanimously agreed.

3.3 Capital Account Transfers. Upon a permitted sale or other transfer of aMembership Interest in the Company, the CapitaJ Account of the Member transferring the Member’sMembership Interests will, to the extent attributable to such interest, become the Capital Account ofthe Person to which or whom such Membership Interest is sold or transferred in a manner consistentwith Section l.704-I(b)(2)(iv) of the Treasury Regulations.

3.4 Negative Capital Accounts. A Member with a negative balance in theMember’s Capital Account at no time during the term of the Company or upon dissolution andliquidation of it, has any obligation to the Company or the other Members to restore that negativebalance, except (i) as may be required by law, or (ii) in respect of any negative balance resultingfrom a withdrawal of capital or dissolution in contravention of this Agreement.

3.5 No Interest on Capital Accounts. No interest will be paid to any Member onany part of such Member’s Capital Account. Except as otherwise specifically may be provided inthis Agreement no Member will have any priority or preference over any other Member with respectto distributions from the Company.

3.6 Loans and Advances. Loans or advances by any Member to the Companywill not be considered contributions to the capital of the Company and will not increase the CapitalAccount of the lending or advancing Member.

ARTICLE 4

Costs, Expenses and Compensation

4.1 Operating Costs. The Company will pay or cause to be paid all costs andexpenses of the Company incurred by the Company in pursuing and conducting, or otherwise relatedto, the business of the Company.

4.2 Reimbursement of Manager. Except as inconsistent with the provisions ofSection 6.6, the Company will reimburse the Manager for any reasonable out-of-pocket costs and

-5-

expenses incurred by him in pursuing and conducting, or otherwise related to, the business of theCompany.

4.3 Except as expressly authorized by the Members whose PercentageInterests exceed 50%, the Manager will not receive any fees or other compensation from theCompany.

ARTICLE 5

Allocations and Distributions

5.1 Allocations.

(a) Allocation of Profits and Losses. Except as provided in subparagraphs(b) and (c) of this Section, all Profits and Losses for each Fiscal Year (or part thereof) will beallocated to the Members in accordance with their respective Percentage Interests.

(b) Special Allocations. All capitalized terms used in this Section nototherwise defined in this Agreement have the meaning set forth in the Treasury Regulationspromulgated pursuant to Code Section 704. The following special allocations will be made in thefollowing order:

(i) Property Contributions or Revaluations. In accordance withCode Section 704(c) and the Treasury Regulations thereunder, income, gain, loss anddeduction with respect to any property contributed to the capital of the Company or revaluedin accordance with (A) Treasury Regulation I .704-I (b)(2)(iv)(f) or, (B) in connection with anon-liquidating distribution in accordance with Treasury Regulation 1.704-l(b)(2)(iv)(rn)(but only to the extent not otherwise revalued under Treasury Regulation 1.704-l(b)(2)(iv)(t)), will, solely for tax purposes, be allocated among the Members so as to takeaccount of any variation between the adjusted basis of such property to the Company forfederal income tax purposes and its Adjusted Book Value using the traditional method asdescribed in the Treasury Regulations under Code Section 704(c) unless an alternativemethod permitted by such Treasury Regulations is selected by the Manager. Any elections ordecisions relating to such allocations will be made by the Manager in any manner thatreasonably reflects the purpose and intention of this Agreement. Any decision to revalueCompany property in accordance with Treasury Regulation 1.704-1 (b)(2)(iv)(f) or (m) willbe made by the Manager in the Manager’s sole and absolute discretion.

(ii) Minimum Gain Chargeback. Except as otherwise provided inTreasury Regulation Section 1.704-2(f), notwithstanding any other provision of this Section5.1, if there is a net decrease in Partnership Minimum Gain during any Adjustment Period,each Member will be specially allocated items of Company income and gain for the period(and, if necessary, subsequent periods) in an amount equal to that Member’s share of the netdecrease in Partnership Minimum Gain, determined in accordance with Treasury RegulationSection 1.704-2(g). Allocations pursuant to the previous sentence will be made in proportionto the respective amounts required to be allocated to each Member. The items to be so

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allocated will be determined in accordance with Treasury Regulation Section I .704-2(fl(6)and I .704-2(j)(2). This subsection is intended to comply with the minimum gain chargebackrequirement in Treasury Regulation Section 1.704-2(f) and will be interpreted consistentlywith it.

(iii) Partner Minimum Gain Chargeback. Except as otherwiseprovided in Treasury Regulation Section I .704-2(i)(4), notwithstanding any other provisionof this Section 5.1, if there is a net decrease in Partner Nonrecourse Debt Minimum Gainattributable to a Partner Nonrecourse Debt during any period, each Member who has a shareof the Partner Nonrecourse Debt Minimum Gain attributable to the Partner NonrecourseDebt, determined in accordance with Treasury Regulation Section 1 .704-2(i)(5), will bespecially allocated items of Company income and gain for the Adjustment Period (and, ifnecessary, subsequent Adjustment Periods) in an amount equal to that Member’s share of thenet decrease in Partner Nonrecourse Debt Minimum Gain attributable to the PartnerNonrecourse Debt, determined in accordance with Treasury Regulation Section 1 .704-2(i)(4).Allocations pursuant to the previous sentence will be made in proportion to the respectiveamounts required to be allocated to each Member pursuant thereto. The items to be soallocated will be determined in accordance with Treasury Regulation Sections 1 .704-2(i)(4)and I .704-2(j)(2). This subsection is intended to comply with the minimum gain chargebackrequirement in Treasury Regulation Section 1 .704-2(i)(4) and will be interpreted consistentlywith it.

(iv) Qualified Income Offset. If any Member unexpectedlyreceives any adjustments, allocations, or distributions described in Treasury RegulationSection l.704-l(b)(2)(ii)(d)(4), (5) or(6), items of Company income and gain will bespecially allocated to each such Member in an amount and manner sufficient to eliminate, tothe extent required by the Treasury Regulations, the Modified Capital Account Balancedeficit of that Member as quickly as possible, provided that an allocation pursuant to thissubsection will be made only if and to the extent that such Member would have a ModifiedCapital Account Balance deficit requiring elimination pursuant to the Treasury Regulationsafter all other allocations provided for in this Section 5.1 have been tentatively made as if thissubsection were not in the Agreement.

(v) Nonrecourse Deductions. Nonrecourse Deductions for anyperiod will be specially allocated among the Members in proportion to their PercentageInterest.

(vi) Partner Nonrecourse Deductions. Any Partner NonrecourseDeductions for any period will be specially allocated to the Member who bears the economicrisk of loss with respect to the Partner Nonrecourse Debt to which the Partner NonrecourseDeductions are attributable in accordance with Treasury Regulation Section 1 .704-2(i)(l).

(vii) Section 754 Adjustments. To the extent an adjustment to theadjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section743(b) is required, pursuant to Treasury Regulation Section I .704-I(b)(2)(iv)(m)(2) orTreasury Regulation Section 1.704-1 (b)(2)(iv)(m)(4), to be taken into account in determiningCapital Accounts as the result of a distribution to a Member in complete liquidation of the

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Member’s interests, the amount of the adjustment to Capital Accounts will be treated as anitem of gain (if the adjustment increases the basis of the asset) or loss (if the adjustmentdecreases that basis) and that gain or loss will be specially allocated to the Members inaccordance with their Percentage Interests in the event that Treasury Regulation SectionI .704-I(b)(2)(iv)(m)(2) applies, or to the Member to whom the distribution was made ifTreasury Regulation Section 1 .704-I (b)(2)(iv)(m)(4) applies.

(viii) Compliance with Treasury Regulations. The provisions ofthis Agreement, relating to the maintenance of Capital Accounts are intended to comply withTreasury Regulation Section 1.704-1(b), and must be interpreted and applied in a mannerconsistent with those Treasury Regulations. If the Manager determines that it is prudent tomodify the manner in which the Capital Accounts, or any debits or credits thereto, arecomputed to comply with those Treasury Regulations, the Manager may make suchmodification, if it is not likely to have a material effect on the amounts distributable to anyMember upon the dissolution of the Company. The Manager also will make any adjustmentsthat are necessary or appropriate to maintain equality between the Capital Accounts of theMembers and the amount of capital reflected on the Company’s balance sheet, as computedfor book purposes, in accordance with Treasury Regulations Section l.704-l(b)(2)(iv)(q).

(c) Loss Limitation. Losses allocated pursuant to Section 5.1(a) will notexceed the maximum amount of Losses that can be allocated without causing any Member to have anegative Modified Capital Account Balance at the end of any Fiscal Year. In the event some but notall of the Members would have a negative Modified Capital Account Balance as a consequence of anallocation of Losses pursuant to Section 5.1(a), the limitation set forth in this Section 5.1(c) will beapplied on a Member by Member basis and Losses not allocable to any Member as a result of suchlimitation will be allocated to the other Members in proportion to the positive Modified CapitalAccount Balances of such other Member’s Capital Accounts so as to allocate the maximumpermissible Losses to the Members under Regulations Section I.704-l(b)(2)(ii)(d).

5.2 Apportionment to Transferred Interests. Profits, gains, losses, deductions andcredits allocated to a Membership Interest assigned or reissued during a Fiscal Year will beapportioned to the Person who was the holder of such Membership Interest during the Fiscal Year, inproportion to the number of days that each holder was recognized as the owner of the MembershipInterest during such Fiscal Year or in any other reasonable manner selected by the Manager andpermitted by Section 706 of the Code.

5.3 Cash Distributions. From time to time (but at least quarterly) the Managerwill determine in the Manager’s reasonable judgment to what extent (if any) the Company’s cash onhand exceeds its current and anticipated needs, including, without limitation, for operating expenses,debt service, and a reasonable contingency reserve. If an excess exists, the Manager will cause theCompany to distribute to the Members, in accordance with their Percentage Interests, an amount incash equal to such excess.

5.4 Distributions in Kind. In the event that the Manager determines that a portionof the Company’s assets should be distributed in kind to the Members, the Manager will make a goodfaith determination of the fair market value of each such asset as of a date reasonably close to thedate of such distribution. Any unrealized appreciation or depreciation with respect to such asset, as

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determined using the principles set forth in Section l.1(s)(iii), will be allocated among the Membersin the same order of priority as set forth in Section 5.1 (assuming that the property were sold for thefair market value so determined) and distribution of any such assets in kind to a Member will beconsidered a distribution of an amount of cash equal to the assets’ determined fair market value forpurposes of determining the Capital Account of the distributee.

5.5 Credit. For all income tax purposes, credits of the Company claimed for aFiscal Year will be allocated among the Members in the same manner as Losses arc allocated amongthe Members pursuant to Section 5.1(a) unless otherwise required by the Code or the TreasuryRegulations.

5.6 Tax Withholding. The Company is authorized to pay, on behalf of anyMember, any amounts to any federal, state or local taxing authority, as may be necessary for theCompany to comply with tax withholding provisions of the Code or other income tax or revenuelaws of any applicable taxing authority. To the extent the Company pays any such amounts that itmay be required to pay on behalf of a Member, such amounts will be treated as a distribution to suchMember and will reduce the amount otherwise distributable to such Member.

5.7 Offset. The Company may offset all amounts owing to the Company by aMember against any distribution to be made to the Member.

ARTICLE 6

Management

6.1 Rights and Duties of Members. The Company is a “manager-managed”limited liability company under the Law which will be managed by the Manager. Except as mayhereafter be required or permitted by the Law or as specifically provided herein, the Members will insuch capacity take no part whatever in the control, management, direction or operation of the affairsof the Company and will have no power to act for or bind the Company.

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6.2 Management. The powers of the Company will be exercised by or under theauthority of, and the business and affairs of the Company will be managed under the direction of theManager. Any Person, other than a Member, dealing with the Company, may rely on the authority ofthe Manager and officers in taking any action in the name of the Company without inquiry into theprovisions of, or compliance with, this Agreement, regardless of whether that action is actually takenin accordance with the provisions of this Agreement. The Members agree that the initial Manager isNeal Packer, and he will serve in that capacity until his successor has been elected and qualified.The Manager may be removed from the position, with or without cause, by action of the Memberswhose Percentage Interests aggregate more than 75%. The removal of the Manager does notconstitute a waiver or exculpation of the Company or any Member of any liability that the Managermay have to the Company or any Member in respect of the cause for the Manager’s removal, and theManager, even though removed, will remain entitled to indemnification from the Company pursuantto Section 6.6 with respect to any matter arising prior to the Manager’s removal. Any Managervacancy occurring for any reason may be filled by the vote or wriften consent of a majority of thePercentages Interests held by the Members.

6.3 Powers of the Manager.

(a) The Manager will have full and complete charge of all affairs of theCompany and the management and control of the Company’s business will rest exclusively with theManager, subject to the terms and conditions of this Agreement. The Manager is required to devoteto the conduct of the business of the Company only such time and attention as the Managerdetermines, in the Manager’s sole and absolute discretion, to be necessary to accomplish the purposes,and to conduct properly the business, of the Company.

(b) Subject to the limitations set forth in this Agreement, including,without limitation, those limitations set forth in Section 6.4, the Manager will perform or cause to beperformed, all management and operational functions relating to the business of the Company.Without limiting the generality of the foregoing, the Manager is authorized on behalf of the Company,without the consent of any Member, to:

(i) invest and expend the capital and revenues of the Company infurtherance of the Company’s business and pay, in accordance with the provisions of thisAgreement, all expenses, debts and obligations of the Company to the extent that funds of theCompanys are available therefor;

(ii) make investments in United States government securities,securities of governmental agencies, commercial paper, insured money market funds,bankers’ acceptances, certificates of deposit and other securities, pending disbursement of theCompany funds or to provide a source from which to meet contingencies;

(iii) enter into agreements and contracts with any Person,terminate any such agreements and institute, defend and settle litigation arising therefrom,and give receipts, releases and discharges with respect to all of the foregoing and any mattersincident thereto;

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(iv) maintain, at the expense of the Company, adequate recordsand accounts of all operations and expenditures and furnish the Members with the reportsreferred to in Article 8;

(v) purchase, at the expense of the Company, liability, casualty,fire and other insurance and bonds to protect the Company’s properties, business, Members,employees, Manager and officers;

(vi) borrow funds needed for the operations of the Company and,in connection therewith, issue notes, debentures and other debt securities and mortgage,pledge, encumber or hypothecate the assets of the Company;

(vii) obtain replacement of any mortgage, encumbrance, pledge,hypothecation or other security device and prepay, in whole or in part, modify, consolidate orextend any such mortgage, encumbrance, pledge, hypothecation or other security device;provided, however, that the Manager is not authorized to replace a mortgage on which noMember has liability with a mortgage on which a Member does have liability without thewritten consent of such Member(s);

(viii) sell, lease, trade, exchange or otherwise dispose of all or anyportion of the property or assets of the Company, subject, however, to the provisions ofSection 6.4(d) and Section 10.3;

(ix) employ, at the expense of the Company, consultants,accountants, attorneys, brokers, engineers, escrow agents and others and terminate suchemployment;

(x) execute and deliver purchase agreements, notes, leases,subleases, applications, transfer documents and other instruments necessary or incidental tothe conduct of the business of the Company;

(xi) permit an assignment of a Membership Interest in theCompany and admit an assignee of a Membership Interest as a new Member in the Company,pursuant to and subject to the limitations of Article 9;

(xii) determine the accounting methods and conventions to be usedin the preparation of the Company’s income tax returns, and make any and all elections underthe tax laws of the United States, the several states and other relevant jurisdictions as to thetreatment of items of income, gain, loss, deduction and credit of the Company, or any othermethod or procedure related to the preparation of such returns; and

(xiii) bring, defend and settle claims or litigation in the name of theCompany.

By executing this Agreement, each Member is deemed to have consented to any exercise by theManager of any of the foregoing powers. Any third party may rely on the signature of any officer

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duly authorized by the Manager, as a valid exercise or execution of any of the foregoing powers onbehalf of the Company.

6.4 Restrictions on the Manager’s Authority.

The Manager may not, without the approval, written consent or ratification of thespecific act by all the Members (or less than all as specifically provided in this Section 6.4) given inthis Agreement or given by other written instrument executed and delivered by the Memberssubsequent to the date of this Agreement, do any of the following:

(a) any act in contravention of this Agreement or the Articles;

(b) any act which would make it impossible to carry on the ordinarybusiness of the Company, except as otherwise provided in this Agreement;

(c) merge or consolidate the Company into or with any other entity,unless the Manager receives the prior written consent of Members holding more than two-thirds of thePercentage Interests in the Company;

(d) sell, lease, exchange or refinance all or substantially all of the assetsof the Company, unless the Manager receives the prior written consent of Members holding more thantwo-thirds of the Percentage Enterests in the Company; or

(e) admit new Members to the Company, except as provided for inArticle 9.

6.5 Officers.

(a) The Manager may, from time to time, designate one or more personsto be an officer of the Company. Any officer so designated will have such authority and perform suchduties as the Manager may, from time to time, delegate to such officer them subject to the limitationsset forth in the Law or this Agreement. The Manager may assign titles to particular officers. Noofficer need be a resident of the State of New York or a Member. Each officer will hold his or heroffice until his or her successor is duly designated and qualifies or until his or her death or until he orshe resigns or is removed in the manner hereinafter provided. Any number of offices may be held bythe same person. The salaries or other compensation, if any, of the officers and any agents of theCompany will be fixed from time to time by the Manager. Any officer may resign as such at anytime. Such resignation may be made in writing and will take effect at the time specified therein, or ifno time is specified, upon receipt by the Manager. Acceptance of a resignation will not be necessaryto make it effective, unless expressly so provided in the resignation. Any officer may be removed assuch, either with or without cause, by the Manager at any time when, in the Manager’s judgment, thebest interest of the Company will be served by the officer’s removal. Any vacancy occurring in anyoffice of the Company (other than the Manager) may be filled by the consent of the Manager.

(b) Unless otherwise restricted by the Manager, the officers of theCompany may take the following actions on behalf of the Company:

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(i) make any capital expenditure for the Company;

(ii) make investments in United States government securities,securities of governmental agencies, commercial paper, insured money market funds,bankers’ acceptances, certificates of deposit, and other securities, pending disbursement ofthe Company’s funds or to provide a source from which to meet contingencies;

(iii) enter into or terminate agreements or contracts with anyPerson;

(iv) institute, defend or settle litigation arising from the operationof the Company’s business or give releases or discharges with respect to any matter incidentthereto;

(v) purchase, at the expense of the Company, liability, casualty,fire and other insurance and bonds to protect the Company’s properties, business, Members,employees or officers; or

(vi) borrow funds needed for the operations of the Company and,in connection therewith, issue notes, debentures and other debt securities and mortgage,pledge, encumber or hypothecate the assets of the Company or obtain replacement of anysuch mortgage, pledge, encumbrance or hypothecation.

(c) The officers of the Company expressly do not have the power or rightto:

(i) approve the admission of new Members or the transfer orissuance of Membership Interests;

(ii) determine or make any allocations or distributions of theCompany to the Members;

(iii) determine the accounting methods and conventions to be usedin the preparation of the Company’s tax returns, or make any elections under the tax laws ofthe United States, the several states or other relevant jurisdictions as to treatment of items ofincome, gain, loss, deduction or credit of the Company or any other method or procedurerelated to the preparation of such returns; or

(iv) do or take any of the actions described in Section 6.4.

