=================================================================

                                                           

 

LOAN AND SECURITY AGREEMENT 

Dated as of September 15, 2006 

Between 

IRET-MR9, LLC,
as Borrower 

and 

CITIGROUP GLOBAL MARKETS REALTY CORP.
as Lender

 

 

 

 

=================================================================

 

 

i

--------------------------------------------------------------------------------

LOAN AND SECURITY AGREEMENT

This LOAN AND SECURITY AGREEMENT (this “Loan Agreement”) is dated as of
September 15, 2006, and entered into by and between IRET-MR9, LLC, a Delaware
limited liability company (“Borrower”), and CITIGROUP GLOBAL MARKETS REALTY
CORP., a New York corporation (together with its successors and assigns, whether
one or more, “Lender”).

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, Borrower and Lender agree as follows:

ARTICLE I
DEFINITIONS

Section1.1       Certain Defined Terms. The terms defined below are used in this
Loan Agreement as so defined. Terms defined in the preamble to this Loan
Agreement are used in this Loan Agreement as so defined.

“Accounts” has the meaning set forth in Section 7.1.

“Account Banks” has the meaning set forth in Section 7.1.

“Account Collateral” means all of Borrower’s right, title and interest in and to
the Accounts, the Reserves, all monies and amounts which may from time to time
be on deposit therein, all monies, checks, notes, instruments, documents,
deposits, and credits from time to time in the possession of Lender representing
or evidencing such Accounts and Reserves and all earnings and investments held
therein and proceeds thereof, including, but not limited to, the Account
Collateral specified in Section 7.6(A) hereof.

“Affiliate” means in relation to any Person, any other Person: (i) directly or
indirectly controlling, controlled by, or under common control with, the first
Person; (ii) directly or indirectly owning or holding five percent (5%) or more
of any equity interest in the first Person; or (iii) five percent (5%) or more
of whose voting stock or other equity interest is directly or indirectly owned
or held by the first Person. In addition, the Affiliates of each Borrower Party
include, without limitation, all other Borrower Parties, irrespective of whether
they now or hereafter satisfy the foregoing criteria. For purposes of this
definition, “control” (including with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”) means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise. Where expressions such as “[name of
party] or any Affiliate” are used, the same shall refer to the named party and
any Affiliate of the named party.

“Approved Architect” has the meaning set forth in Section 5.5.

“Approved Bank” shall mean a bank, the long term unsecured debt obligations of
which are rated at least “AA” by S&P and the equivalent by Fitch and Moody’s
(unless Lender approves in writing a financial institution other than a bank or
a lower rating, in each case in Lender’s sole and absolute discretion).

--------------------------------------------------------------------------------

“Approved Operating Budget” has the meaning set forth in Section 7.4.

“Approved Expenditures” has the meaning set forth in Section 6.6.

“Approved CCW Leasing Costs” has the meaning set forth in Section 6.5.

“Approved Gateway Leasing Costs” has the meaning set forth in Section 6.5.

“Approved Leasing Costs” has the meaning set forth in Section 6.5.

“Assignment of Leases” means each Assignment of Leases and Rents, each of even
date herewith from Borrower to Lender, constituting an assignment of the Leases
and proceeds therefrom as Collateral for the Loan, as same may be amended or
modified from time to time.

“Assignment of Management Agreement” means that certain Conditional Assignment
of Management Agreement of even date herewith (and if there are more than one of
them, each and every one of them) executed by Borrower and current Manager,
constituting an assignment of the Management Agreement as Collateral for the
Loan, as same may be amended or modified from time to time.

“Assurant Early Termination Option” means that certain right and option of
Assurant to terminate the Assurant Lease, as set forth in Section 22.1 of the
Assurant Lease, including, without limitation, the delivery to Borrower of the
Assurant Early Termination Payment.

“Assurant Early Termination Payment” means the payment required to be made by
Assurant in connection with its exercise of the Assurant Early Termination
Option pursuant to Section 22.1 of the Assurant Lease (providing, among other
things, for the payment to the landlord under the Assurant Lease of an amount
equal to the product of (i) $10.00 and (ii) the total number of rentable square
feet comprising the demised premises under the Assurant Lease as of July 31,
2007).

“Assurant Exercise Date” has the meaning set forth in Section 6.5.

“Assurant Lease” means that certain Multi-Tenant Office Lease Agreement dated as
of November 3, 1999, by and between Fortis, Inc. (Assurant Inc., a Delaware
corporation (“Assurant”) is the successor by merger to Fortis, Inc.), as tenant
and Opus Northwest, L.L.C. (predecessor in interest to Borrower), as landlord,
as amended by that First Amendment to Office Lease dated April 11, 2001 by and
between Fortis, Inc. and Opus Northwest, L.L.C., and that Second Amendment to
Office Lease dated March 28, 2002, by and between Fortis, Inc. and MR No. 18
L.L.C.(successor in interest to Opus Northwest, L.L.C. and predecessor in
interest to Borrower), relating to premises leased at the Gateway Property.

“AU Lease” means that certain Office Lease dated as of May 24, 2001, by and
between Applied Underwriters, Inc. (“AU”), as tenant, and Tetrad Corporation
(predecessor in interest to Borrower), as landlord, as amended by that First
Amendment to Office Lease dated February 17, 2003, between AU and Tetrad
Corporation, and Second Amendment to Office Lease dated March 1, 2005, between
AU and Tetrad Corporation.

2

--------------------------------------------------------------------------------

“AU Early Termination Option” means that certain right and option of AU to
terminate the AU Lease, as set forth in Section 8 of the Second Amendment to the
AU Lease (which in turn amends and restates Section 7 of the First Amendment to
the AU Lease, which in turn amended and restated Section 3.03 of the Lease).

“AU Exercise Date” has the meaning set forth in Section 6.5.

“Bankruptcy Code” means Title 11 of the United States Code, as amended from time
to time, and all rules and regulations promulgated thereunder.

“Borrower” has the meaning set forth in the preamble.

“Borrower Party” and “Borrower Parties” mean, individually or collectively, the
Borrower and Guarantor.

“Business Day” means any day excluding (i) Saturday, (ii) Sunday, (iii) any day
which is a legal holiday under the laws of the State of New York, and (iv) any
day on which banking institutions located in such state are generally not open
for the conduct of regular business.

“Calendar Quarter” means each of the four periods of three consecutive months
each from January 1 – March 31, April 1 – June 30, July 1 – September 30 and
October 1 – December 31, respectively.

“Capital Expenditures” means expenditures for capital improvements, furnishings,
fixtures and equipment (whether paid in cash or property or accrued as
liabilities) made by Borrower that, in conformity with GAAP, are required to be
included in the property, plant, or equipment, or similar fixed asset account or
otherwise capitalized.

“Capital Expenditure Budget” means Borrower’s budget for Capital Expenditures
for the Property.

“CCW Leasing Reserve” has the meaning set forth in Section 6.5.

“CCW Property” means the CCW Property identified in the definition of
“Individual Property” below.

“Claims” has the meaning set forth in Section 5.3.

“Collection Account” has the meaning set forth in Section 7.1.

“Collection Account Bank” has the meaning set forth in Section 7.1.

 “Closing” means the funding of the Loan contemplated by this Loan Agreement.

“Closing Date” means the date on which the Closing occurs.

“Collateral” means rights, interests, and property of every kind, real and
personal, tangible and intangible, which is granted, pledged, liened, or
encumbered as security for the Loan or any of the other Obligations under this
Loan Agreement, the Mortgage or other Loan

3

--------------------------------------------------------------------------------

Documents, including without limitation the Property, the Improvements, the
Rents and the Accounts.

“Compliance Certificate” has the meaning set forth in Section 5.1.

“Condemnation Proceeds” means, in the event of a Taking with respect to the
Property, the proceeds in respect of such Taking.