6.6 Exculpation. The Manager and officers of the Company will not be liable, indamages or otherwise, to the Company or to any of the Members for any act or omission performedor omitted by a Manager or officer pursuant to the authority granted by this Agreement, except ifsuch act or omission results from gross negligence, willfil misconduct or bad faith. The Companywill indemnify, defend and hold harmless the Manager and the officers from and against any and allclaims or liabilities of any nature whatsoever, including, without limitation, reasonable attorneys’fees and disbursements, arising out of or in connection with any action taken or omitted by a

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Manager or officer pursuant to the authority granted by this Agreement, except where attributable tothe gross negligence, willful misconduct or bad faith of a Manager or such officer. The Manager andofficers will be entitled to rely on the advice of counsel, accountants or other independent expertsexperienced in the matter at issue, and any act or omission of a Manager or officer pursuant to suchadvice will in no event subject the a Manager or officers to liability to the Company or any Member.The Company will advance funds to a Manager or officer for the costs of defending any claim uponreceipt of an undertaking from such Manager or officer to repay such amounts to the Company uponany judicial determination that such Manager or officer is not entitled to indemnification under thisSection 6.6.

6.7 Removal of a the Manager. Consistent with Section 6.2, a Manager may beremoved, with or without cause, from such position by vote or written consent of the Membersholding more than two-thirds of the Percentage Interests in the Company. The removal of a Managerwill not constitute a waiver or exculpation by the Company or any Member of any liability which theManager may have to the Company or any Member, and the Manager, even though removed, willremain entitled to exculpation and indemnification from the Company pursuant to Section 6.6 withrespect to any matter arising prior to his or her removal.

6.8 Restrictions on Transactions with Affiliates. Apart from transactions theterms of which are contemplated or approved by this Agreement, neither the Manager nor theManager’s Affiliates must engage in any transaction with the Company unless the terms of thetransaction are on an arm’s-length basis and on terms which are no less favorable to the Companythan would be obtained in a transaction with an unaffiliated party. The terms of any transactionapproved by Members holding at least a majority of the Percentage Interests of the Company will bepresumed to be on ami’s-length terms.

6.9 Other Activities. Other than those that may be competitive with the businessof the Company, any Member or the Member’s Affiliates and any Manager may engage in or possessan interest in other business ventures of any nature or description for their own account,independently or with others, whether presently existing or hereafter created and neither theCompany nor any other Member or the Member’s Affiliates nor any Manager will have any rights inor to such independent ventures or the income or profits derived therefrom.

ARTICLE 7

Taxes

7.1 Tax Elections. The Manager will, without any further consent of theMembers being required (except as specifically required herein), make any and all elections forfederal, state, local and foreign tax purposes as the Manager deems appropriate and in the bestinterest of the Company, provided, however, if a distribution as described in Code Section 734occurs or if a transfer of a Membership Interest described in Code Section 743 occurs, upon thewritten request of any subject Member, the Manager will elect to adjust the basis of the property ofthe Company pursuant to Code Section 754, provided further, however, at the Manager’s discretion,such requesting Member may be required to reimburse the Company for any reasonable additional

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administrative and accounting costs incurred as a result of such election as a precondition to theCompany making such requested election.

7.2 Tax Status of the Company. The Manager covenants and agrees to use theManager’s best efforts to establish and maintain the classification of the Company as a partnershipfor federal income tax purposes and not as an association taxable as a corporation. Neither theCompany, the Manager nor any Member may make an election for the Company to be excluded fromthe application of Subchapter K of Chapter I of Subtitle A of the Code or any similar provisions ofapplicable state law, and no provisions of this Agreement will be interpreted to authorize any suchelection.

7.3 Tax Returns. The Manager will cause to be prepared and filed all necessaryfederal, state income and foreign tax returns for the Company.

7.4 Tax Matters Partners. Neal Packer will serve as the “Tax Matters Partner” ofthe Company pursuant to Code Section 623 I (a)(7).

ARTICLE 8

Accounts

8.1 Books. The Manager will maintain complete and accurate books of accountof the Company’s affairs at the Company’s principal offices, including a list of the names andaddresses of all Members and the interest held by each Member. Each Member and the Member’saccountants, lawyers and agents has the right to inspect the Company’s books and records (includingthe list of the names and addresses of Members) at the offices of the Manager.

8.2 Members’ Accounts. Separate Capital Accounts will be maintained for eachMember.

8.3 Reports and Returns. The books of the Company will be closed promptlyafter the end of each Fiscal Year. Within 75 days of the end of each Fiscal Year, each Member willbe provided with an information letter containing all information concerning the Company necessaryfor the preparation of the Member’s income tax return(s).

ARTICLE 9

Transfers

9.1 Restrictions on Transfers. Each Member agrees and covenants that, exceptas otherwise permitted or required by this Agreement and the Buy-Sell Agreement, the Member willnot (a) Transfer the Member’s Membership Interest (or any portion thereof), or (b) permit theMember’s Membership Interest (or any portion thereof) to be the subject of a Transfer.

9.2 Nonrecognition of Certain Transfers. Notwithstanding any other provision ofthis Agreement, any Transfer of a Membership Interest (or any portion thereof) in contravention of

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any of the provisions of this Agreement or the Buy-Sell Agreement will be void and ineffective, andwill not bind, or be recognized by, the Company.

9.3 Compliance with Securities Laws. Any provision of this Agreement to thecontrary notwithstanding, no Transfer of a Membership Interest may be made, except in compliancewith the then applicable federal and state securities laws.

9.4 Assignment and Transfer.

(a) No Membership. A Transfer of any Member’s Membership Interestin the Company entitles the Transferee of such Member’s Membership Interest to receive only thatshare of the allocations and distributions to which the Transferor of such Membership Interest wouldhave otherwise been entitled to. The Transferee obtains no right to vote or participate in themanagement of the business and affairs of the Company. A Transferee will be included within theterm “Member” for all purposes of this Article 9, except for purposes of the rights of a Member topurchase a Membership Interest of other Members or Transferees under Section 9.6.

(b) Membership. Except in the case of “Permitted Transfers”, as suchterm is defined in the Buy-Sell Agreement, the Transferee does not become a Member of theCompany with any rights to vote or manage unless and until nontransferring Members owning amajority of the aggregate outstanding Percentage Interests in the Company consent, in their solediscretion, which can be unreasonably withheld, to make the Transferee a Member. As a condition tothe admission of a new Member, such Member will execute and acknowledge such instruments, inform and substance satisfactory to the Company, as the Company may deem necessary or desirable toeffectuate such admission and to confirm the agreement of such Member to be bound by all of theterms, covenants and conditions of this Agreement, as modified from time to time. Such newMember will pay all reasonable expenses in connection with such admission, including, withoutlimitation, reasonable attorneys’ fees and the cost of the preparation, filing or publication of anyamendment to this Agreement or the Articles, which the Company may deem necessary or desirablein connection with such admission. If a Member transfers the Member’s entire Membership Interestand any Transferee is not approved as a Member pursuant to this Section 9.4(b), such MembershipInterest, held by such Transferee under the terms of Section 9.4(a), will be voted for all purposeshereunder by the remaining Members in the same manner as and in proportion to such remainingMembers’ Percentage Interests voted by such Members.

(c) Other New Member Matters. No new Member will be entitled to anyretroactive allocation of income, losses or expense deductions of the Company. The Company maymake pro rata allocations of income, losses or expense deductions to a new Member for that portionof the tax year in which such new Member was admitted in accordance with Code Section 706(d) andthe Treasury Regulations thereunder. In no event will a new Member be admitted to the Company ifsuch admission would be in violation of applicable federal or state securities laws or would adverselyaffect the treatment of the Company as a partnership for federal income tax purposes.

(d) No Withdrawal. A Member may not withdraw from the Company,except with the consent of nonwithdrawing Members owning all of the outstanding PercentageInterests in the Company, or as otherwise provided for herein.

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(e) No Dissolution. A mere Transfer of a Member’s Membership Interest(or any portion thereof) does not result in dissolution of the Company.

9.5 Transfer by a Member. All Transfers of the Members’ Membership interestsmust be effected pursuant to the terms and conditions of the Buy-Sell Agreement.

9.6 Liens on Membership Interests. A Member may pledge or otherwiseencumber, directly or indirectly, in writing or otherwise, the Member’s Membership Interest onlywith the unanimous consent of all other Members and only if the lien holder agrees in writing that, inthe event the lien holder acquires title to such Member’s Membership Interest, it will be bound by theprovisions of this Agreement.

9.7 Restraining Order. In the event that any Member at any time Transfers orattempts to Transfer the Member’s Membership Interest in violation of the provisions of thisAgreement and any rights hereby granted, then the other Members and the Company will, in additionto all rights and remedies at law and in equity, be entitled to a decree or order restraining andenjoining such Transfer, and the offending Member will not plead in defense thereto that there wouldbe an adequate remedy at law; it being hereby expressly acknowledged and agreed that damages atlaw will be an inadequate remedy forth a breach or threatened breach of the violation of theprovisions concerning transfer set for in this Agreement.

ARTICLE 10

Dissolution

10.1 Events of Dissolution. The Company will dissolve and its affairs will bewound up upon the first to occur of the following:

(a) the approval or written consent of Members holding more than two-thirds of the Percentage Interests in the Company; or

(b) the sale, exchange or other disposition by the Company of all orsubstantially all of the Company’s assets.

10.2 Final Accounting. Upon the dissolution of the Company a proper accountingwill be made from the date of the last previous accounting to the date of dissolution.

10.3 Liquidation. Upon the dissolution of the Company, the Manager will act asliquidator to wind up the affairs of the Company. The liquidator will have full power and authorityto sell, assign and encumber any or all of the Company’s assets and to wind up and liquidate theaffairs of the Company in an orderly and business-like manner. All proceeds from liquidation will bedistributed in the following order of priority: (a) to the payment of the debts and liabilities of theCompany and expenses of liquidation, (b) to the setting up of such reserves as the liquidator mayreasonably deem necessary for any contingent liability of the Company, and (c) the balance to theMembers in accordance with the positive balance in each Member’s respective Capital Account.

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10.4 Distribution in Kind. If the liquidator determines that a portion of theCompany’s assets should be distributed in kind to the Members, the distribution will be madepursuant to Section 5.4.

10.5 Cancellation of Articles. Upon the completion of the distribution ofCompany assets as provided in Sections 10.3 and 10.4, the Company will be terminated and thePerson acting as liquidator will cause the cancellation of the Articles and will take such other actionsas may be necessary or appropriate to terminate the Company.

ARTICLE 11

Amendments To Agreements

Amendments to this Agreement that are of an inconsequential nature (as reasonablydetermined by the Manager) and do not affect the rights of the Members in any material respect, orthat are contemplated by this Agreement (including, without limitation, those contemplated byArticle 9) may be made by the Manager. Any other amendments must be made only upon theapproval or written consent of all the Members. The Manager will give written notice, in accordancewith Section 13.1, to all Members promptly after any amendment has become effective, other thanamendments solely for the purposes of the admission of new Members.

ARTICLE 12

Meetings Of Members

12.1 Meetings. Meetings of Members, for any purpose, may be called by theManager and must be called by the Manager upon receipt of a request in writing signed by theMembers holding at least 25% of the Percentage Interests of the Company. The request must statethe purpose or purposes of the proposed meeting and the business to be transacted. The meetingswill be held at the principal office of the Company, or at another place as may be designated by theManager. Notice of any meeting must be delivered to all Members in the manner prescribed inArticle 13 within 10 days after receipt of the request and not fewer than 15 days nor more than60 days before the date of the meeting. The notice must state the place, date, hour and purpose orpurposes of the meeting. At each meeting of the Members, the Members present or represented byproxy will adopt such rules for the conduct of such meeting as they deem appropriate. The expensesof any meeting, including the cost of providing notice thereof, will be borne by the Company.

12.2 Proxy. Each Member may authorize any person or persons to act for theMember by proxy in all matters in which a Member is entitled to participate. Every proxy must besigned by the Member or the Member’s attorney in fact. No proxy will be valid after the expirationof 6 months from its date. Every proxy will be revocable by the Member executing it.

12.3 Written Consents. Whenever Members are required or permitted to take anyaction by vote or at a meeting, that action may be taken without a meeting, without prior notice andwithout a vote, if a written consent setting forth the action so taken is signed by the Members whosePercentage Interests aggregate at least the minimum level that would be necessary to authorize or

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take the action by vote or at a meeting. Notice of any action so taken by written consent must begiven by the Manager to all Members who have not so consented, in the manner prescribed inArticle 13, promptly after the taking of the action.

12.4 Manner of Acting. The vote or written consent of Members holding morethan 50% of the Percentage Interests of the Company will be the act of the Members, unless the voteof a greater or lcsscr proportion or number is otherwise required by the Law, the Articles or thisAgreement.

ARTICLE 13

Notices

13.1 Method for Notices. Unless otherwise provided in this Agreement, any noticeto be given hereunder must be in writing and (a) delivered personally (to be effective when sodelivered), (b) mailed by Registered or Certified mail, return receipt requested (to be effective fourdays after the date it is mailed), (c) sent by Federal Express or other overnight courier service (to beeffective when received by the addressee) or (d) sent by facsimile transmission (to be effective uponreceipt by the sender of electronic confirmation of the delivery of the facsimile provided that a copyis mailed by way of one of the above methods), to the following addresses and telecopy numbers (orto such other addresses or telecopy numbers which any party designates in writing to the otherparties):

If to the Company:

HILL & MARKES REALTY, LLCAttn: Neal Packer, Manager120 Ed son StreetAmsterdam, New York 12010

With a copy to:

l-Iodgson Russ LLPAttn: Mario J. Papa, Esq.55 East Main Street, Suite 100Johnstown, New York 12095

If to the Members:

To the address set forth for each of them on Schedule I.

13.2 Routine Communications. Notwithstanding the provisions of Section 13.1,routine communications, such as distribution checks or financial statements of the Company, may besent by first-class mail, postage prepaid.

13.3 Computation of Time. In computing any period under this Agreement, theday of the act, event or default from which the designated period begins to run is not included. The

-19-

last day of the period so computed is included, unless it is a Saturday, Sunday or legal holiday, inwhich event the period runs until the end of the next day that is not a Saturday, Sunday or legalhot iday.

ARTICLE 14

General Provisions

14. 1 Entire Agreement. This Agreement, together with the Buy-Sell Agreement,constitutes the entire agreement among the parties with respect to the subject matter, and supersedesany prior agreement or understanding among the parties with respect to the subject matter.

14.2 Waiver. Except as provided otherwise in this Agreement, no rights of anyMember hereunder may be waived except by an instrument in writing signed by the party sought tobe charged with such waiver.

14.3 Governing Law. This Agreement will be construed in accordance with andgoverned by the laws of the State of New York, without giving effect to the provisions, policies orprinciples of those laws relating to choice or conflict of laws.

14.4 Binding Effect. Except as provided otherwise in this Agreement, thisAgreement is binding upon and inures to the benefit of the parties to it and of their respective legalrepresentatives, heirs, successors and assigns.

14.5 Counterparts. This Agreement may be executed either directly or by anattorney-in-fact, in any number of counterparts of the signature pages, each of which will beconsidered an original.

14.6 Facsimile or Electronic Exchange. Delivery of a copy of a signature byfacsimile transmission or other electronic exchange methodology will constitute a valid and bindingexecution and delivery of this Agreement by such party, and such electronic copy will constitute anenforceable original document.

14.7 Separability. Any provision that is prohibited or unenforceable in anyjurisdiction, as to such jurisdiction, will be ineffective to the extent of the prohibition orunenforceability, without invalidating the remaining portions or affecting the validity orenforceability of the provision in any other jurisdiction.

14.8 Headings. The section and other headings in this Agreement are for referencepurposes only and do not affect the meaning or interpretation.

14.9 Waiver of Partition. Each Member irrevocably waives, during the term of theCompany, any right that the Member may have to maintain any action for partition with respect toany Company property.

- 20 -

14.10 Construction. Whenever the singular number is used in this Agreement andwhen required by context, the same will include the plural and vice versa, and the masculine genderwill include the feminine and neuter genders and vice versa.

-21 -

SCHEDULE I

MEMBERS

MEMBER NAME AND ADDRESS CAPITAL CONTRIBUTION PERCENTAGE INTEREST

Neal Packer$___________ 25%

Facsimile:

Andrea Packer$__________ 25%

Facsimile:

Jeffrey Finkle$___________ 50%

Facsimile:______________________

100%

040698/00021 Business 7509lO2v2

EXHIBIT C

CERTIFICATE OF GOOD STANDINGRELATING TO THE COMPANY

C-i012178/00069 Business 7555334v1

State of New YorkDepartment of State } ss:

I hereby certify, that HILL & MARKES REALTY, LLC a NEW YORK LimitedLiability Company filed Articles of Organization pursuant to the LimitedLiability Company Law on 04/06/2010, and that the Limited LiabilityCompany is existing so far as shown by the records of the Department.

I further certify, that no other documents have been filed by suchLimited Liability Company.

Witness my hand and the official sealof the Department ofState at the CityofAlbany, this 11th day ofMaytwo thousand and ten.

Daniel ShapiroFirst Deputy Secretary of State

201005120111 AL

EXHIBIT D

RESOLUTION OF THE MEMBERS OF THE COMPANY

D-1012178/00069 Business 7555334v1

UNANIMOUS WRITTEN CONSENT OF MEMBERS

OF


‘[he undersigned, being all of the members (the “Members”) of Hill & Markes Realty, LLC (the“Company”), a New York limited liability company, hereby consent to the adoption of the followingresolutions and the taking of the following actions without a meeting:

WHEREAS, the Members desire to negotiate and secure certain credit facilities from RBS Citizens,N.A. (the “Lender”) consisting of a building loan in the amount of Eight Million Five Hundred Thousand and00/100 Dollars ($8,500,000.00) (the “Loan”);

WHEREAS, the Members deem it to be in the best interest of the Company to enter into and securethe Loan from the Lender; and

WHEREAS, the Members deem it to be in the best interest of the Company to grant to the Lender asecurity interest in the collateral set forth in the Loan Documents (as defined below) as security for the Loan.

NOW, THEREFORE, BE IT RESOLVED, that the form, terms and provisions of the proposedCredit Agreement to be entered into by and among the Lender, the Company and Hill & Markes, Inc., dated asof July 7, 2010 (the “Credit Agreement”), a copy of which has been presented to the Members, providing for,among other things, the Loan and for the granting of security by the Company for the Company’s obligationsunder the Credit Agreement, be, and they hereby are, in all respects ratified, confirmed and approved; and be itfurther

RESOLVED, that the form, terms arid provisions of the Building Loan Note (as such term is definedin the Credit Agreement) (the “NQc”), a copy of which was presented to the Members, which shall beexecuted and delivered by the Company to the Lender and shall bear interest thereon as more fully set forth inthe proposed form of the Note and the Credit Agreement, be, and the same hereby are, in all respects ratified,confirmed and approved; and be it further

RESOLVED, that the form, terms and provisions of the proposed Mortgage and Security Agreementby the Company and Montgomery County Industrial Development Agency in favor of the Lender(the “Mortgage”), be, and the same hereby is, in all respects ratified, confirmed and adopted; and be it further

RESOLVED, that the form, terms and provisions of all other Loan Documents (as defined in theCredit Agreement) to which the Company is a party (hereinafter, collectively, the “Loan Documents”), be, andthe same hereby are, in all respects ratified, confirmed and adopted; and be it further

RESOLVED, that the Manager, President, Chief Operating Officer, Vice President, Treasurer,Secretary, and ChiefFinancial Officer of the Company (each, the “Officer”, and collectively, the “Officers”)be, and each of them hereby is, individually authorized and directed in the name and on behalf of theCompany, and if requested or required under its corporate seal, duly attested by its Secretary, to negotiate,execute and deliver to the other parties thereto the Credit Agreement, the Note and the Mortgage and the LoanDocuments, with such changes in and additions to such terms, if any, as the Officer executing the same shallapprove, which approval thereofby the Members shall be conclusively evidenced by the execution thereof; andbe it further

040698/0002 Business 7577 109v4

RESOLVED, that the Officers of the Company be, and each of them hereby is, individuallyauthorized and directed in the name and on behalf of the Company, and if requested or required, tinder itscorporate seal, duly attested by the Secretary, to execute and deliver (and where necessary or appropriate to tilewith governmental and other authorities) all such disclosures of information and other statements and all suchother certificates, agreements, instruments and other documents, to make such payments, and to take all suchaction as any Officer may consider necessary or appropriate in order to carry out and effectuate the foregoingresolutions and the transactions contemplated thereby, which approval thereof by the Members shall beconclusively evidenced by the execution thereof; and be it further

RESOLVED, that the performance by the Company of the Loan Documents according to therespective terms thereof, and of the other documents and instruments referred to therein or executed anddelivered in connection therewith, be, and the same hereby are approved; and be it further

RESOLVED, that all actions heretofore taken by the Officers of the Company for the purpose ofcarrying out the transactions authorized by these resolutions be, and the same hereby are, in all respects,approved, ratified and confirmed.

2040698/00021 Business 7577 I 09v4

July, 2010.IN WITNESS WhEREOF, each o[’the undersigned has executed this consent as of theJday of

JeffreyFii’ ‘‘l

Andrea Packer, Member/-/

)/è,,

‘Jea1 Packer, Member

3O4Ob98OOO2 Business 7577 uQv3

EXHIBIT E

PENDING LITIGATIONAFFECTING THE COMPANY

-NONE-

012178/00069 Business 7555334v1

CLOSING ITEM NO.: C-2

AFFIDAVIT OF COMPANY

STATE OF NEW YORK ))Ss:

COUNTY OF ALBANY )

I, the undersigned, an Authorized Officer of Hill & Markes Realty, LLC (the “Company”), dohereby depose and state as follows:

1. Montgomery County Industrial Development Agency (the “Agency”) may rely on thecontents of this Affidavit in proceeding with the closing of its Hill & Markes Realty, LLC Project,consisting of: (A)(I) the acquisition of an interest in a 45.3+!- acre parcel of land (tax map parcelidentification number 54-2-2.1) and located on Highway 5S in the City of Amsterdam, Town of Florida,Montgomery County, New York (the “Land”), (2) the construction of two facilities on the Land: (a) anapproximately 100,000 square foot warehouse, and (b) an approximately 15,000 square foot officebuilding (both facilities being collectively referred to as the “Facility”), (3) the acquisition and installationof certain machinery and equipment therein and thereon (the “Equipment”) (the Land, the Facility and theEquipment hereinafter collectively referred to as the “Project Facility”), all of the foregoing to constitutenew warehousing and office facilities to support the growth of the Company’s supply business and relatedactivities; (B)the granting of certain “financial assistance” (within the meaning of Section 854(14) of theAct) with respect to the foregoing, including potential exemptions from sales and use taxes, real propertytransfer taxes, mortgage recording taxes and real estate taxes (collectively, the “Financial Assistance”);and (C)the lease of the Project Facility to the Company, pursuant to the terms of a lease agreement datedas of June 1, 2010 (the “Lease Agreement”) by and between the Agency and the Company.

2. On or about September 2, 2008, the Company delivered an application (the“Application”) to the Agency for consideration of the Project.

3. The scope of the Project has not otherwise varied significantly from the descriptionpublished in the Notice of Public Hearing attached hereto as Schedule A.

4. The total Project Costs, as of the date of this Affidavit, are estimated to be $12,127,083.

5. There has been no other significant change or variation in the Project from theinformation contained in the Application, except as set forth on Schedule B attached hereto and made apart hereof.

012178/00069 Business 7555360v1

IN WITNESS WHEREOF, the undersigned has set forth their hand as of the 7th day of July,2010.


BY,///&

kuthorized ember

Sworn to before me thisl dayof July, 2010.

bIic

MAEUQ J PAPANotary PuLjrn, I ew Y k

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-2-012178100069 Business 7555360v1

SCHEDULE A

NOTICE OF PUBLIC HEARING

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—

NO11CE OF PUBLIC HEARINGON PROPOSED PROJECTAND FINANCIAL ASSISTANCERELATiNG THERETONotice is hereby given that apublic hearing pursuant toSection 859-a(2) of the GeneralMunicipal Law of the State ofNew York (the “Act”) will be heldby Montgomery CountyIndustrial Development Agency(the Agency”) on the 21st dayof May, 2009 at 9:30 o’clocka.m., local time, at TownHall,1 67 Fort Hunter Road inthe Town- of Florida,Montgomery County, New York,in connection with the followingmatters:

.Hill &- Markes, Inc. (the“Company”) submitted an application (the “Application”) to theAgency, a copy of whichApplication is on file at the officeof the Agency, which Applicationrequested that the Agency con-

LEGALSsider undertaking a project (the“Project”) for the benefit of theCompany, said Project consisting of the following: (A) (1) theacquisition of an interest in aparcel of land consisting of aportion(s) of tax map parcel 54-2-2 and 54-1-7.12 and locatedon Highway 5S in the City ofAmsterdam, Town of Florida,Montgomery County, New York(the land”), (2) the construction of two facilities on the Land:(a) an approximately 100,000square foot warehouse, and (b)an approximately 15,000square foot office building (bothfacilities being collectivelyreferred to as the “Facility”), (3)the acquisition and installationof certain machinery and equipment therein and thereon (the“Equipment”) (the Land, theFacility and the Equipmenthereinafter collectively referredto as the “Project Facility”), all ofthe foregoing to constitute newwarehousing and office facilitiesto support the growth of theCompany’s supply businessand related activities; (B) thegranting of certain “financialassistance” (within the meaningof Section 854(14) of the Act)with respect to the foregoing,including potential exemptionsfrom certain sales and usetaxes, real property taxes, realestate transfer taxes and mortgage recording taxes (the“Financial Assistance”); and (C)the lease (with an obligation topurchase) or sale of the ProjectFacility to the Company or suchother person as may be designated by the Company andagreed upon by the Agency.The Agency is consideringwhether (A) to undertake theProject and (B) to provide certain exemptions from taxationwith respect to the Project,including (1) exemption from

LEGALSmortgage recording taxes withrespect to any documentsrecorded by the Agency withrespect to the Project in theoffice of the County Clerk ofMontgomery County, New Yorkor elsewhere, (2) exemptionfrom sales taxes relating to theacquisition, construction andinstallation of the ProjectFacility, (3) exemption fromdeed transfer taxes on any realestate transfers with respect tothe Project, and (4) exemptionfrom real property taxes (but notincluding special assessmentsand special ad valorem levies),subject to the obligation of theCompany to make payments inlieu of taxes with respect to theProject. It any portion of theFipancial Assistance to begranted by the Agency withrespect to the Project is notconsistent with the Agency’suniform tax exemption policy,the Agency will follow the procedures for deviation from suchpolicy set forth in Section874(4) of the Act prior to granting such portion of the FinancialAssistance.The Agency has not completedits environmental review of theProject. While the Agency hasnot yet made any determinations pursuant to Article 8 of theEnvironmental ConservationLaw (the “SEOR Act”) regardingthe potential environmentalimpact of the Project, theProject Facility will not beacquired, constructed andinstalled until the provisions ofthe SEOR Act have been satisfied, to the extent applicable.The Agency will at said time andplace hear all persons withviews on either the location andnature of the proposed ProjectFacility and the financial assistance being contemplated bythe Agency in connection with

LEGALSthe proposed Project. A copy ofthe application filed by theCompany with respect to theProject is available for publicinspection during normal business hours at the office of theAgency.Dated: April 20, 2009.MONTGOMERY COUNTYINDUSTRIAL DEVELOPMENTAGENCYBy: Is) William HisertChairmanAPR-58, 4/22 - -

SCHEDULE B

-NONE

B-I012178/00069 Business 7555360v1

Hill & Markes, Inc. &Hill & Markes Realty, LLC

AND

LOAN AGREEMENT

BETWEEN

MONTGOMERY COUNTY

July 7 2010

Table of Contents

Article I: Definitions Page 51.1 Definitions

Agreement Page 6

Article II: The Loan Page 72.1 The Loan2.2 The Note2.3 Prepayment2.4 Authority and Purpose2.5 The Closing2.6 Use of Loan Proceeds

Article Ill: Conditions of the Loan Page 93.1 Borrower Action3.2 Company Documents3.3 Other Project Financing3.4 Job Creation as Requirement

of Loan3.5 Other Matters

Article IV: Representations and Warranties of the Company Page 104.1 Good Standing, Authority and

Authorized Units of Membership4.2 Valid and Binding Obligation4.3 Good Title4.4 No Pending Litigation4.5 No Consent or Filing4.6 No Violation4.7 Compliance with Laws and

Regulations4.8 Financial Statements4.9 Accuracy of Documents4.10 Taxes4.11 Outstanding Obligations4.12 Possession of Special Rights

Article V: Affirmation Covenants Page 125.1 Payments

7

5.2 Future Financial Statements5.3 Notice5.4 Taxes5.5 Insurance5.6 Litigation5.7 “C” Company5.8 Records and Rights to Inspect5.9 Liens and Encumbrances5.10 Continue Business5.11 Upkeep of Property5.12 Remain in Montgomery County5.13 Job Creation5.14 Job Openings5.15 Employment Census5.16 Compliance with Federal Requirements5.17 Other Covenants5.18 Benefit Montgomery County5.19 OtherActs

Article VI: Negative Covenants Page 176.1 Encumbrances6.2 Sale of Assets6.3 Mergers

Article VII: Representations and Warranties of Montgomery Page 18County7.1 Compliance with Laws and

Regulations7.2 Authority7.3 Approvals

Article VIII: Default Page 188.1 Events of Default8.2 Effects of an Event of Default

Article IX: Expenses Page 20

Article X: Miscellaneous Page 2010.1 Site Visits & Inspection of Books

3

10.2 Amendments, Modificationsand Waivers

10.3 Delays and Omissions10.4 Assignability10.5 No Agency Relationship10.6 Materiality10.7 Successors and Assigns10.8 Notices10.9 Governing Law10.10 Inconsistent Provisions10.11 Confidentiality10.12 Entire Agreement

Exhibit A: Promissory Note Page 25

Exhibit B: Security Agreement Page 28

Exhibit C: Personal Guaranty — Jeffrey 0. Finkle Page 35

Exhibit D: Personal Guaranty — Neal A. Packer Page 38

Exhibit E: Personal Guaranty — Andrea M. Packer Page 41

Exhibit F: Receipt of Loan Proceeds Page 44

Exhibit G: Use of Proceeds Page 45

Exhibit H. Company Evidentiary Documents Page 46

Exhibit I: Insurance Certificates Page 47

Schedule 1: Other Project Financing Required Page 48

Schedule 2: Interim Financing Page 49

Schedule 3: Liens and Encumbrances Page 50

Schedule 4: Pending Litigation Page 51

Schedule 5: Job Creation Page 52

4

ARTICLE I - Definitions1.1 Definitions: For the purpose of this Agreement, the following wordsand terms shall have the respective meanings set forth as follows:

“Agreement” means this Loan and Security Agreement.

“Business Day” means any day other than a Saturday, Sunday or public holiday in the State of NewYork or day upon which the banks in the County of Montgomery, State of New York areauthorized or ordered to remain closed.

-

“Collateral” means 3rd position on the UCC filing of the Real Estate at the current location, 120Edson Street, Amsterdam, NY, the real estate of the newly constructed facility located at1975 State Highway 5S, Town of Florida, NY and all other assets associated with eachfacility, with a value of at least $500,000.00.

“Recipient” means the County of Montgomery a municipal corporation and subdivision of the Stateof New York.

“Borrower” means Hill & Markes, Inc. and Hill & Markes Realty, LLC Company’s organized underthe laws of the State of New York State, with a future address of 1975 State Highway 5S,Amsterdam, NY 12010

“Event of Default” means the occurrence of any of the events listed in Section 8.1 hereof.

“HUD” means the United States Department of Housing and Urban Dvlpmt.

“HUD Grant” means that certain grant B-94-DH-36-0095, B-95-DH-36-0089 designated as theSmall Cities Community Development Block Grant Program and Program Income derivedthrough these grants.

“HUD Grant Agreement” means that certain agreement between the recipient and HUD settingforth the temis and conditions upon which the HUD Grant is awarded and providing for thedisbursement of the proceeds of the HUD Grant.

“Loan” means the loan made by the County to the Borrower pursuant to this Agreement, in theprincipal sum not to exceed Five Hundred Thousand dollars ($500,000.00)

“Proiect” means the use of funds in connection with a project that includes the acquisition of land,the development of an approximately 120,000 square ft office/distribution center, andreimbursement of the Company for any costs associated with such project that will belocated at 1975 State Highway 5S, Amsterdam, New York described in Exhibit G (Use ofProceeds) annexed hereto.

“County” means the County of Montgomery, a municipal corporation, established by and the Law ofthe State of New York.

“Related Documents” shall mean the Promissory Note(s), Security Agreement, executed pursuantto this Loan Agreement.

5

AGREEMENT

This Agreement made this the

_____

day of July, 2010 by and betweenHill & Markes, Inc. & Hill & Markes Realty, LLC, having its current businessoperations located at 120 Edson Street, Amsterdam, County of Montgomery andState of New York, (the “Borrower”) and MONTGOMERY COUNTY, having itsprincipal offices at PC Box 1500, Annex Building, Fonda, New York 12068 (theLender).

WITNESSETH:

WHEREAS, the County of Montgomery, New York (the “Recipient”) hasheretofore made application to the United States Department of Housing andUrban Development (“HUD”) for a grant under Title I of the Housing andCommunity Development Act of 1974 (Public Law 93-383), as amended, throughthe Small Cities Community Development Block Grant Program (the “HUDGrant”); and

WHEREAS, such application has been duly accepted pursuant to conditions byHUD and a HUD Grant was awarded to the Recipient; and

WHEREAS, the purpose of the HUD Grant is to provide loan funds for assistingbusinesses within Montgomery County to expand operations and thereforecreate new jobs or retaining existing employment, and

WHEREAS, the Borrower can create new jobs through the acquisition of land,the development of a new approximately 120,000 sq foot officer/distributioncenter, and reimbursement of the Company for all costs associated with suchproject, which will be located at 1975 State Highway 5S, Amsterdam, NYMontgomery County, and

WHEREAS, pursuant to Article 5, Section 99-h of the General Municipal Law ofthe State of New York, the Recipient has the power to accept and expend fundsmade available by the Federal Government to administer and conduct programswith such federal assistance related to the general welfare of inhabitants of theRecipient, where the County has received approval of its program as required bylaw; and

WHEREAS, the County wishes to enter into this Loan Agreement (“Agreement”)between the County and the Borrower for purposes of lending a portion of theproceeds of the HUD Grant Program Income to the Borrower and providing forthe repayment thereof and security therefore all on the terms and conditions setforth herein;

6

NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THISAGREEMENT WITNESSETH:

That the Borrower, in consideration of the loan made by the County pursuant tothis Agreement (the “Loan”) and for other good and valuable consideration, thereceipt of which is hereby acknowledged, and in order to secure the payment ofthe principal of and interest on the Loan and the performance and observance bythe Borrower of all covenants expressed herein, does hereby grant, bargain, sell,convey, transfer, mortgage, grant a security interest in, pledge and assign untothe County for the securing of the performance of the obligations of the Borrowerhereinafter set forth, the following:

A 3rd Security Interest held by Montgomery County Industrial DevelopmentAgency, who administers the CDBG fund, on the “Collateral” which isproperty of the Borrower, and described in Article II, The Loan, Section 2.6(Exhibit G) and subject to the lien and security interest of this Agreementas stated in attached hereto in Exhibit B Security Agreement, together withall improvements thereon.

NOW, THEREFORE, in consideration of the representations and agreementshereinafter contained, the parties hereto agree as follows:

ARTICLE II — The Loan

2.1 The Loan. The County agrees, on the terms and conditions andrelying upon the representations and warranties set forth in this Agreement tolend the Borrower and the Borrower agrees to borrow from the County, the sumof Five Hundred Thousand and No/i 00 Dollars ($500,000.00) on the date of theclosing of this Agreement (the “Loan”).

2.2 The Note. The Loan shall be evidenced by a promissory note ofthe Borrower, in form of Exhibit “A” (the “Note”) annexed hereto and made a parthereof and payable to MONTGOMERY COUNTY in 120 equal monthlyinstallments of principal and interest at a fixed rate of 3.25% as more particularlyset forth in the Note. Repayment of the Loan shall commence one month fromthe date of the execution and delivery of the Note.

2.3 Prepayment. The Borrower may prepay the principal amount duein whole or in part prior to maturity on any monthly installment payment date ofthis note without penalty.

2.4 Authority and Purpose. County, by Resolution 87-2010 at a dulycommenced meeting of The County Board of Supervisors on March 23, 2010

7

approved and authorized the granting of this loan. The purpose of thisloan is to assist the Company with payment and reimbursement of costsassociated with the acquisition of land and the development of a newapproximately 120,000 sq foot office/warehouse building, and costsassociated with such acquisition and development, to be located in theFlorida Park Ext, 1975 State Highway 5S, Town of Florida, MontgomeryCounty. The Loan will be secured with a third position on the UCC Filingof the “Collateral”, which is located at the same and the current place ofbusiness 120 Edson Street, Amsterdam NY and all other assetsassociated with such real estate. The Borrower’s anticipates the creationof 30 new, full time equivalent (FTE) positions at this location over the nextthree years with a minimum of fifty-one (51%) of those new jobs to be forlow and moderate income persons as described in SCHEDULE 5 attachedhereto.

2.5 The Closing. At the closing of the Loan:

(a) The Borrower shall execute and deliver to County: one (1)executed copy of the Note (the Note, annexed hereto as Exhibit “A (2) executedcopy of a Security Agreement to which MONTGOMERY COUNTY has a securedinterest in the Collateral (the UCC Financing Statement annexed hereto asExhibit “B”) and (3) executed copy of the personal guarantee of Jeffrey D. Finkle,Neal A. Packer and Andrea M. Packer (the “Guaranty” annexed hereto as Exhibit“C”, “D” & “E”). The Agreements are collectively hereinafter referred to as the“Collateral Documents”. The Borrower shall also execute and deliver, in formand content satisfactory to Montgomery County, the documents required of theBorrower pursuant to Sections 3.1, 3.2, 3.3, and 3.4 hereof.

(b) Montgomery County shall deliver to the Borrower copies ofthe resolution referred to in Section 2.4 hereof and shall disburse funds in acheck drawn on a New York State bank in the amount not to exceed FiveHundred Thousand and No/i 00 Dollars ($500,000.00), made payable to Hill &Markes Realty, LLC and Hill & Markes, Inc., in accordance with the conditions setforth in Exhibit G. Montgomery County shall receive from the Borrower a receiptexecuted by an officer of, Hill & Markes, Inc. & Hill & Markes Realty, LLCacknowledging the Borrower’s receipt of the proceeds of this Loan, upondisbursement. (The “Receipt of Loan Proceeds,” annexed hereto as Exhibit “F”).

Upon completion of the above transactions, the Closing of the Loan shallbe deemed to have occurred.