“Contingent Obligation”, as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of that Person: (A) with respect to any
indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such
liability will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such liability will be protected
(in whole or in part) against loss with respect thereto; (B) with respect to any
letter of credit issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings; (C) under any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement or arrangement designed to protect against
fluctuations in interest rates; or (D) under any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect that Person against fluctuations in currency values. Contingent
Obligations shall include (i) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co‑making, discounting with recourse or sale with recourse by such Person of the
obligation of another, (ii) the obligation to make take‑or‑pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement, and (iii) any liability of such Person for the obligations of
another through any agreement to purchase, repurchase or otherwise acquire such
obligation or any property constituting security therefor, to provide funds for
the payment or discharge of such obligation or to maintain the solvency,
financial condition or any balance sheet item or level of income of another. For
purposes of this definition, the amount of any Contingent Obligation at any time
shall be computed as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

“Contractual Obligation”, as applied to any Person, means any indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject including, without limitation,
the Loan Documents.

“Default” means any breach or default under any of the Loan Documents, whether
or not the same is an Event of Default, and also any condition or event that,
after notice or lapse of time or both, would constitute an Event of Default if
that condition or event were not cured or removed within any applicable grace or
cure period.

“Default Rate” has the meaning set forth in Section 2.2.

“Defeasance” has the meaning set forth in Section 2.3.

4

--------------------------------------------------------------------------------

“Defeasance Collateral” shall mean U.S. Obligations, which provide payments
(i) on or prior to, but as close as possible to, all Payment Dates and other
scheduled payment dates, if any, under the Note after the Defeasance Date and up
to and including the Maturity Date, and (ii) in amounts equal to or greater than
the respective Scheduled Defeasance Payments related to such Payment Dates.

“Defeasance Collateral Account” has the meaning set forth in Section 2.3.

“Defeasance Date” has the meaning set forth in Section 2.3.

“Documents” means all “documents” as defined in the UCC or other receipts
covering, evidencing or representing goods now owned or hereafter acquired by
Borrower.

“Dollars” and the sign “$” mean the lawful money of the United States of
America.

“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution, which account is either (i) an account
maintained with an Eligible Bank or (ii) a segregated trust account maintained
by a corporate trust department of a federal depository institution or a state
chartered depository institution subject to regulations regarding fiduciary
funds on deposit similar to Title 12 of the Code of Federal Regulations §
9.10(B), which has corporate trust powers and is acting in its fiduciary
capacity and in either case having combined capital and surplus of at least
$100,000,000 or otherwise acceptable to the Rating Agencies.

“Eligible Bank” shall mean a bank that (i) satisfies the Rating Criteria and
(ii) insures the deposits hereunder through the Federal Deposit Insurance
Corporation.

“Employee Benefit Plan” means any employee benefit plan within the meaning of
Section 3(3) of ERISA (including any Multiemployer Plan) (i) which is maintained
for employees of Borrower or any ERISA Affiliate, (ii) which has at any time
within the preceding six (6) years been maintained for the employees of Borrower
or any current or former ERISA Affiliate or (iii) for which Borrower or any
ERISA Affiliate has any liability, including contingent liability.

“Environmental Claims” has the meaning set forth in Section 4.16.

“Environmental Indemnity” means the Environmental Indemnity Agreement of even
date herewith from Borrower and Guarantor to Lender, as same may be amended or
modified from time to time.

“Environmental Laws” means any federal, state, or local law, ordinance or
regulation or any court judgment or order of any federal, state or local agency
or regulatory body applicable to Borrower or to the Property relating to
industrial hygiene or to environmental or unsafe conditions including, but not
limited to, those relating to the generation, manufacture, storage, handling,
transportation, disposal, release, emission or discharge of Hazardous Material,
those in connection with the construction, fuel supply, power generation and
transmission, waste disposal or any other operations or processes relating to
the Property, and those relating to the atmosphere, soil, surface and ground
water, wetlands, stream sediments and vegetation on,

5

--------------------------------------------------------------------------------

under, in or about the Property. “Environmental Laws” also shall include, but
not be limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Solid Waste Disposal Act, the Clean Water
Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking Water
Act and the Occupational Safety and Health Act, and all regulations adopted in
respect to the foregoing laws.

“Environmental Report” means collectively each Phase I Environmental Site
Assessment prepared by The LJM Group, Inc. for each Individual Property, each
dated June 19, 2006.

“EO13224” has the meaning set forth in Section 4.34.

“ERISA” means the Employee Retirement Income Security Act of 1974, and all rules
and regulations promulgated thereunder. Section references to ERISA are to
ERISA, as in effect at the date of this Agreement and, as of the relevant date,
any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.

“ERISA Affiliate” means Borrower and any corporation, trade or business that is,
along with Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Section 414 of the
Internal Revenue Code of 1986, as amended, or Section 4001 of ERISA.

“Event of Default” has the meaning set forth in Section 8.1.

“Excess Interest” has the meaning set forth in Section 2.2.

“Financial Statements” means (i) statements of operations and retained earnings,
statements of cash flow, and balance sheets and (ii) such other financial
reports as the subject entity shall routinely and regularly prepare.

“Financing Statements” means the Uniform Commercial Code Financing Statements
naming the Borrower as debtor, and Lender as secured party, required under
applicable state law to perfect the security interests created hereunder or
under the other Loan Documents.

“First Open Payment Date” is the Payment Date in June, 2016. 

“First Payment Date” has the meaning set forth in Section 2.4.

“Fiscal Quarter” means each of the four periods of three consecutive months each
from May 1 – July 31, August 1 – October 31, November 1 – January 31 and
February 1 – April 30, respectively.

“Fiscal Year” means each period of twelve consecutive months beginning on May
1st and ending on April 30th.

“Fitch” means Fitch, Inc. and its successors.

6

--------------------------------------------------------------------------------

“GAAP” means generally accepted accounting principles as in effect in the United
States of America from time to time.

“Gateway Leasing Reserve” has the meaning set forth in Section 6.5.

“Gateway Property” means the Gateway Property identified in the definition of
“Individual Property” below.

“Governmental Authority” means, with respect to any Person, any federal or state
government or other political subdivision thereof and any entity, including any
regulatory or administrative authority or court, exercising executive,
legislative, judicial, regulatory or administrative or quasi-administrative
functions of or pertaining to government, and any arbitration board or tribunal
in each case having jurisdiction over such applicable Person or such Person’s
property, and any stock exchange on which shares of capital stock of such Person
are listed or admitted for trading.

“Guaranty” means the Exceptions to Non-Recourse Guaranty of even date herewith
executed by Guarantor in favor of Lender, as same may be amended or modified
from time to time.

“Guarantor” means Investors Real Estate Trust, a North Dakota real estate
investment trust.

“Hazardous Material” means all or any of the following: (i) substances,
materials, compounds, wastes, products, emissions and vapors that are defined or
listed in, regulated by, or otherwise classified pursuant to, any applicable
Environmental Laws, including any so defined, listed, regulated or classified as
“hazardous substances”, “hazardous materials”, “hazardous wastes”, “toxic
substances”, “pollutants”, “contaminants”, or any other formulation intended to
regulate, define, list or classify substances by reason of deleterious, harmful
or dangerous properties; (ii) waste oil, oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal resources;
(iii) any flammable substances or explosives or any radioactive materials; (iv)
fungus, mold, mildew or other biological agents the presence of which may
adversely affect the health of individuals or other animals or materially
adversely affect the value or utility of the Property, (v) asbestos in any form;
(vi) electrical or hydraulic equipment which contains any oil or dielectric
fluid containing polychlorinated biphenyls; (vii) radon; or (viii) urea
formaldehyde.

“Immediate Repairs/Leasing Costs” has the meaning set forth in Section 6.8.