2.6 Use of Loan Proceeds. The proceeds of the Loan shall be usedspecifically towards the “Collateral” located at 1975 State Highway 5S, Town ofFlorida, NY, secured with the same “Collateral” as indicated in Exhibit “G” — “Useof Proceeds” attached hereto.

8

ARTICLE Ill — Conditions of the Loan

Montgomery County’s agreement to loan the sum described in thisAgreement shall be effective only upon fulfillment by the Borrower of thefollowing conditions at or prior to the date of the Closing.

3.1 Borrower Action. The Borrower shall have taken all necessary andappropriate action for Hill & Markes, Inc. and Hill & Markes Realty, LLC (theCompany) and Principals of the Company shall have adopted resolutionsauthorizing the Loan, the execution and delivery of this Agreement, the Note, andthe Collateral Documents, and the taking of all action required of the Companyby this Agreement; and the Company shall have furnished to MontgomeryCounty certified copies of such company resolutions and such other companydocuments as the County shall reasonably request.

3.2 Company Documents. There shall have been furnished to theCounty photocopies of

(a) Certified copy of the Certificate of Organization,And, as requested by the County at its option, Borrower shall

supply, prior to closing,(b) Certificate of the Company’s good standing duly issued of

recent date by the Secretary of the State of New York,(c) Certificate of Incumbency specifying the members of the

Company, together with their specimen signatures and(d) All other company documents which Montgomery County has

requested in form and content satisfactory to the County andits counsel (Exhibit “H” — Company Evidentiary Documents).

3.3 Other Proiect Financing. The Company (i) shall have completed allother financing arrangements as required and more particularly described inSchedule 1, (‘Other required Financing”) attached hereto, such financingarrangements to be in full force and effect; and (ii) Borrower shall have furnishedto the County evidence of the same.

3.4 Job Creation as Requirement of Loan. The Company shall provideMontgomery County with documentation, as hereinafter prescribed in Section5.13, evidencing jobs that are retained and newly created as a result of theProject: and shall list new job opportunities with the Private Industry Council, theNew York State Employment Service or similar job placement agencies.

3.5 Other Matters. All matters incidental to the execution and deliveryof this Agreement, the Note, and the Collateral Documents, and all actionrequired by this Agreement, shall be satisfactory to Montgomery County and toits counsel.

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ARTICLE IV — Representations and Warranties of the Company

The Company makes the following representations and warranties, whichshall be deemed to be continuing representations and warranties so long as anyindebtedness to Montgomery County of the Company, including indebtedness forfees and expenses, remains unpaid:

4.1 Good Standing, Authority and Authorized Units of Membership.The Company is a “Incorporated” Company, duly organized, validly existing, andin good standing under the laws of the State of New York, has powers andauthority to transact the business in which it is engaged, is duly licensed orqualified and is in good standing in each jurisdiction in which the conduct of suchbusiness requires such licensing or such qualification; and has all necessarypower and authority to enter into this Agreement, the Note, the CollateralDocuments, as the case may be, and any other document executed inconnection with this Agreement, all of which have been duly authorized by allproper and necessary Company and Member action or action similarly requiredunder NYS Laws governing “INC-CORPORATED” Company.

4.2 Valid and Binding Obligation. This Agreement, the CollateralDocuments and any other document executed in connection herewith, and theNote when executed and delivered, will constitute the legal, valid and bindingobligations of the Company, enforceable in accordance with their respectiveterms.

4.3 Good Title. The Company has good and marketable title to all ofits property and assets reflected in the financial statements described herein, notsubject to any mortgage, indenture, pledge, lien, conditional sale contract,security interest, encumbrance, claim, trust or charge, except as disclosed insuch financial statements, in the notes to such financial statements or onSchedule 3 (Liens and Encumbrances”) attached hereto.

4.4 No Pending Litigation. Except as disclosed in Schedule 4(“Pending Litigation”), there are no actions, suits, proceedings (whether or notpurportedly on behalf of the Company or investigations pending or, to theknowledge of the Company, threatened against the Company or any basistherefore, which if adversely determined, would, in any case or in the aggregate,materially adversely affect the property, assets of the Company to carry on itsoperations substantially as now conducted or anticipated to be conducted in thefuture, or which questions the validity of this Agreement, or any action to betaxed pursuant to any of the foregoing.

4.5 No Consent or Filing. No consent, license, approval orauthorization of, or registration, declaration or filing with, any court, governmentbody or authority or other person or entity is required in connection with the valid

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execution, delivery or performance of this Agreement, the Note, the CollateralDocuments or other documents required by the is Agreement or in connectionwith any of the transactions contemplated thereby, other than filings andrecordings in connection with the Collateral Documents.

4.6 No Violations. Except as disclosed in the financial statements or asotherwise described herein, the Company is not in violation of any material termof its certificate of organization or operating agreement, or of any mortgage,borrowing agreement or other instrument or agreement pertaining toindebtedness for borrowed money. The Company is not in violation of any termof any other indebtedness, instrument, or agreement to which it is a party of, butwhich it may be bound, resulting, or which might reasonably be expected toresult, in a material and adverse effect upon its business or assets; and theCompany is not in violation of any order, writ, judgment, injunction or decree ofany court of competent jurisdiction or of any statute, rule or regulation or anycompetent governmental authority.

The execution and delivery of this Agreement, the Note, the CollateralDocuments and other documents required by this Agreement and theperformance of all the same are and will be in compliance with the foregoing andwill not result in any violation or result in the creation of any mortgage, lien,security interest, or charge or encumbrance upon any property or assets exceptin favor of Montgomery County. To the best knowledge of the Company thereexist no facts or circumstances not disclosed in this Agreement or in thedocuments furnished in connection herewith which materially adversely affect, orso far as the Company can foresee, may materially adversely affect thecondition, business or operations of the Company.

4.7 Compliance with Laws and Regulations. The Company is familiarwith the applicable material conditions, restrictions, reservations and zoningordinances affecting its property and assets; and to the best of its knowledge, theuse of its property and assets will, in all respects, conform to and comply, in allmaterial respects, with all requirements of such conditions, restrictions,reservations and zoning ordinances; and such use will comply, in all materialrespects, with all rules, regulations and requirements of all governmentalagencies having jurisdiction.

4.8 Financial Statements. All financial statements heretofore given andhereafter to be given to the Montgomery County in connection with thisAgreement, as set forth in Section 5.2 hereafter, are and will be true andcomplete in all respects as of their respective dates and prepared in accordancewith generally accepted accounting principles consistently applied, and fairlypresent the financial conditions of the business or person to which they pertain,and no materially adverse change has occurred in the financial conditionsreflected therein since the respective dates, thereof.

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4.9 Accuracy of Documents. To the best knowledge of the Company,all documents furnished to Montgomery County by or on behalf of the Companyas part of or in support of the Company’s loan application are true, correct andcomplete, and accurately represent the matters to which they pertain.

4.10 Taxes. Except as disclosed in Schedule 3 attached hereto, theCompany has duly paid and discharged all current and past taxes, assessmentsand other governmental charges and has made all required withholding andother tax deposits.

4.11 Outstanding Obligations. The Company is current in its payment ofall outstanding obligations, which it has incurred and has discharged suchobligations as have become due.

4.12 Possession of Special Rights. The Company possesses allnecessary patents, trademarks, trade names, copyrights and licenses to carry onits business as now conducted without known conflict with the valid patents,trademarks, trade names, copyrights and license of others.

ARTICLE V. — Affirmative Covenants

During the term of this Agreement, and so long thereafter as anyindebtedness of the Company to Montgomery County, including anyindebtedness for fees and expenses, shall remain unpaid, the Company will:

5.1 Payments: Duly and punctually pay the principal of and interest onall indebtedness incurred by it pursuant to this Agreement in the manner set forthin this Agreement according to the true intent and meaning hereof, and will payall other outstanding obligations which the Company has incurred or will incur asthey become due.

5.2 Future Financial Statements. Furnish to the Montgomery County:

(a) Within 120 days after the end of the fiscal year, a reviewed oraudited financial statement of the Company as of the end of such year, whichstatement shall consist of a balance sheet, a profit and loss statement, cash flowstatement covering the period from the end of the Company’s immediatelypreceding fiscal year to the end of such year, prepared by certified publicaccountants, together with certificate of a Member or chief fiscal officer of theCompany, stating that:

(i) the Company has complied with and is in compliance wlth allterms, covenants and conditions of thisAgreement, which are binding upon it;

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(ii) there exists no Event of Default as defined in this Agreementand no event which with the giving ofnotice or lapse of time, or both, wouldconstitute such an Event of Default or, ifthis is not the case, that one or morespecified Events of Default haveoccurred and are defined;

(iii) the representations and warranties contained in Article IV ofthis Agreement are true with the sameeffect as though made on the date ofsuch certificate (the “ComplianceCertificate”); and

(b) on or before the forty-fifth(45th) day of each quarter, copies ofbalance sheet, income and cash flow statements prepared by the Company forthe prior quarter shall be provided by the Borrower to Montgomery County’s dulyauthorized representative who shall keep all such furnished documentsconfidential except to provide the same to Montgomery County Officers on aneed-to-know basis.

5.3 Notice. Promptly notify Montgomery County in writing of:

(a) Any pending or future audits of the Company’s federal incometax returns by the Internal Revenue Services as soon as the Company hasknowledge thereof, and the results of each such audit after its completion;

(b) Any default by the Company in the performance of, or anymodifications of, any of the terms or conditions contained in any agreement,mortgage, indenture or instrument to which the Company has executed in regardto payment of its indebtedness; provided, however, the Company shall not berequired to so notify Montgomery County of modifications of any or all terms orprovisions of any document or agreement concerning its transactions in theordinary course of business not pertaining to its indebtedness for borrowedmoney, which do not materially and adversely affect the business or assets of theCompany.

5.4 Taxes. Promptly pay and discharge all of its taxes, assessmentsand other governmental charges prior to the date on which penalties areattached thereto, establish adequate reserves for the payment of taxes andassessments, and make all required withholding and other tax deposits.

5.5 Insurance. The Company shall:

(a) Keep all its property and all additional collateral pledgedherewith insured at all times with responsible insurance carriers against fire, theft

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and other risks in coverage, form and amount satisfactory to MontgomeryCounty.

(b) Promptly deliver to Montgomery County through its dulyauthorized representative, certificates of insurance or insurance policies requiredto be carried by the Company pursuant hereto, with appropriate endorsementdesignating Montgomery County as loss payee, as its interest may appear, asrequested by the County.

(c) Cause each such insurance policy to contain a minimum of ten(10) day notice of cancellation provision satisfactory to Montgomery County, and

(d) Deliver to Montgomery County through its duly authorizedrepresentative, on or before closing, Certificates of such insurance, to beattached as Exhibit “I”, “Insurance Certificates,” to this Agreement.

5.6 Litigation. Promptly notify Montgomery County through its dulyauthorized representative, in writing as soon as the Company has knowledgethereof, of the institution or filing of any litigation, action, suit, claim, counterclaim,or administrative proceeding against, or investigation of, the Company:

(a) to which the Company is a party by or before regulatory body orgovernmental agency; and/or

(b) the outcome of which may materially and adversely affect thefinances or operations of the Company or the Company’s ability to fulfill itsobligations hereunder or which questions the validity of this Agreement, the Note,or the Collateral Documents, or any action taken or to be taken pursuant to theforegoing; and furnish or cause to be furnished to Montgomery County suchinformation regarding the same as the County may reasonably request.

5.7 “LLC” Company. Maintain its LLC Company existence in goodstanding, and remain or become duly licensed or qualified and in good standingin each jurisdiction in which the conduct of its business requires suchqualification or licensing.

5.8 Records and Rights to Inspect. Keep and maintain proper books,records and other documents in accordance with generally accepted accountingprincipals consistently applied; permit a representative of Montgomery County orits duly appointed representative or agent, during regular business hours andupon reasonable prior written notice, to have access to and the right to inspect,copy, audit and examine, all such books and records and other documents of theCompany; and notify the County promptly in writing of any proposed change inlocation from Montgomery County at which site such books, records and otherdocuments are or will be maintained.

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5.9 Liens and Encumbrances. Keep the “Collateral” free from all liensand encumbrances except those contemplated by this Agreement or shown inSchedule 2 hereto; and discharge immediately by bond or otherwise, or makeother arrangements acceptable to Montgomery County with respect to anymechanic’s or other lien filed against the “Collateral” arising out of a good faithdispute between the Company and the person or entity filing such lien.

5.10 Continue Business. Engage in the business conducted by it on thedate of this Agreement and/or other business related thereto.

5.11 Upkeep of Property. Maintain the Company’s property and assetsin good repair.

5.12 Remain in Montgomery County. Keep its principal place ofbusiness and its operations in Montgomery County, New York. The Company’sprincipal place of business shall be deemed to have remained in MontgomeryCounty so long as the Company maintains a greater number of employees withinMontgomery County than in any other single location where the Company mayfrom time to time establish an office or conduct business. Independentcontractors and company officers employed by the Company outside ofMontgomery County shall not be counted as employees.

5.13 Job Creation. The Company shall make every reasonable effort tocause to retain 141 Full Time Equivalent (FTE) positions and create a minimumof 8 new FTE’s positions located at 1975 State Highway 5S, Town of Florida, NY,Montgomery County, New York during its first year of operations in accordancewith the requirements as set forth in Schedule 5, “Job Creation.” The Companyagrees to retain those 149 positions and operate with 11 new FTE positions bythe end of its 2nd year of operations and retain those 160 and create 11 morenew FTE positions at this location by the end of its third year of operations for atotal of 30 new positions over the next three years and a retain a total of 171FTE’s. The Company will supply Montgomery County with a report of job creationon a semi-annual basis. Actual job creation documentation will be in a formprescribed by Montgomery County attached hereto as an addendum to saidSchedule 5.

5.14 Job Openings. The Company shall list all new job opportunitieswith the Workforce Solutions Center of Fulton, Montgomery and SchoharieCounties, the New York State Employment service, and/or similar job placementagencies.

5.15 Employment Census. The Company shall permit MontgomeryCounty, during regular business hours and upon reasonable prior written notice,to inspect such Employment listings and, if reasonably required, to verify saidlistings against the Company’s payroll records, not including any informationregarding any Company employee’s compensation. The Company shall be

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under no obligation to disclose the individual or household income of anyCompany employee for any period after such employee’s date of hire by theCompany to Montgomery County or any other party as a result of the Loan, thisAgreement, the Collateral Documents, or otherwise.

5.16 Compliance with Federal Requirements. The Company shallcomply with all of the following requirements:

(a) All requirements imposed by Title VI of the Civil Rights Act of1964 (Public Law 88-352) and Section 109 of the Housing and CommunityDevelopment Act of 1974, as amended, and the regulations related to equalopportunity (24 CFR, Part 570.601). No person in the United States shall, on thegrounds of race, color, creed, religion or national origin or sex, be excluded fromparticipation in, be denied the benefits of, or be subjected to discrimination underany project assisted with Community Development Block Grant funds.

(b) The flood insurance purchase requirements of Section 102(a) ofthe Flood Disaster Protection Act of 1973 (Public law 93-234).

(c) The provisions of the Americans with Disabilities Act of 1990, asamended.

(d) The labor standards requirements as set forth in 24 CFR,570.605. Employees on construction jobs assisted with Federal funds must bepaid the prevailing Federal wage rates.

(e) Section 504 of the Rehabilitation Act of 1973 (Public Law 93-112), as amended and implementing regulations. No person (employee orapplicant for employment) shall be discriminated against because of a physical ormental disability with regard to any position for which the employee or applicantis qualified.

(f) The provisions of the Age Discrimination Act of 1975, asamended (Public Law 94-135).

(g) Requests from HUD, Montgomery County and the ComptrollerGeneral (or any authorized representatives) for access to and the right toexamine all records, books, papers of documents related to the grant andcooperate fully with the County in supplying information to meet Federal auditrequirements.

5.17 Other Covenants. The Company further agrees to:

(a) Work cooperatively with Montgomery County in carrying out theprocedures for hiring employees under this Loan Agreement.

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(b) Cooperate fully in supplying Montgomery County withinformation on the project needed to prepare any progress reports andPerformance Assessment Reports (PARs) required as may be.

(c) Grant representatives from Montgomery County, TheCommunity Development Block Grant Program or HUD access to the site at allreasonable times, upon reasonable notice to the Company.

(d) Supply documentation in the format determined by MontgomeryCounty to verify project-related costs.

(e) Use its best efforts to attain the employment projectionscontained in the loan application, and as described in Schedule 5.

5.18 Benefit Montciomerv County. The Company agrees to use theproceeds of the loan in such a manner that the economic benefits resulting fromthe expenditure of these loan proceeds shall accrue to Montgomery County andNew York State, which benefits may be demonstrated through audited orreviewed financial statements and job creation documentation as set forth above.

5.19 Other Acts. Execute and deliver, or cause to be executed anddelivered, to Montgomery County all further documents and perform all other actswhich the County deems necessary or appropriate to protect or perfect itssecurity interest in any property directly or indirectly securing payment of anyindebtedness of the Company to the County.

ARTICLE VI. — Negative Covenants

During the term of this Agreement and so long thereafter as anyindebtedness of the Company to Montgomery County, including anyindebtedness for fees and expenses, shall remain unpaid, the Company, withoutthe prior written consent of MONTGOMERY COUNTY (which consent shall notbe unreasonably withheld or delayed) will not:

6.1 Encumbrances. Create, incur, assume or suffer to exist anymortgage, lien, security interest, pledge or otherwise encumber the “Collateral”,as indicated in Exhibit G except in favor of Montgomery County as provided forherein or as indicated on Schedule 3, “Liens and Encumbrances” attachedhereto.

6.2 Sale of Assets. Convey, sell, transfer, lease or sell back all or anyassets acquired from proceeds of the Montgomery County Loan or held ascollateral for the Montgomery County Loan.

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6.3 Merciers. Merge or consolidate with or into any other firm orcorporation, or change the status of the Company in any manner, which wouldsubstantially change the nature, or control of the corporation.

ARTICLE VII. — Representations and WarrantiesOf Montgomery County

Montgomery County represents and warrants to the Company that as ofthe date of the Closing:

7.1 Compliance with Laws and Reciulations. Montgomery County hasreviewed this Agreement, the Note and the Collateral Documents and hasdetermined that the provisions thereof, including but not limited to the Use ofProceeds, Other Financing, the adequacy of the Collateral and the provisionsregarding the transfer thereof, and the Affirmative and Negative Covenants of theCompany, comply with all laws and regulations, whether Federal, State or localregarding transactions of the nature contemplated therein.

7.2 Authority. Montgomery County has full legal right, power andauthority to enter into this Agreement and to execute and deliver this Agreementand the Collateral Documents, where applicable and upon such execution anddelivery of this Agreement and the Collateral Documents, where applicable.

7.3 Approvals. Montgomery County has received all necessaryapprovals and authorizations, passed all necessary resolutions, and otherwiseperformed all acts and done all things necessary for the proper execution anddelivery of this Loan Agreement and the Collateral Documents.

ARTICLE VIII. — Default

8.1 Events of Default. The occurrence of any one or more of thefollowing events shall constitute an event of default (individually, “Event ofDefault”, or collectively, “Events of Default”):

(a) Nonpayment. Nonpayment of any payment due under thisAgreement within ten (10) full business days after written notification of suchnonpayment to the Company by MONTGOMERY COUNTY.

(b) Chanie of Location. Move the location of the Company fromMontgomery County, New York.

(c) Covenants. Failure by the Company to comply with any of thecovenants contained in this Agreement within thirty (30) business days after

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receipt by the Company of written notification of breach of such covenant byMONTGOMERY COUNTY.

(d) Insolvency Proceedings.

(i) The filing by or against the Company of a petition forliquidation, reorganization, adjudicationas a bankrupt, relief as a debtor orsimilar relief under the bankruptcy, oracceleration of any other indebtednessin excess of 5,000.00, insolvency orsimilar laws of the United States or anystate or territory thereof of any foreignjurisdiction, now or hereafter in effect ifsuch filing is not removed norenforcement stayed within thirty (30)days;

(ii) The appointment of the Company, including, without limitation,making of any general assignment bythe Company for the benefit of creditors;

(iii) The appointment of the Company, including, without limitation,the appointment of or taking possessionby a “custodian” as defined in theFederal Bankruptcy Code;

(iv) The institution by or against the Company of any other type ofinsolvency proceeding (under theFederal Bankruptcy Code, or otherwise)or of any formal or informal proceedingsfor the dissolution or liquidation of,settlement of claims against or windingup of affairs of the Company, if suchproceedings are not stayed or removedwithin thirty (30) days;

(v) In the event of the destruction or condemnation of theCompany’s premises.

(e) Warranty Covenants. If any warranty covenant furnished by oron behalf of the Company pursuant to, or in connection with this Agreementincluding, without limitation, representations and warranties contained herein; oras an inducement to Montgomery County to enter into this Agreement or anyother lending agreement with the Company shall prove to have been false in any

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material respect at the time at which the facts therein set forth were certified, orto have omitted any substantial contingent or unhiquidated liability or claimagainst the Company, or if on the date of the execution of this Agreement thereshall have been any material adverse change in any of the facts disclosed by theCompany to MONTGOMERY COUNTY at or prior to the time of such execution.

8.2 Effects of an Event of Default. Upon the happening of one or moreEvents of Default, MONTGOMERY COUNTY may:

(a) Declare the principal then outstanding on the Note to beimmediately due and payable, together with all interest thereon and fees andexpenses accwing under this Agreement; or

(b) Adjust the applicable interest rate to the then current prime rateas published in The Wall Street Journal plus one percentage point (1 %) on thedate of MONTGOMERY COUNTY’s election, for the remainder of the term of theLoan. Upon such election, the Note then outstanding shall become immediatelydue and payable or modified upon presentation and demand to the Company inaccordance with the terms of said Note.

ARTICLE IX. - Expenses

The Company shall reimburse MONTGOMERY COUNTY promptly forfiling fees and recording fees incurred in connection with this Agreement and withany indebtedness subject thereto, for any taxes which MONTGOMERY COUNTYmay be required to pay in connection with the execution and delivery of thisAgreement and the Note, and for any reasonable expenses, including reasonablecounsel fees, incident to the enforcement of any provisions of this Agreement,the Note, Guaranty or the Collateral Documents.

ARTICLE X. - Miscellaneous

10.1 Site Visits, lnsnection of Books. Company shall permit HUD andMONTGOMERY COUNTY representatives access to and to examine, duringregular hours, and upon reasonable prior written notice, the Company’sproperties, minute books, books of account and financial records, job creationrecords and other pertinent business records, as they pertain to the expenditureof funds from HUD and MONTGOMERY COUNTY program funds or matchingfinancing for this project.

10.2 Amendments, Modifications and Waivers. No modification,rescission, waiver, release or amendment of any provision of this Agreement, theNote, or the Collateral Documents and other Collateral shall be made except by a

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written agreement subscribed by duly authorized officers of the Company and ofMontgomery County.

This Agreement may be modified as to the amount of funds borrowed andthe use of proceeds upon submission of an application for modification by theCompany to MONTGOMERY COUNTY unless such modifications aresubstantially different from the Application. In that instance, HUD shall preapprove such modification.

10.3 Delays and Omissions. No course of dealing and no delay oromission by MONTGOMERY COUNTY in exercising any rights or remedyhereunder or with respect to any indebtedness of the Company toMONTGOMERY COUNTY shall operate as a waiver thereof or of any other rightor remedy, and no single or partial exercise thereof shall preclude any other orfurther exercise thereof of the exercise of any other right or remedy.MONTGOMERY COUNTY may remedy any default by the Company hereunderor with respect to any other person, form or corporation in any reasonablemanner without waiving the default remedies and without any other prior orsubsequent default by the Company and shall be reimbursed for its expense inso remedying such default. All rights and remedies of MONTGOMERY COUNTYhereunder are cumulative.

10.4 Assignability. Neither this Agreement, nor any rights or obligationshereunder are assigned by the Company, without the prior express writtenconsent of MONTGOMERY COUNTY. The rights of MONTGOMERY COUNTYunder this Agreement are assigned in part or wholly, and any assignee ofMONTGOMERY COUNTY shall succeed to and be possessed of the rights ofMONTGOMERY COUNTY hereunder to the extent of the assignment made,including the right to make advances to the Company or any approved assigneeof the Company in accordance with this Agreement.

10.5 No Agency Relationship. MONTGOMERY COUNTY is not theagent or representative of the Company and this Agreement shall not makeMONTGOMERY COUNTY liable to material men, contractors, craftsmen,laborers, or others for goods delivered to or services performed by them upon theProperty, or for debts or claims accruing to such parties against the Company,and there is no contractual relationship, either expressed or implied, betweenMONTGOMERY COUNTY and any material men, subcontractors, craftsmen,laborers, or any other person supplying any work, labor or materials for theimprovement of any property.

10.6 Materiality. All covenants, agreements, representations andwarranties made herein and documents delivered in the application for or insupport of this Agreement shall be deemed to have been material and relied onby MONTGOMERY COUNTY and shall survive the execution and delivery of this

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Agreement, the Note, and the Collateral Documents and the disbursement andadvances of funds pursuant to this Agreement.

10.7 Successors and Assigns. The Company and MONTGOMERYCOUNTY as used herein shall include the successors, legal representatives orassigns of those parties.

10.8 Notices. Any notices or demand to be given hereunder shall beduly given unless provided elsewhere in this Agreement if delivered or mailed asfollows, or to such other address as may be designated by either party in thefuture:

To the Company: Mailing Address:Hill & Markes, Inc.Neal A. Packer, COO120 Edson Street — PC Box 7Amsterdam, NY 12010

Relocating to1975 State Highway 5SAmsterdam, NY 12010

Physical Address: (Principal Office Address)Same as above

To Montgomery County: Montgomery CountyP0 Box 1500Fonda, NY 12068-1 500Attention: EconomicDevelopment Director

and shall be deemed effective if delivered, upon delivery, and if mailed, upondeposit, in an official depository maintained by the United States Post Office forcollection of mail.

10.9 Governing Law. This Agreement, the transaction described hereinand the obligations of Montgomery County and the Company shall be construedunder, and governed by, the laws of the State of New York without regard to theprincipals of conflicts of laws.

10.10 Inconsistent Provisions. The terms of this Agreement and anyrelated agreements, instruments or other documents shall be cumulative exceptto the extent that they are specifically inconsistent with each other, in which casethe terms of the Agreement shall prevail to the extent of such inconsistency.

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10.11 Confidentiality. Montgomery County shall keep all documentsand/or information made known to the County by the Company strictlyconfidential. Officers of Montgomery County shall be provided with access tosuch documents and/or information only on a “need to know” basis. MontgomeryCounty will use confidential information only for purposes associated with thisloan agreement and will not voluntarily disclose such confidential information tothird parties.

10.12 Entire Agreement. This Agreement, the Note and the CollateralDocuments, as the case may be, set forth the entire agreement and allunderstandings between the parties hereto and supersede all prior agreements,representations or understandings between the parties hereto and supersede allprior agreements, representations or understandings between the parties hereto,whether written or oral.

IN WITNESSS WHEREOF, the parties hereto have caused thisAgreement to be signed by their duly Authod Members and their companyseals to be hereunto affixed, all as of the7 ‘( day July 2010.

[SEAL] Hill & Markes, Inc.

By:________NeX’A. PackerChief Operating Officer

COUNTY OF McTGOMERY)

On this 7Tday of July 2010, before me personally came Neal A.Packer, to me known, who, being by me duly sworn, did depose and state that heresides at 20 Covington Court, Niskayuna, NY 12309 and that s/he is the COO ofHill & Markes, Inc, operating in New York State, named in and which executedthe above instrument; that s/he knows the seal of said company; and that theseal affixed to said instrument is such company seal; that it was so affixed byorder of the Officials of said Company, and that s/he signed her name hereto byorder of the Officers of that Company.

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/2

STATE OF NEW YORK))SS:

[SEAL]

STATE OF NEW YORK)

COUNTY OF MONTGOMERY)

Montgomery County

By:Vito L. GrecoChairman, Board of Supervisors

)SS:

/ 7/ ( -f’ ( -4

Notary Public

On the (f *day of July before me personally came Vito L. Greco to meknown, who being by me duly sworn, did depose and say that deponent resides at231 Brookside Avenue, Amsterdam, NY 12010. That deponent is the Chairman ofthe Montgomery County Board of Supervisors, the community development agencydescribed in and which executed the foregoing instrument and that deponentknows the seal of said agency; that the seal affixed to said instrument is suchofficial seal; that it was so affixed by order of the Board of said County; and thatdeponent signed said instrument by like order

/í /7-)

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EXHIBIT A

Promissory Note

$500,000.00 Fonda, New YorkJuly

7,2010

FOR VALUE RECEIVED, the undersigned, Hill & Markes, Inc. and Hill & MarkesRealty, LLC, Company having a current address as 120 Edson Street, NY,County of Montgomery and an operations address of the same, State of NewYork, (the “Company”) to be relocated to 1975 State Highway 5S, Town ofFlorida, NY, County of Montgomery, State of New York, promises to pay to theorder of Montgomery County with a mailing address of County Annex Building,Treasurer’s Office, P0 Box 1500, Fonda, New York 12068, or at holder’s option,at such other place as may be designated from time to time by the holder, thesum of Five Hundred Thousand and 00/1 00 Dollars ($500,000.00), in lawfulmoney of the United States of America, together with interest thereon, payable inmonthly installments as follows:

a. Payments of both Principal and Interest, at a rate of 3.25% for a period of120 months shall be paid in 120 consecutive equal monthly (4installments of $4,885.95 each month commencing on the 7day of August 2010 and on the same day of each month thereafterthrough July 2020 when the entire outstanding principal andaccrued interest shall be due and payable.

b. Said installments shall be applied first to the unpaid accrued interest andthen to the outstanding principal balance of this Note, all inaccordance with the Amortization Schedule, annexed hereto andmade a part hereof.

This Note may be prepaid in whole or in part at any time without penalty.

Upon the occurrence of one or more Event(s) of Default as defined in the LoanAgreement, and/or the Security Agreement, both dated even date herewith,between the Company and Montgomery County (the “Loan Agreement,” the“Security Agreement,” respectively) securing performance hereof, and after theelapse of the notice period, if any, required under the Loan Agreement, SecurityAgreement and any other Collateral Documents, this Note shall, at the option ofand upon the written demand of Montgomery County, become immediately dueand payable without presentment or protest of other notice or demand, all ofwhich are expressly waived by the Company, or at the option of Montgomery

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County, the interest rate shall be adjusted to the current prime rate plus 1 % aspublished in The Wall Street Journal on the date of Montgomery County’selection for the remainder of the term of the loan.

This Note evidences a borrowing under, is subject to, and is entitled to thebenefits of the Loan Agreement to which reference is hereby made with respectto prepayment, delinquency charges, collateral, and rights of acceleration of theprincipal upon the occurrence of Events of Default as defined in the LoanAgreement. All terms, definitions, covenants and conditions related to the abovematters set forth in the Loan Agreement are incorporated in this Note as thoughfully set forth herein.

No delay or failure by the holder hereof to exercise any right or power hereundershall operate as a waiver thereof, nor shall any single or partial exercise by theholder of any right or power hereunder preclude any other or further exercisethereof or the exercise of any other right or power. The rights and remedies ofthe holder herein specified are cumulative and not exclusive of any other rights orremedies, which the holder may otherwise have.

No modification, rescission, waiver, release or amendment of any provision ofthis Note shall be effective unless made by a written agreement executed by aduly authorized officer of the Company and the holder hereof which agreementspecifically indicates that it constitutes a modification hereof.

This Note shall be construed under and governed by the laws of the State of NewYork.

In the event of a breach of the terms of this Note, the Company agrees to payreasonable costs and expenses incurred by the holder in enforcing or modifyingthis Note or in collecting the indebtedness evidenced hereby, including withoutlimitation, if the holder retains counsel for any such purpose, reasonable attorneyfees.


By:_______________‘/NalA.P cker/ Chief Operating Officer

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ACKNOWLEDGM ENT



On this 7 day of July 2010, before me personally came Neal A.Packer to me known, who, being by me duly sworn, did depose and state that heresides at 20 Covington Court, Niskayuna, NY 12309 and that he is the COO ofHill & Markes, Inc., an “Incorporated” Company, operating in New York State,named in and executed the above instrument; that he knows the seal of saidcompany; and that the seal affixed to said instrument is such company seal; thatit was so affixed by order of the Officials of said Company, and that she signedhis/her name hereto by order of the Officers of that Company.

MtRO J.Notrv Puhfjc, Ste o e York

C)L’E!ed ri FvtiDn Co..iMy Commission Exre /‘

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EXHIBIT B

Security Agreement

This Security Agreement “Agreement” made between the County ofMontgomery, having a principal place of business at PC Box 1500, Fonda, NewYork (the “County”) and Hill & Markes, Inc. and Hill & Markes Realty, LLC, havingprincipal place of business at 120 Edson Street, Amsterdam NY and relocating to1975 State Highway 5S, Town of Florida, NY, Montgomery County, New York, (the‘Borrower”).

In consideration of the mutual covenants and promises herein contained, theCounty and the Borrower agree as follows:

SECTION ONESECURITY INTEREST - COLLATERAL

To secure the payment of indebtness in the sum of Five Hundred Thousand and00/100 Dollars ($500,000.00) as provided in the Promissory Note of even dateherewith, Borrower hereby agrees to pledge security in the form of UCC I tothe County on the following described or specified property (hereincollectively called the “Collateral”):

a 3rd position on the UCC filing of the real estate at the current location,120 Edson Street, Amsterdam, NY, the real estate of the new constructedfacility located at 1975 State Highway 5S, Town of Florida, NY and all otherassets associated with each facility, with a value of at least $500,000.00,and more particularly described in EXHIBIT G annexed hereto and made a parthereof.

SECTION TWOREPLACEMENT PROPERTY

Borrower grants a security interest in all property acquired by the Borrower toreplace the collateral during the term of this agreement.

SECTION THREEWARRANTIES

Borrower represents and warrants to the County as follows:

1. Title. Borrower is and, as “Collateral” to be acquired after the date hereof, willbe, the owner of the “Collateral” free from any adverse lien, security interest orencumbrances, with the exception of purchase money security interest, whenapplicable, and the liens and encumbrances described in the Schedules to theLoan Agreement between the parties dated the date hereof and Borrower agrees

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that it will defend the collateral against all claims and demands of all persons atany time claiming the same or any interest therein, provided, however, that theCounty acknowledges that 3rd position of the UCC filing of a the “Collateral”located at 120 Edson Street, Amsterdam, NY and the relocation address of1975 State Highway 5S, Town of Florida, NY, Montgomery County, describedon EXHIBIT E of the Loan Agreement under the heading “Use of Proceeds” willbe held by the Industrial Development Agency (IDA), who administers the CDBG,for a term of ten years under the provisions of the Community DevelopmentBlock Grant (CDBG).

2. Location of Collateral: 120 Edson Street, Amsterdam, NY and therelocation address of 1975 State Highway 5S, Town of Florida, NY,Montgomery County

3. Accuracy of Information. Subject to any limitations stated therein or inconnection therewith, all information furnished to the County concerning collateral,or otherwise, for the purpose of obtaining credit or an extension of credit, is, or willbe at the time the same is furnished, correct in all material respects and completeinsofar as completeness may be necessary to give the County accurate knowledgeof the subject matter.

SECTION FOURINSPECTION

Borrower shall at all reasonable times and from time to time allow the County by orthrough any of its officers, agents, attorneys or accountants and\or representativesof the Recipient and HUD to examine or inspect the “Collateral” wherever locatedand to examine, inspect and make abstracts from Borrowers books and recordswith respect to “Collateral”.

SECTION FIVERECORDS AND REPORTS

Borrower shall at all times keep accurate and complete records of the “Collateral”and its status. Borrower shall immediately notify the County of any event causingloss or depreciation in the value of the “Collateral”.

SECTION SIXINSURANCE

Borrower shall have and maintain insurance at all times with respect to all tangiblecollateral against risks of fire (including extended coverage), theft, and against suchother risks as such coverage is usually carried by owners of similar businesses andproperties or as the County may reasonably require and, in the case of motorvehicles, collision, containing such terms, in such form, for such periods and writtenby such companies as may be satisfactory to the County, such insurance to be

29

payable to the County and Borrower as their respective interests may appear.Borrower shall deliver to the County a certificate of insurance evidencing theinsurance coverage required by this paragraph.In the event of failure to provide insurance as herein provided, the County may, atthe County’s option, provide such insurance and Borrower shall pay to the County,on demand, the cost thereof.

SECTION SEVENCHANGE OF PLACE OF BUSINESS OR LOCATION OF INVENTORY

Borrower will promptly notify the County in writing of any addition to, change in ordiscontinuance of its place or places of business as shown in the Loan Agreementand Promissory Note of even dates herewith and in the place at which the“Collateral” is located as shown in SECTION THREE Paragraph 2 of this SecurityAgreement.

SECTION EIGHTLIENS AND TAXES

Borrower will keep all “Collateral” free from any adverse lien, security interest orencumbrance and in good condition and will not waste or destroy any of the same.

Without the written consent of the County, Borrower will not allow any financingstatement covering any of the collateral to be on file in any public office, other thana financing statement filed pursuant to SECTION NINE of this Security Agreementand other than any financing statement on files as of the date of this agreement.Borrower will not use the “Collateral” in violation of any statute or ordinance and willpromptly pay when due all taxes and assessments upon the collateral for its use oroperation, upon the proceeds thereof, upon this Security Agreement or any ofBorrower’s obligations hereunder.At its option, County may discharge taxes, liens, security interests or otherencumbrances at any time levied or placed on the collateral and may pay for themaintenance and preservation of the collateral. Borrower agrees to reimburse theCounty, on demand, for any payment made, or for any expense incurred by theCounty pursuant to the foregoing sentence.

Borrower shall not be in default under this section if it contests through appropriateproceedings any taxes, liens or other encumbrances levied or placed on the“Collateral” and provides for the indemnification of the County by good andsufficient sureties satisfactory to the County against any loss which the Countymight suffer because of the existence of said taxes, liens or encumbrances on thecollateral.

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SECTION NINEFINANCING STATEMENT

At the request of the County, Borrower will join with the County in executing one ormore financing statements pursuant to the Uniform Commercial Code in formsatisfactory to the County and will pay the cost of filing the same in all public officeswherever filing is deemed by the County to be necessary or desirable. Withoutlimiting the foregoing, Borrower agrees that whenever the Uniform CommercialCode requires Borrower to sign a financing statement for filing purposes, theBorrower hereby appoints the County or any of the County’s representatives asBorrower’s attorney and agent, with full power of substitution, to sign or endorseBorrower’s name on any such financing statement or other documents, and theCounty is authorized, if permitted by applicable law, to file one or more UniformCommercial Code financing statements disclosing any security interest in theProject and this Security Agreement and the sums due under this SecurityAgreement without the signature of the Borrower or of the County as attorney infact for the Borrower. The County is authorized to file such a financing statement inall places where necessary to perfect the County’s security interest in the collateral.