“Impositions” means all taxes (including, without limitation, all real estate,
ad valorem, excise and sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible transaction privilege,
privilege, license or similar taxes), assessments, ground rents, water, sewer or
other rents and charges, excises, levies, fees (including, without limitation,
license, permit, inspection, authorization and similar fees), and all other
governmental charges, in each case whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character in respect of
Borrower, the Collateral, and the Property (including all interest and penalties
thereon), which at any time prior to, during or in respect of the term

7

--------------------------------------------------------------------------------

hereof may be assessed or imposed on or in respect of or be a lien upon (i)
Borrower (including, without limitation, all income, franchise, single business,
excise or other taxes imposed on Borrower, for the privilege of doing business
in any jurisdiction) or Lender or (ii) the Property, or any other Collateral or
any part thereof. Nothing contained in this Agreement shall be construed to
require Borrower to pay (and Impositions shall not include) any tax, assessment,
levy or charge imposed on Lender, in the nature of a franchise, capital levy,
estate, inheritance, succession, income or net revenue tax.

“Impositions and Insurance Reserve” means the reserve established pursuant to
Section 6.3.

“Improvements” means all buildings, structures and improvements of every kind
and nature existing and to be constructed upon the land which comprises any
portion of the Property.

“Indebtedness” or “indebtedness”, as applied to any Person, means: (A) all
indebtedness for borrowed money; (B) that portion of obligations with respect to
leases that is properly classified as a liability on a balance sheet in
conformity with GAAP (excluding any prepaid rents and security deposits under
Leases); (C) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money; (D) any obligation
owed for all or any part of the deferred purchase price of property or services
if the purchase price is due more than thirty (30) days from the date the
obligation is incurred or is evidenced by a note or similar written instrument;
and (E) all indebtedness secured by any Lien on any property or asset owned or
held by that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit of that Person.

“Indemnified Liabilities” has the meaning set forth in Section 13.2.

“Independent Director” has the meaning set forth in Section 9.1.

“Individual Property” means, individually, each of the following nine (9)
parcels of real estate (including land and Improvements and personal property
located thereon or associated therewith), the legal description of each is
identified with respect to each Individual Property on the Schedule indicated
below as follows:

Individual Property

Schedule to Loan Agreement

 

 

Flagship Corporate Center

Schedule A-1

775 Prairie Center Drive

 

Eden Prairie, Minnesota

 

 

 

Gateway Corporate Center

Schedule A-2

576 Bielenberg Drive

 

Woodbury, Minnesota

 

(the “Gateway Property”)

 

 

 

Timberlands Office

Schedule A-3

8

--------------------------------------------------------------------------------

400 West 114th Street

 

Leawood, Kansas

 

 

 

Woodlands Plaza IV

Schedule A-4

11775 Borman Dr.

 

Maryland Heights, Missouri

 

 

 

Riverpoint Office Center

Schedule A-5

13690 Riverport Drive

 

Maryland Heights, Missouri

 

 

 

Farnam Executive Center

Schedule A-6

10810 Farnam Drive

 

Omaha, Nebraska

 

 

 

Pacific Hills

Schedule A-7

120th and Pacific Street

 

Omaha, Nebraska

 

(“Pacific Hills Property”)

 

 

 

Corporate Center West

Schedule A-8

10805, 10815, 10825 Old Mill Road

 

Omaha, Nebraska

 

(“CCW Property”)

 

 

 

Miracle Hills Executive Center

Schedule A-9

11422 Miracle Hills

 

Omaha, Nebraska

 

 

“Insurance Premiums” means the annual insurance premiums for the insurance
policies required to be maintained by Borrower with respect to the Property
under Section 5.4.

“Intellectual Property” means all of Borrower’s right, title and interest,
whether now owned or hereafter acquired, in, to and under the trademark
licenses, trademarks, rights in intellectual property, trade names, service
marks and copyrights, copyright licenses, patents, patent licenses or the
license to use intellectual property such as computer software owned or licensed
by Borrower or other proprietary business information relating to Borrower’s
policies, procedures, manuals and trade secrets.

“Interest” means interest accrued or accruing on the Loan.

“Interest Rate” shall mean a rate per annum of 5.9236%.

“Involuntary Borrower Party Bankruptcy” means any involuntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, in which any Borrower Party is a debtor or all or
any portion of the Property is property of the estate therein.

9

--------------------------------------------------------------------------------

“IRC” means the Internal Revenue Code of 1986, and any rule or regulation
promulgated thereunder from time to time, in each case as amended.

“IRET Properties” means IRET Properties, a North Dakota Limited Partnership.

“IRS” means the Internal Revenue Service or any successor thereto.

“Lease” means any lease, tenancy, license, sublease, assignment and/or other
rental or occupancy agreement (including, without limitation, any and all
guarantees of any of the foregoing) heretofore or hereafter entered into
affecting the use, enjoyment or occupancy of the Property or any portion
thereof, including any extensions, renewals, modifications or amendments
thereof.

“Leasing Reserve” has the meaning set forth in Section 6.5.

“Legal Requirements” shall mean, with respect to the Borrower and the Property,
all federal, state, county, municipal and other governmental statutes, laws,
rules, orders, regulations, ordinances, judgments, decrees and injunctions of
governmental authorities affecting the Borrower or the Property or any part
thereof or the construction, use, alteration or operation thereof, or any part
thereof, whether now or hereafter enacted and in force, including, without
limitation, the Americans with Disabilities Act of 1990, and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, either
of record or known to Borrower, at any time in force affecting the Property or
any part thereof, including, without limitation, any which may (i) require
repairs, modifications or alterations in or to the Property or any part thereof,
or (ii) in any way limit the use and enjoyment thereof.

“Lender” is defined in the preamble.

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

“Loan” has the meaning set forth in Section 2.1.

“Loan Agreement” means this Loan and Security Agreement, as same may be amended
or modified from time to time (including all schedules, exhibits, annexes and
appendices hereto).

“Loan Documents” means this Loan Agreement, the Note, the Mortgage, the
Assignment of Leases, the Assignment of Management Agreement, the Guaranty, the
Environmental Indemnity, the Financing Statements, and any and all other
documents and agreements accepted by Lender for the purposes of evidencing
and/or securing the Loan and any certificates delivered in connection with the
Loan.

“Management Agreement” means, individually and collectively, as the context
requires, the management agreement(s) for the Property in effect on the date
hereof between Borrower and the current Manager and any management agreement
which may hereafter be entered into in

10

--------------------------------------------------------------------------------

accordance with the terms and conditions hereof, pursuant to which any
subsequent Manager may hereafter manage the Property.

“Manager” means, collectively, the Person(s) (approved by Lender in accordance
with the terms and conditions hereof) that may hereafter be charged with
management of the Property pursuant to a Management Agreement.

“Material Adverse Effect” means (A) a material adverse effect upon the business,
operations, properties, assets or condition (financial or otherwise) of Borrower
or any other Borrower Party with respect to such party taken as a whole, or (B)
the material impairment of the ability of Borrower or any other Borrower Party
to perform its material obligations under any Loan Documents, or (C) the
impairment of the ability of Lender to enforce or collect any of the
Obligations. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then occurring events and existing
conditions would result in a Material Adverse Effect.

“Material Alteration” means any improvement or alteration affecting structural
elements of the Property the cost of which exceeds $250,000; provided, however,
that in no event shall (i) any tenant improvement work performed pursuant to any
Lease existing on the date hereof or entered into hereafter in accordance with
the provisions of this Loan Agreement or (ii) alterations performed as part of a
Restoration, constitute a Material Alteration.

“Maturity Date” shall mean the Scheduled Maturity Date, or such other date on
which the final payment of principal of the Note becomes due an payable as
therein or herein provided, whether at such Scheduled Maturity Date, by
acceleration, or otherwise.

“Maximum Rate” has the meaning set forth in Section 2.2(D).

“Moody’s” means Moody’s Investors Services, Inc. and its successors.

“Monthly Debt Service Payment” has the meaning set forth in Section 2.4(A).

“Mortgage” means, individually and collectively, as the context requires, those
certain Mortgages/Deeds of Trust, Assignment of Leases and Rents, Financing
Statement, Security Agreement and Fixture Filings each of even date herewith
from Borrower to Lender, constituting a Lien on each Individual Property as
Collateral for the Loan as same may be modified or amended from time to time.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 3(37) or
Section 4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate is making,
or is accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) years, or for
which Borrower or any ERISA Affiliate has any liability, including contingent
liability.

“Note” means that certain Promissory Note, dated of even date herewith, made by
Borrower to Lender evidencing the Loan, as amended, modified, restated or split,
and any replacement notes therefor.

11

--------------------------------------------------------------------------------

“O & M Program” has the meaning set forth in Section 5.7(D).

“Obligations” means the Loan and all other obligations, liabilities and
indebtedness of every nature of Borrower from time to time owed to Lender under
the Loan Documents, including the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable under the Loan
Documents whether before or after the filing of a proceeding under the
Bankruptcy Code by or against Borrower.

“Operating Budget” means Borrower’s budget setting forth Borrower’s best
estimate, after due consideration, of all revenue, costs, expenses and Operating
Expenses for the Property, for the Property which budget has been reasonably
approved by Lender if and to the extent required hereunder.

“Operating Expenses” means all costs and expenses accrued in accordance with
GAAP relating to the operation, maintenance, repair, use and management of the
Property, including, without limitation, utilities, repairs and maintenance,
insurance, property taxes and assessments, advertising expenses, payroll and
related taxes, equipment lease payments and actual management fees, but
excluding (i) principal, interest and other payments made by Borrower under the
Loan Documents, and (ii) depreciation, amortization and other non-cash items.

“Operating Expenses Sub-Account” has the meaning set forth in Section 7.3.

“Pacific Hills Property” means the Pacific Hills Property identified in the
definition of “Individual Property” below.

“Payment Date” has the meaning set forth in Section 2.4.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan,
which is subject to the provisions of Part 3 of Title I of ERISA, Title IV of
ERISA or Section 412 of the IRC and (i) which is maintained for employees of
Borrower, or any of its ERISA Affiliates, (ii) which has at any time within the
preceding six (6) years been maintained for the employees of Borrower or any of
its current or former ERISA Affiliates, or (iii) for which Borrower or any ERISA
Affiliate has any liability, including contingent liability.

“Permitted Encumbrances” means (i) the Mortgage and the other Liens of the Loan
Documents in favor of Lender; (ii) the items shown in Schedule B to the Title
Policy as of Closing; (iii) future liens for property taxes and assessments not
then delinquent; (iv) Liens for Impositions not yet due and payable or Liens
arising after the date hereof which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted in
accordance with Section 5.3(B) hereof; (v) in the case of Liens arising after
the date hereof, statutory Liens of carriers, warehousemen, mechanics,
materialmen and other similar Liens arising by operation of law, which are
incurred in the ordinary course of business and discharged by Borrower by
payment, bonding or otherwise within thirty (30) days after the filing thereof
or which are being contested in good faith in accordance with Section 5.3(B)
hereof; (vi) rights of existing and future tenants, as tenants only, pursuant to
the Leases; and (vii) any other Lien to which Lender may expressly consent in
writing.

12

--------------------------------------------------------------------------------

“Permitted Investments” means any one or more of the following obligations or
securities acquired at a purchase price of not greater than par (unless Borrower
deposits into the applicable Sub-Account cash in the amount by which the
purchase price exceeds par), including those issued by any Servicer, the trustee
under any Securitization or any of their respective Affiliates, payable on
demand or having a maturity date not later than the Business Day immediately
prior to the date on which the invested sums are required for payment of an
obligation for which the related Sub-Account was created and meeting one of the
appropriate standards set forth below:

                                                      (i)            obligations
of, or obligations fully guaranteed as to payment of principal and interest by,
the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States of
America including, without limitation, obligations of: the U.S. Treasury (all
direct or fully guaranteed obligations), the Farmers Home Administration
(certificates of beneficial ownership), the General Services Administration
(participation certificates), the U.S. Maritime Administration (guaranteed Title
XI financing), the Small Business Administration (guaranteed participation
certificates and guaranteed pool certificates), the U.S. Department of Housing
and Urban Development (local authority bonds) and the Washington Metropolitan
Area Transit Authority (guaranteed transit bonds); provided, however, that the
investments described in this clause (i) must (A) have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or change, (B) if
rated by S&P, not have an “r” highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, have an interest rate tied to a
single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) not be subject to liquidation prior to
their maturity;

                                                    (ii)            Federal
Housing Administration debentures;

                                                   (iii)            obligations
of the following United States government sponsored agencies: Federal Home Loan
Mortgage Corp. (debt obligations), the Farm Credit System (consolidated
systemwide bonds and notes), the Federal Home Loan Banks (consolidated debt
obligations), the Federal National Mortgage Association (debt obligations), the
Student Loan Marketing Association (debt obligations), the Financing Corp. (debt
obligations), and the Resolution Funding Corp. (debt obligations); provided,
however, that the investments described in this clause (iii) must (A) have a
predetermined fixed dollar amount of principal due at maturity that cannot vary
or change, (B) if rated by S&P, not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, have an
interest rate tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) not be subject to
liquidation prior to their maturity;

                                                  (iv)            federal funds,
unsecured certificates of deposit, time deposits, bankers’ acceptances and
repurchase agreements with maturities of not more than 365 days of any bank, the
short term obligations of which at all times are rated in the highest short term
rating category by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency in the highest short term rating category
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial or, if higher, then current ratings
assigned to any class of certificates or other securities issued in connection
with any Securitization backed in whole or in part by the Loan (collectively the
“Certificates”) provided, however, that the

13

--------------------------------------------------------------------------------

investments described in this clause (iv) must (A) have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or change, (B) if
rated by S&P, not have an “r” highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, have an interest rate tied to a
single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) not be subject to liquidation prior to
their maturity;

                                                    (v)            fully Federal
Deposit Insurance Corporation-insured demand and time deposits in, or
certificates of deposit of, or bankers’ acceptances issued by, any bank or trust
company, savings and loan association or savings bank, the short term
obligations of which at all times are rated in the highest short term rating
category by each Rating Agency (or, if not rated by all Rating Agencies, rated
by at least one Rating Agency in the highest short term rating category and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial or, if higher, then current ratings
assigned to any class of Certificates); provided, however, that the investments
described in this clause (v) must (A) have a predetermined fixed dollar of
principal due at maturity that cannot vary or change, (B) if rated by S&P, not
have a “r” highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, have an interest rate tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) not be subject to liquidation prior to their maturity;

                                                  (vi)            debt
obligations with maturities of not more than 365 days and at all times rated by
each Rating Agency (or, if not rated by all Rating Agencies, rated by at least
one Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investments would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial or, if higher, then
current ratings assigned to the Certificates) in its highest long-term unsecured
debt rating category; provided, however, that the investments described in this
clause (vi) must (A) have a predetermined fixed dollar amount of principal due
at maturity that cannot vary or change, (B) if rated by S&P, not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, have an interest rate tied to a single interest rate index
plus a fixed spread (if any) and must move proportionately with that index, and
(D) not be subject to liquidation prior to their maturity;

                                                 (vii)            commercial
paper (including both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a specified date not more
than one year after the date of issuance thereof) with maturities of not more
than 365 days and that at all times is rated by each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial or, if higher, then current ratings assigned to any
class of Certificates) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause (vii) must (A)
have a predetermined fixed dollar amount of principal due at maturity that
cannot vary or change, (B) if rated by S&P, not have a “r” highlighter affixed
to their rating, (C) if such investments have a variable rate of interest, have
an interest rate tied to a single interest rate index plus a fixed spread (if
any) and must move proportionately with that index, and (D) not be subject to
liquidation prior to their maturity;

14

--------------------------------------------------------------------------------

                                               (viii)            units of
taxable money market funds, which funds are regulated investment companies, seek
to maintain a constant net asset value per share and have the highest rating
from each Rating Agency (or, if not rated by all Rating Agencies, rated by at
least one Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the initial or, if higher, then
current ratings assigned to any class of Certificates) for money market funds or
mutual funds; and

                                                  (ix)            any other
security, obligation or investment which has been approved as a Permitted
Investment in writing by (a) Lender and (b) each Rating Agency, as evidenced by
a written confirmation that the designation of such security, obligation or
investment as a Permitted Investment will not, in and of itself, result in a
downgrade, qualification or withdrawal of the initial or, if higher, then
current ratings assigned to any class of Certificates by such Rating Agency;

provided, however, that such instrument continues to qualify as a “cash flow
investment” pursuant to Code Section 860G(a)(6) earning a passive return in the
nature of interest and no obligation or security shall be a Permitted Investment
if (A) such obligation or security evidences a right to receive only interest
payments or (B) the right to receive principal and interest payments on such
obligation or security are derived from an underlying investment that provides a
yield to maturity in excess of 120% of the yield to maturity at par of such
underlying investment.