Borrower hereby ratifies all acts of said attorney and said substitute and agrees tohold the County and said attorney harmless from any acts of commission oromission or any error of judgment or mistake of fact or law pertaining thereto.

SECTION TENFURTHER ASSURANCES

Borrower will do, make, execute and deliver all of such additional and furtheracts, things, deeds, assurances and instruments as the County may require, tomore completely vest in and assure to County its rights hereunder and in or tothe collateral.

SECTION ELEVENEVENTS OF DEFAULT

RIGHTS AND REMEDIES ON DEFAULT

Events of default by the Borrower and the County’s rights and remedies as a resultof a covered default shall be as defined in ARTICLE VIII of the Loan Agreement ofeven date herewith.

SECTION TWELVEWAIVER

The County shall not be deemed to have waived any of the County’s rightshereunder or under any other agreement, instrument or paper signed by Borrowerunless such waiver be in writing and signed by the County. No delay or omission on

31

the part of the County in exercising any right shall operate as a waiver of such rightor any other right. A waiver on any one occasion shall not be construed as a bar toor waiver of any right or remedy on any future occasion.

SECTION THIRTEENCUMULATIVE REMEDIES

All of the County’s rights and remedies, whether evidenced hereby or by any otheragreement, instrument or paper, shall be cumulative and may be exercisedsingularly or concurrently.

SECTION FOURTEENDEMANDS AND NOTICES

Any demand upon or notice to Borrower that the County may elect to give shall beeffective when deposited in the mails or delivered to a telegraph, wireless or radiocompany addressed to Borrower at the address shown in the Loan Agreement ofeven date herewith, as modified by any notice given pursuant to SECTION SEVEN.Demands or notices addressed to Borrower’s address at which the Countycustomarily communicates with Borrower shall also be effective.

SECTION FIFTEENTRANSFERS

If at any time or times the County, by assignment or otherwise, transfers anyliabilities or collateral or other security therefor, such transfer shall carry with it theCounty’s powers and rights under this Security Agreement with respect to theliabilities and collateral or other security transferred and the transferee shallbecome vested with said powers and rights, whether or not they are specificallyreferred to in the transfer. If and to the extent that the County retains any otherliability or collateral or other Security, the County will continue to have the rights andpowers herein set forth with respect thereto.

SECTION SIXTEENTERMINATION

Whenever there are outstanding liabilities and no commitment on the part of theCounty under any agreement which might give rise to any obligation of Borrower,Borrower may terminate this Security Agreement upon written notice to the County.Prior to such termination this shall be a continuing agreement in every respect.

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SECTION SEVENTEENCOLLECTION OR PROTECTION OF COLLATERAL

The County shall have no duty to collect or protect the “Collateral”, to preservenghts of Borrower or others against prior parties, to realize on the “Collateral “in anyparticular manner or seek reimbursement from any particular source or to preserve,protect, insure or care for the “Collateral”.

SECTION EIGHTEENMISCELLANEOUS

This agreement is intended to take effect when signed by Borrower and delivered tothe County.

All rights of the County hereunder shall inure to the benefit of the successors andassigns of the County, and all obligations of Borrower hereunder shall bind theheirs, executors, administrators, successors and assigns of Borrower.

If there be more than one Borrower, their obligations shall be joint and several.

IN WITNESS WIEOF, the parties hereto have caused this instrument to beexecuted this 7 dyof July 2010.


4 // /

By: %/LLNea’I,A. PackerChief Operating Officer

STATE OF NEW YORK

CITY\TOW \VILLAGE\COUNTY OF MONTGOMERY

On the 7 day of July 2010 before me personally came Neal A. Packer to meknown, who being by me duly sworn, did depose and say that deponent resides at;20 Covington Court, Niskayuna, NY 12309 and that deponent is the same personwho executed the foregoing instrument and that deponent is the COO of Hill &Markes, Inc. the Borrower in and which ing instrument; and thatdeponent signed said instrument by like

/ / 33

Montgomery County

[SEAL] By:______________Vito L. GrecoChairman Board of Supervisors

STATE OF NEW YORK

CITY\TOWN\ILLAGE\COUNTY OF MONTGOMERY

On the ‘j day of July 2010 before me personally came Vito L. Greco to meknown, who being by me duly sworn, did depose and say that deponent resides at231 Brookside Avenue, Amsterdam, NY 12010. That deponent is the Chairman ofthe Montgomery County Board of Supervisors, the community development agencydescribed in and which executed the foregoing instrument and that deponentknows the seal of said agency; that the seal affixed to said instrument is suchofficial seal; that it was so affixed by order of the Board of said County; and thatdeponent signed said instrument by like order.

) /-‘- /&

r1btary Public

RobnL. LokeNotary PuMfc for New York

Montgorncry County Reg. 496087,2Comm. xpres Jan 2,20

____

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EXHIBIT C

Personal Guaranty

Personal Guaranty of, Jeffrey D. Finkle, President, theBorrower, Hill & Markes, Inc and Hill & Markes Realty, LLC:

The undersigned, Jeffrey D. Finkle, (the Guarantor), in consideration ofMontgomery County making a loan in an aggregate amount of FiveHundred Thousand and 00/100 ($500,000.00) to Hill & Markes,Inc. and Hill & Markes Realty, LLC, with its principal place ofbusiness located at 120 Edson Street, Amsterdam, NY and to beknown as 1975 State Highway 5S, Amsterdam, Town of Florida,Montgomery County, NY (the Company) for the purpose of usingfunds for the real estate construction and costs associated withsuch, specifically known as “Collateral” located at, 120 EdsonStreet, Amsterdam, NY and 1975 State Highway 5S, Amsterdam,Town of Florida, Montgomery County, NY secured with 3rd positionon the UCC filing of the “Collateral” and the execution of apromissory note as more particularly set forth in a certain LoanAgreement between the Company and Montgomery County datedJuly 74 2010, and for other valuable consideration, receipt ofwhich is hereby acknowledged, hereby guarantees to MontgomeryCounty that the Company will pay each and all amounts when thesame may be due and payable together with the interest thereon.

In default of such payment by the Company the undersigned herebyunconditionally promises and agrees to pay to Montgomery Countyupon demand, all amounts which the Company shall owe toMontgomery County with respect to such loan, together with anyinterest thereon and/or any and all additional fees and penaltiesincurred.

This agreement constitutes and is an unconditional guaranty of paymentand not of collections, and is a continuing one and is to apply tosuch existing indebtedness of the Company to Montgomery Countywith respect to said Loan and to any and all renewals andextensions thereof.

Release of exchange of other security, release of anyone other than theCompany, extension of time or manner of payment, renewal of orfailure to collect, any of such indebtedness when due, or failure ofMontgomery County to notify the undersigned of non-complianceby the Company of any obligation to Montgomery County shall notrelieve or discharge the undersigned of any obligation hereunder.

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The undersigned hereby waives notice of acceptance of this guaranty andall notices of default by Montgomery County except as required inthe Note, the Loan Agreement or the Security Agreement all datedof even date hereof between the Company and MontgomeryCounty.

This instrument may not be modified or discharged orally, shall bind allwho sign it, jointly and severally, and shall be construed andgoverned in accordance with the laws of the State of New York.

IN WITNESS WHEREOF, the undersigned has signed his/her name onthis 7k— day of July 2010.

ç4Jeff’Dj1F&ikle IPresidentHill & Markes, Inc.

36

ACKNOWLEDGMENT



On the 7 day of July 2010 before me personally came Jeffrey D.Finkle to me known, who being by me duly sworn, did depose andsay that deponent resides at: 209 Bentwood Court West, Albany, NY12203 and that deponent is the same person who executed theforegoing instrument and that deponent is the President of Hill &Markes, Inc. the Borrower in and which executed the foregoinginstrument; and that deponent signed said instrument by like order.

Noar’MA.E) J. p

t(:, E(

Yo..J’ Cc:

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Exhibit D

Personal Guaranty

Personal Guaranty of, Neal A. Packer, Vice-President, theBorrower, Hill & Markes, Inc and Hill & Markes Realty, LLC:

The undersigned, Neal A. Packer, (the Guarantor), in consideration ofMontgomery County making a loan in an aggregate amount of FiveHundred Thousand and 00/100 ($500,000.00) to Hill & Markes,Inc. and Hill & Markes Realty, LLC, with its principal place ofbusiness located at 120 Edson Street, Amsterdam, NY and to beknown as 1975 State Highway 5S, Amsterdam, Town of Florida,Montgomery County, NY (the Company) for the purpose of usingfunds for the real estate construction and costs associated withsuch, specifically known as “Collateral” located at, 120 EdsonStreet, Amsterdam, NY and 1975 State Highway 5S, Amsterdam,Town of Florida, Montgomery County, NY secured with 3rd positionon the UCC filing of the “Collateral” and the execution of apromissory note as more particularly set forth in a certain LoanAgreement between the Company and Montgomery County datedJuly 7-a- , 2010, and for other valuable consideration, receipt ofwhich is hereby acknowledged, hereby guarantees to MontgomeryCounty that the Company will pay each and all amounts when thesame may be due and payable together with the interest thereon.




38



IN WITNESS WHEREOF, the undersigned has signed his/her name onthis ]- day of July 2010.

/Neal A. Pack&hief Operating Officer

Hill & Markes, Inc.

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ACKNOWLEDGMENT


COUNTY OF MO GOMERY)

On the

______day

of July 2010 before me personally came Neal A. Packerto me known, who being by me duly sworn, did depose and say thatdeponent resides at: 20 Covington Court, Niskayuna, NY 12309 andthat deponent is the same person who executed the foregoinginstwment and that deponent is the Chief Operating Officer of Hill &Markes, Inc. the Borrower in and which executed the foregoinginstrument; and that deponent signed said instrument by like order.

Notary Public

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Exhibit E

Personal Guaranty

Personal Guaranty of, Andrea M. Packer, Vice-President, theBorrower, Hill & Markes, Inc and Hill & Markes Realty, LLC:

The undersigned, Andrea M. Packer, (the Guarantor), in consideration ofMontgomery County making a loan in an aggregate amount of FiveHundred Thousand and 00/100 ($500,000.00) to Hill & Markes,Inc. and Hill & Markes Realty, LLC, with its principal place ofbusiness located at 120 Edson Street, Amsterdam, NY and to beknown as 1975 State Highway 5S, Amsterdam, Town of Florida,Montgomery County, NY (the Company) for the purpose of usingfunds for the real estate construction and costs associated withsuch, specifically known as “Collateral” located at, 120 EdsonStreet, Amsterdam, NY and 1975 State Highway 5S, Amsterdam,Town of Florida, Montgomery County, NY secured with 3rd positionon the UCC filing of the “Collateral” and the execution of aprom issory note as more particularly set forth in a certain LoanAgreement between the Company and Montgomery County datedJuly 7-, 2010, and for other valuable consideration, receipt ofwhich is hereby acknowledged, hereby guarantees to MontgomeryCounty that the Company will pay each and all amounts when thesame may be due and payable together with the interest thereon.




41



IN WITNESS WHEREOF, the undersigned has signed his/her name onthis )- day of July 2010. -

thAndrea M. PackerVice-PresidentHill & Markes, Inc.

42

ACKNOWLEDGMENT

STATE OF NEW YORK)SS:


On the 7 day of July 2010 before me personally came Andrea M.Packer to me known, who being by me duly sworn, did depose andsay that deponent resides at: 20 Covington Court, Niskayuna, NY12309 and that deponent is the same person who executed theforegoing instrument and that deponent is the Vice-President of Hill &Markes, Inc. the Borrower in and which executed the foregoinginstrument; and that deponent signed said instrument by like order.

,J7 Notary Public

H

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EXHIBIT F

Receipt of Loan Proceeds

RE: MONTGOMERY COUNTYIRLF LOAN

Pursuant to Paragraph 2.5 (b) of a certain loan agreement, dated this

____

day of July 2010 by and between Hill & Markes, Inc. and Hill &Markes Realty, LLC (“the Company”) and Montgomery County doeshereby acknowledge that the receipt of Five Hundred Thousand and00/100 ($500,000.00) to be used for the purposes expresslydescribed in said loan agreement, will be disbursed as indicated:$498,500.00 to Hill & Markes, Inc. and Hill & Markes Realty, LLC;and $1500.00 to the County Attorney Douglas Landon will bedisbursed on the day of the closing: July ‘1 , 2010

Hill & Markes, Inc.

‘ Neal . PackerI COO

Dated:July

___,2010

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EXHIBIT G

Use of Proceeds

r7(tDated: / dayof July2010.

Use of Proceeds: to assist with the acquisition of land and the development ofa new approximately 120,000 sq foot facilitylocated at 1975 State Highway 5S, Town ofFlorida, NY and reimbursement to theCompany for all other costs associated with.

Collateral: secured with a 3rd position on the UCC filing of the RealEstate at the current location, 120 EdsonStreet, Amsterdam, NY, the real estate of thenew constructed facility located at 1975 StateHighway 5S, Town of Florida, NY and all otherassets associated with each facility, with avalue of at least $500,000.00.

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EXHIBIT H

Company Evidentiary Documents

The following Documents are included in this section:

1) Certificate of Good Standing2) Certificate of Organization, Certified3) Minutes of Special Meeting for Action by Written Consent

Of Managing Members4) Waiver of Notice of Special Meeting for Action By Written

Consent of Members

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EXHIBIT I

Insurance Certificate(s)

The borrower hereby acknowledges the following: InsuranceCertificate naming Montgomery County as loss payee.

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Schedule I

Other Project Financing Required

The borrower hereby acknowledges the following: Proceeds are alsobeing received from: Citizens Bank, NYBDC (SBA), ESD GrantFunding and RSB Asset Funding.

48

Schedule 2

Interim Financing

The borrower hereby acknowledges the following: Citizens for$628,309.00 and Statewide Zone Capital Corp of NY for $300,000.00

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Schedule 3

Liens and Encumbrances

The borrower hereby acknowledges the following liens andencumbrances now known to exist: Citizens has a first securitymortgage on the current real estate including all assets associatedwith located at 120 Edson Street, Amsterdam, NY. NYBDC has a 1st

security interest on the racking at the end of the construction. H & Mis currently drawing on the RBS Asset financing which has a firstsecurity interest in certain officer equipment located at 120 EdsonStreet, Amsterdam, NY.

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Schedule 4

Pending Litigation

The borrower hereby acknowledges the following pending orthreatened actions, suits, proceedings or investigations to which theborrower is, or may be a party: NONE

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Schedule 5

Job Creation

Job Creation Definitions:

“Covered Jobs” means any and all positions created as a direct result ofthe Project.

“Family” means all persons living in the same household who are relatedby birth, marriage or adoption.

“Household” means all persons who occupy a housing unit.

“Low and Moderate Income Person” means a member of a family havingan income equal to or less than the Section 8 low income limitestablished by HUD. Unrelated individuals shall be considered asone-person families for this purpose.

For the purpose of this agreement, a covered job will be considered to be held bya low or moderate income person, if at the time that the new position is first filled,adequate documentation is obtained from the new employee regarding theannualized total income for all family members prior to the date of employment inthe covered job.

In calculating covered jobs the following will apply:

(a) Only permanent jobs will be counted: temporary and constructionjobs will not be counted.

(b) Jobs of 35 or more hours per week will be considered as one full-time job. Part-time permanent jobs of less than 35 hours per week will beconverted to full-time equivalent jobs by dividing the number of part-time hoursby 40.

(c) Seasonal jobs will only be considered to be permanent jobs if theduration of the working period is long enough to classify the job as theemployee’s principal occupation.

The Borrower shall make every effort to create the following new full-timeor full-time-equivalent jobs in accordance with the attached 3-yearschedule, which shall be deemed to begin upon completion of theproject. “Completion of the Project” shall mean that the equipmentand machinery has been purchased.

The “Completion of the Project” shall occur no later than six months fromthe date of the closing of this Loan.

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SCHEDULE OF FTE POSITIONS TO BE MAINTAINED

The attached “Employment Plan” submitted by Borrower in the LoanApplication is an integral part of this Loan Agreement. It specifies thefollowing agreement by Borrower to attain the following:

a)Total number of Full Time Equivalent Positions (FTE’S) to beretained during year one is 141 and FTE’s to be created during year one: 8 FullTime Equivalent Positions (FTE’s) to be created. Of these, at least 51% are tobe held be low to moderate-income positions.

b) Total number of low to moderate income jobs to be retained andcreated during the second year of operations: 149 FTE positions to be retained,and an additional 11 new FTE positions will be created, bringing total FTEemployment to a minimum of 160 positions by the end of the second year ofoperations, with at least 51 % are to be held be low to moderate-incomepositions.

c) Total Number of low to moderate income jobs to be retained duringand created the third year of operations: 160 FTE positions to be retained and 11new FTE’s will be created, bringing the total FTE employment to a minimum of171 Positions by the end of the third year of operations, with at least 51% are tobe held be low to moderate-income positions.

See attached sheet from original loan application submitted by borrower.

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Printed: 7/7/2010 Preliminary Loan AmortizationSchedule

Hill & Markes, Inc.