“Person” means and includes natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not legal entities,
and governments and agencies and political subdivisions thereof and their
respective permitted successors and assigns (or in the case of a governmental
Person, the successor functional equivalent of such Person).

“Pre-Existing Condition” has the meaning set forth in Section 5.5.

“Prepayment Consideration” has the meaning set forth in Section 2.6(C).

“Principal Balance” means the outstanding principal balance of the Loan from
time to time.

“Proceeds” shall have the meaning given in the UCC and, in any event, shall
include, without limitation, all proceeds, products, offspring, rents, profits
or receipts, in whatever form, arising from the Collateral.

“Prohibited Transaction” shall mean a prohibited transaction as described under
Section 406 of ERISA or Section 4975 of the IRC which is not the subject of a
statutory exemption under Section 408(b) of ERISA or an administrative exemption
granted pursuant to Section 408(a) of ERISA.

“Property” means collectively each and every Individual Property.

15

--------------------------------------------------------------------------------

“Rating Agency” shall mean any of S&P, Moody’s, Fitch, any successors thereto,
or any other nationally-recognized statistical rating organization designated by
Lender in its sole discretion.

“Rating Confirmation” with respect to the transaction or matter in question,
shall mean: (i) if all or any portion of the Loan, by itself or together with
other loans, has been the subject of a Securitization, then each applicable
Rating Agency shall have confirmed in writing that such transaction or matter
shall not result in a downgrade, qualification, or withdrawal of any rating then
in effect for any class of certificates or other securities issued in connection
with such Securitization; and (ii) if the Loan or any portion thereof has not
been the subject of a Securitization, (a) the applicable Rating Agency shall
have confirmed in writing that such transaction or matter shall not result in a
downgrade, qualification, or withdrawal of any shadow rating or other rating
provided to the Loan or any portion thereof not the subject of a Securitization,
and (b) Lender shall have determined in its reasonable discretion (taking into
consideration such factors as Lender may determine, including the attributes of
the loan pool in which the Loan might reasonably be expected to be securitized)
that no rating for any certificate or other securities that would be issued in
connection with Securitization of such portion of the Loan would be downgraded,
qualified, or withheld by reason of such transaction or matter.

“Rating Criteria” with respect to any Person, shall mean that (i) the short-term
unsecured debt obligations of such Person are rated at least “A-1” by S&P, “P-1”
by Moody’s and “F-1” by Fitch, if deposits are held by such Person for a period
of less than one month, or (ii) the long-term unsecured debt obligations of such
Person are rated at least “AA-” by S&P, “Aa3” by Moody’s and “AA-” by Fitch, if
deposits are held by such Person for a period of one month or more.

“Receipts” means all revenues, receipts and other payments of every kind arising
from ownership or operation of the Property and received by Borrower or an
Affiliate of Borrower, including, without limitation, all warrants, stock
options, or equity interests in any tenant, licensee or other Person occupying
space at, or providing services related to or for the benefit of, the Property
received by Borrower or an Affiliate of Borrower in lieu of rent or other
payment.

“Related Person” means in relation to any Person, any other Person that is (i)
an Affiliate of the first Person; (ii) the sibling of the first Person or of the
Affiliate; (iii) the then-current and former spouses of the first Person or of
the Affiliate; (iv) a Person that shares or has shared a residence with the
first Person or with the Affiliate; (v) the ancestor or descendant of the first
Person or of any other Person described in this items (i) through (iv) above; or
(vi) any other Person that, by reason of familial, economic, social or other
relationship, would reasonably be expected to favor the first Person or to act
as requested by the first Person. Where expressions such as “[name of party] or
any Related Person” are used, the same shall refer to the named party and any
Related Person of the named party.

“Release Date” shall mean the earlier of (i) the Payment Date in October, 2009,
or (ii) the date that is two (2) years from the “start up day” (within the
meaning of Section 860G(a)(9) of the IRC) of the REMIC Trust established in
connection with the final Securitization involving the Loan.  Within thirty (30)
days of Borrower’s written request, Lender shall confirm in writing

16

--------------------------------------------------------------------------------

the specific date that constituted the “start up day,” if then available in
light of the completion of the related Securitization involving the Loan.

“Rent Roll” has the meaning set forth in Section 3.1.

“Rents” has the meaning set forth in the Granting Clauses of the Mortgage.

“Reserves” means the reserves held by or on behalf of Lender pursuant to this
Loan Agreement or other Loan Documents, including without limitation, the
reserves established pursuant to Article VI.

“Restoration” has the meaning set forth in Section 5.5.

“Restoration Threshold” means an amount equal to $150,000.

“S&P” shall mean Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc and its successors.

“Scheduled Defeasance Payments” shall mean scheduled payments of interest and
principal under the Note for all Payment Dates occurring after the Defeasance
Date and up to and including the Scheduled Maturity Date (including the
outstanding Principal Balance of the Loan as of the Scheduled Maturity Date),
and all payments required after the Defeasance Date, if any, under the Loan
Documents for servicing fees, and other similar charges.

“Scheduled Maturity Date” shall mean October 6, 2016.

“Secondary Market Transaction” has the meaning set forth in Section 10.1.

“Securities” (whether or not capitalized) means any stock, shares, voting trust
certificates, bonds, debentures, options, warrants, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as “securities” or any certificates of
interest, shares or participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.

“Securitization” means a public or private rated offering of securities
representing direct or indirect interests in one or more mortgage loans or the
right to receive income therefrom.

“Security Agreement” shall mean a security agreement in form and substance that
would be satisfactory to a prudent lender pursuant to which Borrower grants
Lender a perfected, first priority security interest in the Defeasance
Collateral Account and the Defeasance Collateral.

“Security Deposits” shall mean all security (whether cash, letter of credit or
otherwise) given to Borrower or any agent or Person acting on behalf of Borrower
in connection with the Leases.

“Servicer” means a servicer selected by Lender from time to time in its sole
discretion to service the Loan.

17

--------------------------------------------------------------------------------

“Sub-Accounts” has the meaning set forth in Section 7.1.

“Successor Borrower” has the meaning set forth in Section 2.3.

“Supplemental Debt Reserve Sub-Account” has the meaning set forth in Section
7.3.

“Survey” has the meaning set forth in Section 3.1(H).

“Taking” means a taking or voluntary conveyance during the term hereof of all or
part of the Property, or any interest therein or right accruing thereto or use
thereof, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding by any Governmental Authority affecting the Property
or any portion thereof whether or not the same shall have actually been
commenced.

“Tax Liabilities” has the meaning given to such term in Section 2.8.

“Title Company” means Stewart Title Insurance Company.

“Title Policy” means collectively each mortgagee’s policy or policies of title
insurance pertaining to each Mortgage issued to Lender in connection with the
Closing meeting the requirements of Section 3.1(G).

“Transfer and Assumption” and “Transferee Borrower” have the respective meanings
set forth in Section 11.3.

“UCC” means the New York Uniform Commercial Code, as amended from time to time.

“U.S. Obligations” shall mean securities that are (i) direct obligations of the
United States of America for the full and timely payment of which its full faith
and credit is pledged or (ii) obligations of an entity controlled or supervised
by and acting as an agency or instrumentality and guaranteed as a full faith and
credit obligation which shall be fully and timely paid by the United States of
America, which in either case are not callable or redeemable at the option of
the issuer thereof (including a depository receipt issued by a bank (as defined
in Section 3(a)(2) of the United States Securities Act)) as custodian with
respect to any such U.S. Obligations or a specific payment of principal of or
interest on any such U.S. Obligations held by such custodian for the account of
the holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the securities or the specific payment of principal of
or interest on the securities evidenced by such depository receipt.

“Work” has the meaning set forth in Section 6.7.

“Work Reserves” has the meaning set forth in Section 6.7.

18

--------------------------------------------------------------------------------

Section 1.2      Accounting Terms.

Except as otherwise expressly provided herein, all accounting terms not
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP.

Section 1.3      Other Definitional Provisions.

References to “Articles”, “Sections”, “Subsections”, “Exhibits” and “Schedules”
shall be to Articles, Sections, Subsections, Exhibits and Schedules,
respectively, of this Loan Agreement unless otherwise specifically provided. Any
of the terms defined in Section 1.1 may, unless the context otherwise requires,
be used in the singular or the plural depending on the reference. In this Loan
Agreement, “hereof”, “herein”, “hereto”, “hereunder” and the like mean and refer
to this Loan Agreement as a whole and not merely to the specific article,
section, subsection, paragraph or clause in which the respective word appears;
words importing any gender include the other genders; references to “writing”
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words “including”, “includes” and “include” shall be
deemed to be followed by the words “without limitation”; and any reference to
any statute or regulation may include any amendments of same and any successor
statutes and regulations. Further, (i) any reference to any agreement or other
document shall include subsequent amendments, assignments, and other
modifications thereto, and (ii) any reference to any Person may include such
Person’s respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons.

ARTICLE II
TERMS OF THE LOAN

Section 2.1      Loan.

(A)              Loan. Subject to the terms and conditions of this Loan
Agreement and in reliance upon the representations and warranties of Borrower
contained herein, Lender agrees to lend to Borrower, and Borrower agrees to
borrow from Lender, the Loan, in the aggregate amount of $122,610,000 (such loan
and the obligation of Borrower to repay the same together with all interest and
other amounts from time to time owing hereunder are referred to collectively
herein as the “Loan”).  Borrower’s obligation to pay the principal and interest
on the Loan (including late charges, Default Rate interest, and the Prepayment
Consideration, if any) shall be evidenced by this Loan Agreement and by the
Note, duly executed and delivered by Borrower.  The Note shall be payable as to
principal, interest, late charges, Default Rate interest and Prepayment
Consideration, if any, as specified in this Loan Agreement, with a final
maturity on the Maturity Date.  Borrower shall pay all outstanding Obligations
on the Maturity Date.

(B)              Note. On the Closing Date, Borrower shall execute and deliver
to Lender the Note, made by Borrower to the order of Lender, in the aggregate
original principal amount of $122,610,000.

(C)              Use of Proceeds. The proceeds of the Loan funded at Closing
shall be used to (i) repay any existing indebtedness secured by any mortgage
encumbering all or any part of the Property; (ii) pay all recording fees and
taxes, title insurance premiums, the reasonable costs and expenses incurred by
Lender, including the legal fees and expenses of counsel to Lender, and

19

--------------------------------------------------------------------------------

other costs and expenses approved by Lender (which approval will not be
unreasonably withheld) related to the Loan and (iii) establish the Reserves, if
any, required hereunder. The remaining proceeds of the Loan, if any, shall be
disbursed to Borrower; provided, however, that any and all such remaining
proceeds of the Loan will be used for commercial purposes only and will not be
used for personal, family, agricultural or household use.

Section 2.2      Interest.

(A)              Rate of Interest. The outstanding principal balance of the Loan
shall bear interest at a rate per annum equal to the Interest Rate.

(B)              Default Rate. Notwithstanding the foregoing, upon the
occurrence and during the continuance of an Event of Default and in any event
from and after the Maturity Date of the Loan, the Principal Balance of the Loan
and all other outstanding Obligations shall bear interest until paid in full at
a rate per annum that is five percent (5.0%) in excess of the Interest Rate
otherwise applicable under this Loan Agreement and the Note (the “Default
Rate”).

(C)              Computation of Interest. Interest on the Loan and all other
Obligations owing to Lender shall be computed on the basis of a 360‑day year,
and shall be charged for the actual number of days elapsed during any month or
other accrual period. Interest shall be payable in arrears (except as provided
in the first sentence of Section 2.4(A) hereof).

(D)              Interest Laws. Notwithstanding any provision to the contrary
contained in this Loan Agreement or the other Loan Documents, Borrower shall not
be required to pay, and Lender shall not be permitted to collect, any amount of
interest in excess of the maximum amount of interest permitted by law (“Excess
Interest”). If any Excess Interest is provided for or determined by a court of
competent jurisdiction to have been provided for in this Loan Agreement or in
any of the other Loan Documents, then in such event: (1) the provisions of this
Section shall govern and control; (2) Borrower shall not be obligated to pay any
Excess Interest; (3) any Excess Interest that Lender may have received hereunder
shall be, at Lender’s option, (a) applied as a credit against either or both of
the Principal Balance of the Loan or accrued and unpaid interest thereunder (not
to exceed the maximum amount permitted by law), (b) refunded to the payor
thereof, or (c) any combination of the foregoing; (4) the interest rate(s)
provided for herein shall be automatically reduced to the maximum lawful rate
allowed from time to time under applicable law (the “Maximum Rate”), and this
Loan Agreement and the other Loan Documents shall be deemed to have been and
shall be, reformed and modified to reflect such reduction; and (5) Borrower
shall not have any action against Lender for any damages arising out of the
payment or collection of any Excess Interest. Notwithstanding the foregoing, if
for any period of time interest on any Obligation is calculated at the Maximum
Rate rather than the applicable rate under this Loan Agreement, and thereafter
such applicable rate becomes less than the Maximum Rate, the rate of interest
payable on such Obligations shall, to the extent permitted by law, remain at the
Maximum Rate until Lender shall have received or accrued the amount of interest
which Lender would have received or accrued during such period on Obligations
had the rate of interest not been limited to the Maximum Rate during such
period. If the Default Rate shall be finally determined to be unlawful, then the
applicable Interest Rate shall be applicable during any time when the Default
Rate would have been applicable hereunder, provided however

20

--------------------------------------------------------------------------------

that if the Maximum Rate is greater or lesser than the applicable Interest Rate,
then the foregoing provisions of this paragraph shall apply.

(E)               Late Charges. If any payment of principal, interest or other
sums shall not be made to Lender on the date the same is due hereunder or under
any of the other Loan Documents, then Borrower shall pay to Lender, in addition
to all sums otherwise due and payable, a late fee in an amount equal to five
percent (5.0%) of such principal, interest or other sums due hereunder or under
any other Loan Document (or, in the case of a partial payment, the unpaid
portion thereof), such late charge to be immediately due and payable without
demand by Lender; provided, that such late fee provided under this subsection
(E) shall not be charged with respect to any such late payment if (i) no more
than one late payment occurs in any twenty-four (24) calendar month period
during the term of the Loan and (ii) the delinquency in making such payment is
cured within five days after the date upon which such payment is due (no notice
of delinquency shall be required to be given by Lender).

Section 2.3      Defeasance.