Amount Borrowed $ 500,000.00Term: 10 Years 120 MonthsRate: 3.2500%Monthly Pymt: ($4,885 95)

Payments will be due bepinning 30 days after loan proceeds are disburses

Please make checks payable to: Montgomery County TreasurerPC Box 1500Fonda, NY 12068

Projected Cost of Financing $ 63,397.73

Pymt Date Payment Principal UnpaidNumber Due Amount Interest Reduction Balance

0 500,000.001 08/07/10 $4,885.95 1,354.17 3,531.78 496,468.222 09/07/10 $4,885.95 1,344.60 3,541.35 492,926.873 10/07/10 $4,885.95 1,335.01 3,550.94 489,375.924 11/07/10 $4,885.95 1,325.39 3,560.56 485,815.375 12/07/10 $4,885.95 1,315.75 3,570.20 482,245.166 01/07/11 $4,885.95 1,306.08 3,579.87 478,665.297 02/07/11 $4,885.95 1,296.39 3,589.57 475,075.738 03/07/11 $4,885.95 1,286.66 3,599.29 471,476.449 04/07/11 $4,885.95 1,276.92 3,609.04 467,867.4010 05/07/11 $4,885.95 1,267.14 3,618.81 464,248.5911 06/07/11 $4,885.95 1,257.34 3,628.61 460,619.9812 07/07/11 $4,885.95 1,247.51 3,638.44 456,981.5413 08/07/11 $4,885.95 1,237.66 3,648.29 453,333.2514 09/07/11 $4,885.95 1,227.78 3,658.17 449,675.0715 10/07/11 $4,885.95 1,217.87 3,668.08 446,006.9916 11/07/11 $4,885.95 1,207.94 3,678.02 442,328.9817 12/07/11 $4,885.95 1,197.97 3,687.98 438,641.0018 01/07/12 $4,885.95 1,187.99 3,697.97 434,943.0419 02/07/12 $4,885.95 1,177.97 3,707.98 431,235.0520 03/07/12 $4,885.95 1,167.93 3,718.02 427,517.0321 04/07/12 $4,885.95 1,157.86 3,728.09 423,788.9422 05/07/12 $4,885.95 1,147.76 3,738.19 420,050.7523 06/07/12 $4,885.95 1,137.64 3,748.31 416,302.4324 07/07/12 $4,885.95 1,127.49 3,758.47 412,543.9725 08/07/12 $4,885.95 1,117.31 3,768.64 408,775.3226 09/07/12 $4,885.95 1,107.10 3,778.85 404,996.4727 10/07/12 $4,885.95 1,096.87 3,789.09 401,207.3928 11/07/12 $4,885.95 1,086.60 3,799.35 397,408.0429 12/07/12 $4,885.95 1,076.31 3,809.64 393,598.4030 01/07/13 $4,885.95 1,066.00 3,819.96 389,778.4431 02/07/13 $4,885.95 1,055.65 3,830.30 385,948.14

File: Amort Schedule.xls Sheet: ““ Page 1 of 3

Printed: 7/7/20 10 Preliminary Loan AmortizationSchedule

Pymt Date Payment Principal UnpaidNumber Due Amount Interest Reduction Balance

32 03/07/13 $4,885.95 1,045.28 3,840.68 382,107.4733 04/07/13 $4,885.95 1,034.87 3,851.08 378,256.3934 05/07/13 $4,885.95 1,024.44 3,861.51 374,394.8835 06/07/13 $4,885.95 1,013.99 3,871.97 370,522.9236 07/07/13 $4,885.95 1,003.50 3,882.45 366,640.4737 08/07/13 $4,885.95 992.98 3,892.97 362,747.5038 09/07/13 $4,885.95 982.44 3,903.51 358,843.9939 10/07/13 $4,885.95 971.87 3,914.08 354,929.9140 11/07/13 $4,885.95 961.27 3,924.68 351,005.2241 12/07/13 $4,885.95 950.64 3,935.31 347,069.9142 01/07/14 $4,885.95 939.98 3,945.97 343,123.9443 02/07/14 $4,885.95 929.29 3,956.66 339,167.2844 03/07/14 $4,885.95 918.58 3,967.37 335,199.9145 04/07/14 $4,885.95 907.83 3,978.12 331,221.7946 05/07/14 $4,885.95 897.06 3,988.89 327,232.9047 06/07/14 $4,885.95 886.26 3,999.70 323,233.2048 07/07/14 $4,885.95 875.42 4,010.53 319,222.6849 08/07/14 $4,885.95 864.56 4,021.39 315,201.2950 09/07/14 $4,885.95 853.67 4,032.28 311,169.0051 10/07/14 $4,885.95 842.75 4,043.20 307,125.8052 11/07/14 $4,885.95 831.80 4,054.15 303,071.6553 12/07/14 $4,885.95 820.82 4,065.13 299,006.5254 01/07/15 $4,885.95 809.81 4,076.14 294,930.3855 02/07/15 $4,885.95 798.77 4,087.18 290,843.1956 03/07/15 $4,885.95 787.70 4,098.25 286,744.9457 04/07/15 $4,885.95 776.60 4,109.35 282,635.5958 05/07/15 $4,885.95 765.47 4,120.48 278,515.1159 06/07/15 $4,885.95 754.31 4,131.64 274,383.4760 07/07/15 $4,885.95 743.12 4,142.83 270,240.6461 08/07/15 $4,885.95 731.90 4,154.05 266,086.5962 09/07/15 $4,885.95 720.65 4,165.30 261,921.2963 10/07/15 $4,885.95 709.37 4,176.58 257,744.7164 11/07/15 $4,885.95 698.06 4,187.89 253,556.8265 12/07/15 $4,885.95 686.72 4,199.24 249,357.5866 01/07/16 $4,885.95 675.34 4,210.61 245,146.9867 02/07/16 $4,885.95 663.94 4,222.01 240,924.9668 03/07/16 $4,885.95 652.51 4,233.45 236,691.5269 04/07/16 $4,885.95 641.04 4,244.91 232,446.6170 05/07/16 $4,885.95 629.54 4,256.41 228,190.2071 06/07/16 $4,885.95 618.02 4,267.94 223,922.2672 07/07/16 $4,885.95 606.46 4,279.50 219,642.7773 08/07/16 $4,885.95 594.87 4,291.09 215,351.6874 09/07/16 $4,885.95 583.24 4,302.71 211,048.9775 10/07/16 $4,885.95 571.59 4,314.36 206,734.6176 11/07/16 $4,885.95 559.91 4,326.05 202,408.5777 12/07/16 $4,885.95 548.19 4,337.76 198,070.8178 01/07/17 $4,885.95 536.44 4,349.51 193,721.3079 02/07/17 $4,885.95 524.66 4,361.29 189,360.0180 03/07/17 $4,885.95 512.85 4,373.10 184,986.90

File: Amort Schedule.xls Sheet: ““ Page 2 of 3

Printed: 7/7/2010 Preliminary Loan AmortizationSchedule

Pymt Date Payment Principal Unpaid

Number Due Amount Interest Reduction Balance

81 04/07/17 $4,885.95 501.01 4,384.95 180,601.9682 05/07/17 $4,885.95 489.13 4,396.82 176,205.14

83 06/07/17 $4,885.95 477.22 4,408.73 171,796.41

84 07/07/17 $4,885.95 465.28 4,420.67 167,375.74

85 08/07/17 $4,885.95 453.31 4,432.64 162,943.1086 09/07/17 $4,885.95 441.30 4,444.65 158,498.4587 10/07/17 $4,885.95 429.27 4,456.68 154,041.7788 11/07/17 $4,885.95 417.20 4,468.76 149,573.01

89 12/07/17 $4,885.95 405.09 4,480.86 145,092.15

90 01/07/18 $4,885.95 392.96 4,492.99 140,599.1691 02/07/18 $4,885.95 380.79 4,505.16 136,094.0092 03/07/18 $4,885.95 368.59 4,517.36 131,576.63

93 04/07/18 $4,885.95 356.35 4,529.60 127,047.0494 05/07/18 $4,885.95 344.09 4,541.87 122,505.1795 06/07/18 $4,885.95 331.78 4,554.17 117,951.0096 07/07/18 $4,885.95 319.45 4,566.50 113,384.50

97 08/07/18 $4,885.95 307.08 4,578.87 108,805.6398 09/07/18 $4,885.95 294.68 4,591.27 104,214.36

99 10/07/18 $4,885.95 282.25 4,603.70 99,610.66

100 11/07/18 $4,885.95 269.78 4,616.17 94,994.49101 12/07/18 $4,885.95 257.28 4,628.67 90,365.81102 01/07/19 $4,885.95 244.74 4,641.21 85,724.60103 02/07/19 $4,885.95 232.17 4,653.78 81,070.82104 03/07/19 $4,885.95 219.57 4,666.38 76,404.44105 04/07/19 $4,885.95 206.93 4,679.02 71,725.41106 05/07/19 $4,885.95 194.26 4,691.70 67,033.72107 06/07/19 $4,885.95 181.55 4,704.40 62,329.32108 07/07/19 $4,885.95 168.81 4,717.14 57,612.17109 08/07/19 $4,885.95 156.03 4,729.92 52,882.26110 09/07/19 $4,885.95 143.22 4,742.73 48,139.53111 10/07/19 $4,885.95 130.38 4,755.57 43,383.95112 11/07/19 $4,885.95 117.50 4,768.45 38,615.50113 12/07/19 $4,885.95 104.58 4,781.37 33,834.13114 01/07/20 $4,885.95 91.63 4,794.32 29,039.82115 02/07/20 $4,885.95 78.65 4,807.30 24,232.51116 03/07/20 $4,885.95 65.63 4,820.32 19,412.19

117 04/07/20 $4,885.95 52.57 4,833.38 14,578.81

118 05/07/20 $4,885.95 39.48 4,846.47 9,732.35119 06/07/20 $4,885.95 26.36 4,859.59 4,872.75120 07/07/20 $4,885.95 13.20 4,872.75 0.00

63,397.73 500,000.00

File: Amort Schedule.xls Sheet: “‘ Page 3 of 3

Citizens Bank

ASSIGNMENT AGREEMENT

THIS ASSIGNMENT AGREEMENT (this “Agreement”), dated July 7, 2010, and made

by MONTGOMERY COUNTY (hereinafter referred to as “Assignor”), to and in favor of RBS

CITIZENS, N. A., a national association with an office at 833 Broadway, Albany, New York

12207 (hereinafter referred to as “Bank”).

WITNES SETH THAT:

WHEREAS, Bank has extended a loan to Hill & Markes Realty, LLC (“Borrower”), an

affiliate of Hill & Markes, Inc. (“H&M”) (the “Loan”), evidenced by that certain Building Loan

Promissory Note dated June 15, 2010, in the principal sum of Eight Million Five Hundred

Thousand and 00/100 Dollars ($8,500,000.00) in connection with construction of an

office/warehouse facility at 1975 NYS Route 5 S, Town of Florida, Montgomery County, New

York (the “Project”) pursuant to a certain Building Loan Agreement between Borrower and

Bank; and

WHEREAS, Assignor has extended a loan (the “County Loan”) to Borrower and/or

H&M evidenced by that certain Promissory Note dated June 15, 2010 in the principal sum of

Five Hundred Thousand and 00/100 Dollars ($500,000.00), the net proceeds of which,

amounting to Four Hundred Ninety-Eight Thousand Five Hundred and 00/100 Dollars

($498,500.00) are to be used in the acquisition of the land for the Project to the extent of One

Hundred Thirty-Five Thousand Five Hundred Fifty and 00/100 Dollars ($135,550.00) and the

remaining net proceeds (“Remaining Net Proceeds”) of Three Hundred Sixty-Two Thousand

Nine Hundred Fifty and 00/100 Dollars ($362,950.00) are to be paid to H&M or Borrower

pursuant to the terms of the County Loan and until such time as they are so paid, are to be held in

escrow by Bank; and

WHEREAS, as a condition for agreeing to enter into the Building Loan Agreement and

advancing funds for construction of the Project, Bank has required Assignor to deposit theRemaining Net Proceeds of the County Loan into Account No. 4008624618 (the “Escrow

Account”) to be held by Bank and as security for the obligations of Borrower under the Loan,

NOW, THEREFORE, in consideration of the covenants and provisions outlined herein,Assignor and Bank agree as follows:

1. Assignor hereby, assigns, pledges, sets over, transfers all right, title and interest in

and to the Net Proceeds and the Escrow Account to Bank, and its successors and/or assigns.

2. Bank shall deposit the Remaining Net Proceeds in the Escrow Account to beadministered solely by Bank. Bank shall hold the Remaining Net proceeds until the Project iscomplete and the Town of Florida has issued an unconditional certificate of occupancy for the

Project, at which time the Remaining Net Proceeds shall be paid to Borrower, unless Assignor

sooner directs in writing that the Remaining Net Proceeds be paid to Borrower.

PHBF/ 733188.1

3. Bank shall have, but shall not be limited to, all of the rights of a secured partyunder the New York Uniform Commercial Code.

4. Assignor agrees that Assignor may not make any assignment or pledge of, grantany security interest in, or withdraw money or other value from, the Escrow Account.

5. Assignor further agrees that in the event that the Escrow Account is evidenced byany passbook or certificate, such passbooks or certificates shall be held by Bank to be disbursedfor the purposes set forth herein.

6. Assignor agrees to preserve and protect Bank’s assignment and security interest inthe Escrow Account as a perfected first priority security interest, and shall immediately executeand deliver to Bank, upon Bank’s request, such documents and endorsements as are necessary ordesirable, in Bank’s sole discretion, to perfect, continue the perfection of or evidence the EscrowAccount and Bank’s assignment and security interest therein. Assignor hereby appoints Bank asAssignor’s attorney-in-fact to do, at Bank’s option and at Borrower’s expense, all acts and thingsin Assignor’s name which Bank may deem necessary or desirable to perfect and continue toperfect the assignment, liens and security interests hereby created and to protect the EscrowAccount.

7. Assignor represents and warrants that:

(a) There is no action, suit, or proceeding at law or in equity now pending or,to the knowledge of Assignor, threatened by or against or affecting the creation of the EscrowAccount, Assignor’s ability to assign the Net Proceeds; and

(b) There exists no restriction on the assignment of the Net Proceeds andAssignor has good marketable title to Assignor’s interest therein, free and clear of any securityinterest, lien or encumbrance except the interests created hereby.

8. (a) The provisions of this Agreement may from time to time be amended inwriting signed by Assignor and Bank.

(b) This Agreement shall be governed by and construed and enforced underthe laws of the State of New York.

(c) If any provision of this Agreement shall for any reason be held invalid orunenforceable, such invalidity or unenforceability shall not affect any other provision of thisAgreement or any other agreement between Assignor and Bank; but this Agreement shall beconstrued as if such invalid or unenforceable provision had never been contained herein.

(d) All paragraph headings in this Agreement are included for convenienceonly and are not to be construed as a part hereof or in any way as limiting or amplifying the termshereof.

2od lig mioi 77 10 (2).do

(e) The provisions of this Agreement shall be binding upon and shall inure tothe benefit of the successors and assigns of Bank and Assignor; provided, however, that Assignormay not assign any of its rights or delegate any of its obligations hereunder without the priorwritten consent of Bank.

(f) Each reference in this Agreement to “Bank” shall be deemed to include itssuccessors and assigns. Any pronouns used in this Agreement shall be construed in themasculine, feminine, neuter, singular, or plural as the context may require. The agreements andobligations on any part of Assignor herein contained shall remain in force and applicablenotwithstanding any changes in the composition of any corporation comprising Assignor and theterm “Assignor” shall include any altered or successive corporations; provided, however, that thepredecessor corporation shall not thereby be released from any of its obligations and liabilitieshereunder.

[Remainder of Page Intentionally Left Blank — Signature Page Follows]

3Mom rnI *tigbothmUo.L dtg,por.ry mtet 6fl.o.flkIpg6rvipmIqrI 77 10 (2).do

IN WITNESS WHEREOF, Assignor, intending to be legally bound, has executed thisAgreement as of the day and year first above written.

WITNESS/ATTEST: ASSIGNOR:

MONTGOMERY COUNTY

,

By:Vito L. Greco /

Chairman of the Board of Supervisors

STATE OF NEW YORK )

) ss

COUNTY OF f?ic -)

On the 7th1 day of July, in the year 2010, before me, the undersigned, a Notary Public inand for said state, personally appeared Vito L. Greco, personally known to me or proved to meon the basis of satisfactory evidence to be the individual whose name is subscribed to the withininstrument and acknowledged to me that he executed the same in his capacity, and that by hissignature on the instrument, the individual, or the person upon behalf of which the individualacted, executed this instrument.

Notary PublicRobin L. Loske

Notary PubllC for New YorkontgOmerY County Reg. 4960ç78

Comm. Expires Jan 2 20

_____

Assignment Agreement

Woilman Law Firm41 MARKET STREET

AMSTERDAM, NEW YORK 12010Telephone (518) 842-8213Facsimile (518) 842-3420

Service not accepted by Facsimile

PAUL L. WOLLMANJOSEPH D. WOLLMAN

NADINE A. BLOOM

July 7,2010

Montgomery County Industrial Development AgencyOld County Courthouse, Park StreetFonda, New York 12068

Hill & Markes Realty, LLC120 Edson StreetAmsterdam, New York 12010

Re: Montgomery County Industrial Development AgencyLease/Leaseback TransactionHill & Markes Realty, LLC Project


I have acted as counsel to Montgomery County Industrial Development Agency(the “Agency”), a public benefit corporation organized and existing pursuant to Chapter1030 of 1969 Laws of New York, constituting Title 1 of Article 18-A of the GeneralMunicipal Law, Chapter 24 of the Consolidated Laws of New York, as amended (the“Enabling Act”) and Chapter 666 of the 1970 Laws of New York, as amended, constitutingSection 895-d of said General Municipal Law (said Chapter and the Enabling Act beinghereinafter collectively referred to as the “Act”), in connection with the preparation,execution and delivery by the Agency of the following documents (the “AgencyDocuments”):

(1) a certain resolution adopted by the members of the Agency on June 29,2010 (the “Approving Resolution”) authorizing the execution and delivery by the Agencyof the Agency Documents in connection with a project (the “Project”) undertaken by theAgency for the benefit of Hill & Markes Realty, LLC (the “Company”) consisting of thefollowing: (A) (1) the acquisition of an interest in a 45.3+!- acre parcel of land (tax mapparcel identification number 54-2-2.1) and located on Highway 5S in the City ofAmsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) theconstruction of two facilities on the Land: (a) an approximately 100,000 square footwarehouse, and (b) an approximately 15,000 square foot office building (both facilitiesbeing collectively referred to as the “Facility”), (3) the acquisition and installation of certainmachinery and equipment therein and thereon (the “Equipment”) (the Land, the Facilityand the Equipment hereinafter collectively referred to as the “Project Facility”), all of theforegoing to constitute new warehousing and office facilities to support the growth of the

Montgomery County Industrial Development AgencyHill & Markes Realty, LLCJuly 7, 2010Page 2

Company’s supply business and related activities; (B) the granting of certain “financialassistance” (within the meaning of Section 854(14) of the Act) with respect to theforegoing, including potential exemptions from sales and use taxes, real propertytransfer taxes, mortgage recording taxes and real estate taxes (collectively, the“Financial Assistance”); and (C) the lease of the Project Facility to the Companypursuant to the terms of a lease agreement dated as of June 1, 2010 (the “LeaseAgreement”) by and between the Company and the Agency; and

(2) a certain interim lease dated as of June 1, 2010 (the “Interim Lease”) fromthe Agency, as landlord to the Company, as tenant;

(3) the Lease Agreement;

(4) a certain lease to Agency dated as of June 1, 2010 (the “UnderlyingLease”) from the Company, as landlord to the Agency, as tenant;

(5) a certain license agreement dated as of June 1, 2010 (the “License toAgency”) by and between the Company, as licensor, and the Agency, as licensee,pursuant to which the Company will grant to the Agency (a) a license to enter upon thebalance of the Land (the “Licensed Premises”) for the purpose of undertaking andcompleting the Project and (b) in the event of an occurrence of an Event of Default bythe Company, an additional license to enter upon the Licensed Premises for thepurpose of pursuing its remedies under the Lease Agreement;

(6) a certain payment in lieu of tax agreement dated as of June 1, 2010 (the“Payment in Lieu of Tax Agreement”) by and between the Agency and the Company,pursuant to which the Company has agreed to make payments in lieu of taxes withrespect to the Project Facility; and

(7) a sales tax exemption letter (the “Sales Tax Exemption Letter”) to ensurethe granting of the sales tax exemption.

I have, as counsel to the Agency, examined original or certified copies of theproceedings of the Agency taken with respect to the Project, as well as certificates ofthe Agency’s officers, a certified copy of the Approving Resolution and executedcounterparts of the Agency Documents. I have also examined such statutes, courtdecisions, proceedings and other documents as I have considered necessary orappropriate in the circumstances to render the following opinions. Capitalized termsused herein and not otherwise defined herein shall have the meanings ascribed to suchterms in the Lease Agreement.


Based upon my examination of the foregoing, and in reliance upon the mattersand subject to the limitations contained in the concluding paragraphs of this opinion, Iam of the opinion (except that no opinion is given with respect to any federal or statesecurities law or any law concerning zoning or subdivision matters or as to the law ofany jurisdiction other than the State of New York) that:

1. The Agency is a corporate governmental agency constituting a publicbenefit corporation duly established under the Act.