(A)              Defeasance. (i) Borrower shall have the right at any time after
the Release Date and prior to the First Open Payment Date to obtain a release of
the Lien of the Mortgage encumbering the Property (a “Defeasance”) upon
satisfaction of the following conditions:

(a) Borrower shall provide Lender at least thirty (30) days’ prior written
notice (or such shorter period of time if permitted by Lender in its sole
discretion) specifying a date (the “Defeasance Date”) on which Borrower shall
have satisfied the conditions in this Section 2.3(A) and on which it shall
effect the Defeasance;

(b) Borrower shall pay to Lender (A) all payments of interest due on the Loan to
and including the Defeasance Date and (B) all other sums, then due under the
Note, this Loan Agreement, the Mortgage and the other Loan Documents;

(c) Borrower shall irrevocably deposit the Defeasance Collateral into the
Defeasance Collateral Account and otherwise comply with the provisions of
Sections 2.3(B) and (C) hereof;

(d) Borrower shall execute and deliver to Lender a Security Agreement in respect
of the Defeasance Collateral Account and the Defeasance Collateral;

(e) Borrower shall deliver to Lender an opinion of counsel for Borrower that is
customary in commercial lending transactions and subject only to normal
qualifications, assumptions and exceptions opining, among other things, that (v)
Lender has a legal and valid perfected first priority security interest in the
Defeasance Collateral Account and the Defeasance Collateral, (w) if a
Securitization has occurred, the REMIC Trust formed pursuant to such
Securitization will not fail to maintain its status as a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code as a result
of the defeasance pursuant to this Section 2.3(A), (x) a defeasance pursuant to
this Section 2.3(A) will not result in a deemed exchange for purposes of the
Code and will not adversely affect the status of the Note as indebtedness for
federal income tax purposes, (y) delivery of the Defeasance Collateral and the
grant of a security interest therein to

21

--------------------------------------------------------------------------------

Lender shall not constitute an avoidable preference under Section 547 of the
Bankruptcy Code or applicable state law and (z) if and to the extent required by
the Rating Agencies, a non-consolidation opinion with respect to the Successor
Borrower;

(f) Borrower shall deliver to Lender a confirmation in writing from the
applicable Rating Agencies to the effect that the release of the Property from
the Lien of the Mortgage as contemplated by this Section 2.3(A) and the
substitution of the Defeasance Collateral will not result in a downgrading,
withdrawal or qualification of the respective ratings in effect immediately
prior to such defeasance for the Certificates issued in connection with the
Securitization which are then outstanding;

(g) Borrower shall deliver an officer’s certificate certifying that the
requirements set forth in this Section 2.3(A) have been satisfied;

(h) Borrower shall deliver a certificate of a nationally recognized public
accounting firm reasonably acceptable to Lender certifying that the Defeasance
Collateral will generate monthly amounts equal to or greater than the Scheduled
Defeasance Payments;

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

(j) Borrower shall pay all costs and expenses of Lender incurred in connection
with the defeasance, including Lender’s reasonable attorneys’ fees and expenses
and Rating Agency fees and expenses.

(ii) If a Defeasance occurs and all of the requirements of this Section 2.3 have
been satisfied, Lender shall execute any and all documents required to release
the Property from the Lien of the Mortgage and the Assignment of Leases and the
Defeasance Collateral, pledged pursuant to the Security Agreement, shall be the
sole source of collateral securing the Note. In connection with the release of
the Lien, Borrower shall submit to Lender, not less than thirty (30) days prior
to the Defeasance Date (or such shorter time as permitted by Lender in its sole
discretion), a release of Lien (and related Loan Documents) for execution by
Lender. Such release shall be in a form appropriate in the jurisdiction in which
the Property is located and contain standard provisions protecting the rights of
a releasing lender. In addition, Borrower shall provide all other documentation
Lender reasonably requires to be delivered by Borrower in connection with such
release. Borrower shall pay all costs, taxes and expenses associated with the
release of the Lien of the Mortgage and the Assignment of Leases, including
Lender’s reasonable attorneys’ fees. Except as set forth in this Section 2.3, no
repayment, prepayment or defeasance of all or any portion of the Note shall
cause, give rise to a right to require, or otherwise result in, the release of
the Lien of the Mortgage on the Property.

(B)              Defeasance Collateral Account. On or before the date on which
Borrower delivers the Defeasance Collateral, Borrower or Successor Borrower (as
applicable) shall open at any Eligible Bank the defeasance collateral account
(the “Defeasance Collateral Account”) which shall at all times be an Eligible
Account. The Defeasance Collateral Account shall contain only (i) Defeasance
Collateral and (ii) cash from interest and principal paid on the Defeasance

22

--------------------------------------------------------------------------------

Collateral. All cash from interest and principal payments paid on the Defeasance
Collateral shall be paid over to Lender on each Payment Date and applied to the
monthly installments of interest on the Loan and, upon Maturity, to accrued
interest and the Principal Balance of the Loan. Borrower shall cause the
Eligible Bank at which the Defeasance Collateral is deposited to enter an
agreement with Borrower and Lender, satisfactory to Lender in its sole
discretion, pursuant to which such Eligible Bank shall agree to hold and
distribute the Defeasance Collateral in accordance with this Loan Agreement.
Borrower (or Successor Borrower, as applicable) shall be the owner of the
Defeasance Collateral Account and shall report all income accrued on Defeasance
Collateral for federal, state and local income tax purposes in its income tax
return. Borrower shall prepay all costs and expenses associated with opening and
maintaining the Defeasance Collateral Account. Lender shall not in any way be
liable by reason of any insufficiency in the Defeasance Collateral Account.

(C)              Successor Borrower. In connection with a Defeasance under this
Section 2.3, Borrower shall, if required by the Rating Agencies or if Borrower
so elects or Lender requires, establish or designate a successor entity (the
“Successor Borrower”) which shall be a single purpose bankruptcy remote entity
and which shall be approved by the Rating Agencies. Any such Successor Borrower
may, at Borrower’s option, be an Affiliate of Borrower unless the Rating
Agencies or Lender shall require otherwise. Borrower shall transfer and assign
all obligations, rights and duties under and to the Note, together with the
Defeasance Collateral, to such Successor Borrower. Such Successor Borrower shall
assume the obligations under the Note and the Security Agreement. Borrower shall
pay $1,000 to any such Successor Borrower as consideration for assuming the
obligations under the Note and the Security Agreement. Borrower shall pay all
reasonable costs and expenses incurred by Lender, including Lender’s attorney’s
fees and expenses incurred in connection therewith, and all fees, expenses and
other charges of the Rating Agencies.

Section 2.4      Payments.

(A)              Payments of Interest and Principal. Borrower shall make a
payment to Lender of interest only on the Closing Date for the period from the
Closing Date through October 5, 2006.  Commencing on the sixth (6th) day of
November (the “First Payment Date”) and on the sixth (6th) day of each calendar
month thereafter (each, with the First Payment Date, a “Payment Date”), Borrower
shall make monthly payments (each, a “Monthly Debt Service Payment”) of interest
accrued and unpaid on the Loan.  The schedule of monthly interest payments is
set forth on Schedule 2.4(A).  Prior to the occurrence of an Event of Default,
all Monthly Debt Service Payments shall be applied to accrued and unpaid
interest on the Loan. After an Event of Default, Borrower irrevocably waives the
right to direct the application of any and all payments at any time hereafter
received by Lender from or on behalf of Borrower, and Borrower irrevocably
agrees that Lender shall have the continuing exclusive right to apply any and
all such payments against the then due and owing obligations of Borrower in such
order of priority as Lender may deem advisable.

(B)              Date and Time of Payment. Borrower shall receive credit for
payments on the Loan which are transferred to the account of Lender as provided
below (i) on the day that such funds are received by Lender if such receipt
occurs by 1:00 p.m. (New York time) on such day, or (ii) on the next succeeding
Business Day after such funds are received by Lender if such

23

--------------------------------------------------------------------------------

receipt occurs after 1:00 p.m. (New York time). Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day.