2. Under the Act, it is the purpose of the Agency to promote, develop,encourage and assist in acquiring, constructing, reconstructing, improving, maintaining,equipping and furnishing, manufacturing, commercial and civic facilities, among others,and the Agency has the power to acquire, hold and dispose of real and personalproperty for its corporate purposes. In accordance with the Act, the Agency hasdetermined to undertake the acquisition, construction and installation of the ProjectFacility, and to lease the Project Facility to the Company pursuant to the LeaseAgreement.

3. The members and officers of the Agency identified in the Agency’s generalcertificate delivered on this date have been duly appointed as such members (and dulyelected by the members as such officers) and are qualified to serve as such.

4. The Agency has power and lawful authority under the Act to execute anddeliver the Agency Documents; to undertake the acquisition, construction andinstallation of the Project Facility pursuant to the Lease Agreement; to appoint theCompany as agent of the Agency for the purpose of the acquisition, construction andinstallation of the Project Facility; and to perform and observe the provisions of theAgency Documents on its part to be performed and observed.

5. The Approving Resolution has been duly adopted by the members of theAgency, complies with the procedural rules of the Agency and the requirements of thelaws of the State of New York, and the Approving Resolution has not beensupplemented, amended, or repealed and remains in full force and effect on the datehereof.

6. By the Approving Resolution, the Agency has duly authorized theacquisition, construction and installation of the Project Facility, the lease of its interest inthe Project Facility to the Company and the execution and delivery by the Agency of theAgency Documents.


7. The making and performance by the Agency of the Agency Documentsand the consummation of the transactions on the part of the Agency thereincontemplated will not violate any applicable provision of any applicable law (includingthe Act), regulation, decree, writ, order or injunction, or any applicable provision of theAct, and will not contravene the provisions of or constitute a default under any materialterm of any agreement, indenture, bond resolution or other instrument to which theAgency is a party or by which the Agency is bound; provided, however, that no opinionis expressed as to the terms of laws, regulations, rules, judgments or orders withrespect to the physical acquisition, construction, installation, equipping, occupancy oroperation of the Project Facility.

8. The Agency Documents have been duly authorized by all necessaryaction on the part of the Agency, have been duly executed and delivered by authorizedofficers of the Agency, and, assuming the due authorization, execution and delivery ofsame by the other parties thereto, constitute legal, valid and binding special obligationsof the Agency.

9. No additional or further consent, authorization or approval of, or filing orregistration with, any governmental or regulatory body not already obtained is requiredfor the making and performance by the Agency of the Agency Documents or for theperformance by the Agency of the transactions contemplated thereby; provided,however, that no opinion is expressed as to the terms of laws, regulations, rules,judgments or orders with respect to the physical acquisition, construction, equipping,occupancy or operation of the Project Facility.

10. The Agency has not been served with a summons in any action and, tothe best of our knowledge, there is no litigation pending or threatened in any court,either state or federal, calling into question the creation, organization or existence of theAgency, the validity of the Agency Documents, or the authority of the Agency to acquire,construct and install the Project Facility or to enter into or perform the AgencyDocuments.

Any opinion concerning the validity, binding effect or enforceability of anydocument (A) means that (1) such document constitutes an effective contract underapplicable law, (2) such document is not invalid in its entirety under applicable lawbecause of a specific statutory prohibition or public policy, and is not subject in itsentirety to a contractual defense under applicable law and (3) subject to the followingsentence, some remedy is available under applicable law, if the person concerningwhom such opinion is given is in material default under such document but (B) does notmean that (1) any particular remedy is available under applicable law upon such


material default or (2) every provision of such document will be upheld or enforced inany or each circumstance by a court applying applicable law. Furthermore, the validity,binding effect or enforceability of any document may be limited to or otherwise affectedby (A) any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulentconveyance or other similar statute, rule, regulation or other law affecting theenforcement of creditors’ rights and remedies generally or (B) the unavailability of, orany limitation on the availability of, any particular right or remedy (whether in aproceeding in equity or at law) because of the discretion of a court or because of anyequitable principle or requirement as to commercial reasonableness, conscionability orgood faith.

I express no opinion with respect to (A) title to all or any portion of the ProjectFacility, (B) the priority of any liens, charges, security interests or encumbrancesaffecting the Project Facility or any part thereof (or the effectiveness of any remedywhich is dependent upon the existence of title to the Project Facility or the priority of anysuch lien, charge, security interest or encumbrance), (C) any laws, regulations,judgments, permits or orders with respect to zoning, subdivision matters orrequirements for the physical commencement and continuance of the acquisition,construction, installation, use or operation of the Project Facility or with respect to therequirement of filing or recording of any of the Basic Documents, or (D) the laws of anyjurisdiction other than the State of New York.

Insofar as the foregoing opinions express or involve conclusions as tocompliance by the Agency with the provisions of Article Eight of the EnvironmentalConservation Law of the State of New York, I have relied upon the accuracy of theconclusions contained in the resolution adopted by the members of the Agency on May20, 2010 (the “SEQR Resolution”) in which the Agency concurred with a negativedeclaration that was issued by the Town of Florida Planning Board; provided, however,that I am not passing upon nor do I assume any responsibility for the accuracy,completeness, or fairness of the statements, information or conclusions contained in theforegoing and I make no representation that I have independently verified the accuracy,completeness, or fairness of any such statements, information or conclusions.

This opinion is rendered as of the date hereof, and no opinion is expressed as tomatters referred to herein on any subsequent date.

YLour

PAUL L. WOLLMANP LW/ecr

MACKENZIE &TALLENTArrom’jEYs AT LAW

42 CHuRCH STaeETPOST OFFICE Box 330

Caj’AJockpJE, NEW Yoiu 13317-0330

CHARLES J. TALLENT (518) 673-5656 • (518) 673-3912 WILLIAM B. MACKENZIEFACSIMILE: (518) 673-3501 RETrRED

EMAIL: [email protected]

________

Service by facsimile oremail not accepted

Jtn 720)0

Montgomery County Industrial Development AgencyOld County CourthouseFonda, New York 12068




We have acted as counsel to Hill & Markes Realty, LLC, a limited liability company organizedand existing under the laws of the State of New York (the “Company”), in connection with thepreparation, execution and delivery by the Company and Montgomery County Industrial DevelopmentAgency (the “Agency”), a public benefit corporation organized and existing pursuant to Chapter 1030 of]969 Laws of New York, constituting Title I of Article 18-A of the General Municipal Law, Chapter 24of the Consolidated Laws of New York, as amended (the “Enabling Act”) and Chapter 666 of the 1970

Laws of New York, as amended, constituting Section 895-d of said General Municipal Law (said Chapterand the Enabling Act being hereinafter collectively referred to as the “Act”), of the following documents(collectively, the “Company Documents”): (1) a bill of sale dated as of June 1, 2010 (the “Bill of Sale toAgency”) from the Company to the Agency; (2) a lease to Agency dated as of June 1, 2010 (the“Underlying Lease”) from the Company to the Agency; (3) a license agreement dated as of June 1, 2010(the “License to Agency”) by and between the Company, as licensor, and the Agency, as licensee; (4) a

lease agreement dated as of June 1, 2010 (the “Lease Agreement”) by and between the Agency and the

Company; (5) a payment in lieu of tax agreement dated as of June 1, 2010 (the “Payment in Lieu of TaxAgreement”) by and between the Agency and the Company; and (6) various other closing documentsrequired to be executed by the Company, all in connection with the undertaking by the Agency of a

project (the “Project”) consisting of the following: (A) (1) the acquisition of an interest in a 45.3+!- acre

parcel of land (tax map parcel identification number 54-2-2.1) and located on Highway 5S in the City of

Amsterdam, Town of Florida, Montgomery County, New York (the “Land”), (2) the construction of two

facilities on the Land: (a) an approximately 100,000 square foot warehouse, and (b) an approximately

1 5,000 square foot office building (both facilities being collectively referred to as the “Facility”), (3) the

acquisition and installation of certain machinery and equipment therein and thereon (the “Equipment”)

(the Land, the Facility and the Equipment hereinafter collectively referred to as the “Project Facility”), all

of the foregoing to constitute new warehousing and office facilities to support the growth of the

000161/01178 Business 7555645v1

Montgomery County Industrial Development AgencyHill & Markes Realty, LLCJuij7, 2010Pag’e 2

Company’s supply business and related activities; (B) the granting of certain “financial assistance”(within the meaning of Section 854(14) of the Act) with respect to the foregoing, including potentialexemptions from sales taxes, real property transfer taxes, mortgage recording taxes and real estate taxes(collectively, the “Financial Assistance”); and (C) the lease of the Project Facility to the Companypursuant to the terms of the Lease Agreement.

We have examined the original or certified copies of the proceedings of the Company taken withrespect to the Project, as well as certificates of the Company’s officers, a certified copy of the resolutionof the Company’s Board authorizing the execution and delivery by the Company of the CompanyDocuments (the “Company Resolution”), and executed counterparts of all of the Company Documents.We have also examined such statutes, court decisions, proceedings and other documents as we haveconsidered necessary or appropriate in the circumstances to render the following opinions. Capitalizedterms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in theLease Agreement.

Based on the foregoing, it is our opinion that:

I. The Company is a limited liability company duly organized and validly existing underthe laws of the State of Nw York, is authorized to do business in the State of New York, and possessesfull power and authority to own its Property, to coi-iduct its business and to execute and deliver theCompany Documents and to carry out and perform its obligations thereunder.

2. The Company Resolution has been duly adopted by the Company’s members, complieswith the procedural rules of the Company and the requirements of the laws of the State of New York, andthe Company Resolution has not been supplemented, amended or repealed and remains in full force andeffect on the date hereof.

3. The execution and delivery by the Company of the Company Documents have been dulyauthorized by all necessary action of the Company. Each of the Company Documents has been dulyexecuted and delivered by an Authorized Representative of the Company and is a legal and valid bindingobligation of the Company enforceable against the Company in accordance with its terms, except as theenforcement of the Company Documents may be limited by any applicable bankruptcy, insolvency,moratorium, reorganization or other laws relating to fraudulent conveyances or affecting the enforcementof rights of creditors of the Company generally and equitable principles of general applicability.

4. The execution and delivery by the Company of the Company Documents, the executionand compliance with the provisions of each and the consummation of the transactions contemplatedtherein do not and will not conflict with or constitute on the part of the Company a breach of or defaultunder the Company’s articles of organization, operating agreement or any indenture, deed of trust, bankloan or credit agreement or other agreement or instrument to which the Company is a party or by whichthe Company or any of its Property may be bound or affected (of which the Company has made me awareand has provided me with copies of the same) for which a valid consent has not been secured; nor is anyapproval or any action by any Governmental Authority or agency required in connection with theexecution, delivery or performance thereof by the Company.

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5. There is no action, suit, proceeding or investigation at law or in equity before or by anycourt, public board or body, pending or threatened against, or affecting, the Company, wherein anunfavorable decision, ruling or finding would in any way adversely affect, in a material fashion, theProject Facility or the validity or enforceability of the Company Documents.

6. The Project Facility, as proposed, will be in compliance with the applicable local lawsand ordinances and all state and federal environmental laws (including but not limited to Article Eight ofthe New York State Environmental Conservation Law), rules and ordinances.

Any opinion concerning the validity, binding effect or enforceability of any document (A) meansthat (1) such document constitutes an effective contract under applicable law, (2) such document is notinvalid in its entirety under applicable law because of a specific statutory prohibition or public policy, andis not subject in its entirety’ to a contractual defense under applicable law and (3) subject to the followingsentence, some remedy is available under applicable law if the person concerning whom such opinion isgiven is in material default under such document, but (B) does not mean that (1) any particular remedy isavailable under applicable law upon such material default or (2) every provision of such document will beupheld or enforced in any or each circumstance by a court applying applicable law. Furthermore, thevalidity, binding effect or enforceability of any document may be limited to or otherwise affected by (A)any applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or othersimilar statute, rule, regulation or other law affecting the enforcement of creditors’ rights and remediesgenerally or (B) the unavailability of or any limitation on the availability of any particular right orremedy (whether in a proceeding in equity or law) because of the discretion of a court or because of anyequitable principle or requirement as to commercial reasonableness, conscionability or good faith.

Very truly yours,

KENZIE & TALLENT

BY_____Charles J. all t, Esq.

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HodgsonRussATTORNEYS

CLOSING ITEM NO.: D-3

July 7, 2010

Montgomery County Industrial Development AgencyOld County CourthouseFonda, New York 12068




We have acted as special counsel to Montgomery County Industrial Development Agency (the“Agency”), a public benefit corporation organized and existing pursuant to Chapter 1030 of 1969 Laws ofNew York, constituting Title 1 of Article 18-A of the General Municipal Law, Chapter 24 of theConsolidated Laws of New York, as amended (the “Enabling Act”) and Chapter 666 of the 1970 Laws ofNew York, as amended, constituting Section 895-d of said General Municipal Law (said Chapter and theEnabling Act being hereinafter collectively referred to as the “Act”), in connection with the preparation,execution and delivery by the Agency of the following documents (the “Agency Documents”):

(I) a certain resolution adopted by the members of the Agency on June 30, 2010 (the“Approving Resolution”) authorizing the execution and delivery by the Agency of the AgencyDocuments in connection with a project (the “Project”) undertaken by the Agency for the benefit of Hill& Markes Realty, LLC (the “Company”) consisting of the following: (A) (1) the acquisition of aninterest in a 45.3+!- acre parcel of land (tax map parcel identification number 54-2-2.1) and located onHighway 5S in the City of Amsterdam, Town of Florida, Montgomery County, New York (the “Land”),(2) the construction of two facilities on the Land: (a) an approximately 100,000 square foot warehouse,and (b) an approximately 15,000 square foot office building (both facilities being collectively referred toas the “Facility”), (3) the acquisition and installation of certain machinery and equipment therein andthereon (the “Equipment”) (the Land, the Facility and the Equipment hereinafter collectively referred toas the “Project Facility”), all of the foregoing to constitute new warehousing and office facilities tosupport the growth of the Company’s supply business and related activities; (B) the granting of certain“financial assistance” (within the meaning of Section 854(14) of the Act) with respect to the foregoing,including potential exemptions from sales and use taxes, real property transfer taxes, mortgage recordingtaxes and real estate taxes (collectively, the “Financial Assistance”); and (C) the lease of the ProjectFacility to the Company pursuant to the terms of a lease agreement dated as of June 1, 2010 (the “LeaseAgreement”) by and between the Company and the Agency; and

(2) a certain interim lease dated as of June 1, 2010 (the “Interim Lease”) from the Agency, aslandlord to the Company, as tenant;

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Montgomery County Industrial Development AgencyI-Jill & Markes Realty, LLCJuly 7, 2010 HodgsonPage2

(3) a certain lease to Agency dated as of June 1, 2010 (the “Underlying Lease”) from theCompany, as landlord to the Agency, as tenant;

(4) the Lease Agreement;

(5) a certain license agreement dated as of June 1, 2010 (the “License to Agency”) by andbetween the Company, as licensor, and the Agency, as licensee, pursuant to which the Company willgrant to the Agency (a) a license to enter upon the balance of the Land (the “Licensed Premises”) for thepurpose of undertaking and completing the Project and (b) in the event of an occurrence of an Event ofDefault by the Company, an additional license to enter upon the Licensed Premises for the purpose ofpursuing its remedies under the Lease Agreement;

(6) a certain payment in lieu of tax agreement dated as of June 1, 2010 (the “Payment in Lieuof Tax Agreement”) by and between the Agency and the Company, pursuant to which the Company hasagreed to make payments in lieu of taxes with respect to the Project Facility; and

(7) a sales tax exemption letter (the “Sales Tax Exemption Letter”) to ensure the granting ofthe sales tax exemption.

We have, as special counsel to the Agency, examined the executed counterparts of the AgencyDocuments and such certified proceedings as we deemed necessary to render this opinion. No opinion asto the validity and enforceability of the Agency Documents as they relate to the Company is expressedherein.

In our examination, we have assumed the genuineness of all signatures, the authenticity of alldocuments submitted to us as originals and the conformity with the original documents of all documentssubmitted to us as copies. Furthermore, in rendering the following opinions, we have assumed that alldocuments executed by a person or persons other than the Agency have been duly executed and deliveredby said other person or persons and that said documents, to the extent they create obligations, constitutelegal, valid and binding obligations of said person or persons enforceable against said person or personsin accordance with their terms.

Based upon our examination of the foregoing and in reliance upon the matters and subject to thelimitations contained herein, we are of the opinion, as of the date hereof and under existing law, asfollows:

(A) The Agency was duly created and is validly existing as a corporate governmental agencyconstituting a public benefit corporation of the State of New York with the corporate power and authorityto enter into and perform the Agency Documents and to grant the Financial Assistance.

(B) The Agency Documents have been duly authorized, executed and delivered by theAgency and are legal, valid and binding special obligations of the Agency enforceable against the Agencyin accordance with their respective terms, except as specified below.

Any opinion concerning the validity, binding effect or enforceability of any document (A) meansthat (1) such document constitutes an effective contract under applicable law, (2) such document is notinvalid in its entirety under applicable law because of a specific statutory prohibition or public policy, and

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is not subject in its entirety to a contractual defense under applicable law and (3) subject to the followingsentence, some remedy is available under applicable law if the person concerning whom such opinion isgiven is in material default under such document, but (B) does not mean that (1) any particular remedy isavailable under applicable law upon such material default or (2) every provision of such document will beupheld or enforced in any or each circumstance by a court applying applicable law. The validity, bindingeffect or enforceability of any document may be limited or otherwise affected by (A) any bankruptcy,insolvency, reorganization, moratorium, fraudulent conveyance or other similar statute, rule, regulation orother law affecting the enforcement of creditors’ rights and remedies generally or (B) the unavailabilityof, or any limitation on the availability of, any particular right or remedy (whether in a proceeding inequity or at law) because of the discretion of a court or because of any equitable principle, public policy,procedural requirement or requirement as to commercial reasonableness, conscionability or good faith.

We express no opinion with respect to (A) title to all or any portion of the Project Facility, (B) thepriority of any liens, charges, security interests or encumbrances affecting the Project Facility or any partthereof (or the effectiveness of any remedy which is dependent upon the existence of title to the ProjectFacility or the priority of any such lien, charge, security interest or encumbrance), (C) any laws,regulations, judgments, permits or orders with respect to zoning, subdivision matters or requirements forthe physical commencement and continuance of the acquisition, reconstruction, installation, occupancy oroperation of the Project Facility or with respect to the requirement of filing or recording of any of theAgency Documents, or (D) the laws of any jurisdiction other than the State of New York.

Insofar as the foregoing opinions express or involve conclusions as to compliance by the Agencywith the provisions of Article Eight of the Environmental Conservation Law of the State of New York,we have relied upon the accuracy of the conclusions contained in the resolution adopted by the membersof the Agency on May 20, 2010 (the “SEQR Resolution”); provided, however, that we are not passingupon nor do we assume any responsibility for the accuracy, completeness, or fairness of the statements,information or conclusions contained in the foregoing and we make no representation that we haveindependently verified the accuracy, completeness, or fairness of any such statements, information orconclusions.

We have not been requested to examine and have not examined any documents or informationrelating to the Company other than the documents hereinabove referred to, and no opinion is expressed asto any financial or other information, or the adequacy thereof.

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Montgomery County Industrial Development AgencyHill & Markes Realty, LLCJuly7,2010 I1odgsonPage4 ATTORNEYS

This opinion is rendered as of the date hereof and no opinion is expressed as to matters referredto herein on any subsequent date.

Very truly yours,

HODGSON RUSS LLP

BY______________________A. Joseph ott, III

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