(C)              Manner of Payment. Borrower promises to pay all of the
Obligations relating to the Loan as such amounts become due or are declared due
pursuant to the terms of this Loan Agreement. All payments by Borrower on the
Loan shall be made without deduction, defense, set off or counterclaim and in
immediately available funds delivered to Lender by electronic transfer to such
accounts at such banks as Lender may from time to time designate in writing to
Borrower at least 10 business days prior a Payment Date, provided that in the
event electronic transfer is unavailable, Borrower shall be permitted to pay any
of the Obligations relating to the Loan by a cashier’s check drawn on an
Eligible Bank.

Section 2.5      Maturity. To the extent not sooner due and payable in
accordance with the Loan Documents, the then outstanding principal balance of
the Loan, all accrued and unpaid interest thereon, and all other sums then owing
to Lender hereunder and under the Note, the Mortgage and the other Loan
Documents, shall be due and payable on the Maturity Date, which shall, subject
to earlier acceleration hereunder, be the Scheduled Maturity Date.

Section 2.6      Prepayment.

(A)              Limitation on Prepayment; Prepayment Consideration Due on
Acceleration. Borrower shall have no right to prepay the Loan in whole or part
at any time, except as expressly set forth in this provision. Commencing on the
First Open Payment Date, Borrower may prepay the Loan in whole, but not in part,
without payment of Prepayment Consideration, provided that (i) Borrower shall
provide to Lender not less than thirty (30) days’ prior written notice of such
prepayment, (ii) together with such prepayment Borrower also shall pay all
accrued and unpaid interest and all other Obligations and (iii) if such
prepayment occurs on any day other than a Payment Date, then together therewith
Borrower also shall pay to Lender the amount of interest that would have accrued
on the amount being prepaid from and including the date of such prepayment to
(but excluding) the Payment Date following such date of prepayment.  Borrower
shall not be required to pay any Prepayment Consideration with respect to an
application of insurance proceeds or condemnation awards by Lender pursuant to
the Loan Agreement or Mortgage in the absence of an Event of Default.

(B)              Prepayment Consideration Due. If the Maturity Date shall be
accelerated to a date prior to the Scheduled Maturity Date, or if any prepayment
of all or any portion of the Principal Balance hereunder occurs, whether in
connection with Lender’s acceleration of the unpaid Principal Balance of the
Loan or in any other circumstances whatsoever, or if the Mortgage is satisfied
or released by foreclosure (whether by power of sale or judicial proceeding),
deed in lieu of foreclosure or by any other means, then the Prepayment
Consideration shall become immediately due and owing and Borrower shall
forthwith pay the Prepayment Consideration to Lender. The foregoing shall not
create any right of prepayment. Borrower shall have no right whatsoever to
prepay all or any portion of the principal balance of the Loan, except as set
forth in Section 2.6(A).

24

--------------------------------------------------------------------------------

(C)              Definitions. The “Prepayment Consideration” shall be the amount
equal to the sum of the sum of (a) the interest which would have accrued on the
principal balance of the Loan during the remaining days of the Interest Period
containing the date (the “YMP Due Date”) which is the earlier of (x) the date of
prepayment of the Loan or (y) such earlier date upon which the principal balance
of the Loan shall become due and payable, whether as a result of acceleration of
the maturity of the Loan or otherwise, plus (b) the greater of (i) 4% of the
unpaid principal balance of the Loan on the YMP Due Date (assuming no prepayment
of the Loan on such date) or (ii) the product obtained by multiplying (1) the
entire principal balance of the Loan on the YMP Due Date (assuming no prepayment
of the Loan on such date), times (2) the difference (expressed as a decimal;
e.g., a 10% interest rate = 0.10) obtained by subtracting the Yield Rate (as
defined below) from the interest rate on the Loan, times (3) the present value
factor using the following formula:

 1-(1 + r/12)-n
         r

where:
r=         Yield Rate, and
n=        the number of monthly Interest Periods remaining between the
            YMP Due Date and the scheduled Maturity Date

An “Interest Period” shall mean each period commencing on and including a
Payment Date and ending on the day one day prior to the next Payment Date.  The
“Yield Rate” shall be the annualized yield on securities selected by Lender
issued by the United States Treasury, excluding Treasury Inflation Protected
Securities (TIPS) or any inflation indexed securities issued by the Treasury,
having a maturity corresponding to the scheduled Maturity Date of this Note as
determined by Lender, as quoted in Federal Reserve Statistical Release
[H. 15(519)] under the heading “U.S. Government Securities - Treasury Constant
Maturities” for the fifth Business Day preceding the YMP Due Date, converted to
a monthly equivalent yield.  If yields for such securities of such maturity are
not shown in such publication, then the Yield Rate shall be determined by Lender
by linear interpolation between the yields of securities of the next longer and
next shorter maturities. If said Federal Reserve Statistical Release or any
other information necessary for determination of the Yield Rate in accordance
with the foregoing is no longer published or is otherwise unavailable, then the
Yield Rate shall be determined by Lender based on comparable data.  The Lender’s
calculation of the Prepayment Consideration shall be conclusive except in the
case of manifest error.

Section 2.7      Outstanding Balance. The balance on Lender’s books and records
shall be presumptive evidence (absent manifest error) of the amounts owing to
Lender by Borrower; provided that any failure to record any transaction
affecting such balance or any error in so recording shall not limit or otherwise
affect Borrower’s obligation to pay the Obligations.

Section 2.8      Taxes. Any and all payments or reimbursements made hereunder or
under the Note shall be made free and clear of and without deduction for any and
all taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto arising out of or in connection with the
transactions contemplated by the Loan Documents (all such taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto excluding

25

--------------------------------------------------------------------------------

taxes imposed on net income in accordance with the following sentence are
referred to herein as “Tax Liabilities”). Notwithstanding the foregoing,
Borrower shall not be liable for taxes imposed on the net income of Lender by
the jurisdiction under the laws of which Lender is organized or doing business
or any political subdivision thereof and taxes imposed on its net income by the
jurisdiction of Lender’s applicable lending office or any political subdivision
thereof or federal income taxes imposed on Lender’s net income. If Borrower
shall be required by law to deduct any such Tax Liabilities (or amounts in
estimation or reimbursement for the same) from or in respect of any sum payable
hereunder to Lender, then the sum payable hereunder shall be increased as may be
necessary so that, after making all required deductions, Lender receives an
amount equal to the sum it would have received had no such deductions been made.

Section 2.9      Reasonableness of Charges. Borrower agrees that (i) the actual
costs and damages that Lender would suffer by reason of an Event of Default
(exclusive of the attorneys’ fees and other costs incurred in connection with
enforcement of Lender’s rights under the Loan Documents) or a prepayment would
be difficult and needlessly expensive to calculate and establish, and (ii) the
amounts of the Default Rate, the late charges, and the Prepayment Consideration
are reasonable, taking into consideration the circumstances known to the parties
at this time, and (iii) such Default Rate and late charges and Lender’s
reasonable attorneys’ fees and other costs and expenses incurred in connection
with enforcement of Lender’s rights under the Loan Documents shall be due and
payable as provided herein, and (iv) such Default Rate, late charges, Prepayment
Consideration, and the obligation to pay Lender’s reasonable attorneys’ fees and
other enforcement costs do not, individually or collectively, constitute a
penalty.

ARITCLE III
CONDITIONS TO LOAN

Section 3.1      Conditions to Funding of the Loan on the Closing Date. The
obligations of Lender to fund the Loan are subject to the prior or concurrent
satisfaction or waiver of the conditions set forth below, and to satisfaction of
any other conditions specified herein or elsewhere in the Loan Documents. Where
in this Section any documents, instruments or information are to be delivered to
Lender, then the condition shall not be satisfied unless the same shall be in
form and substance satisfactory to Lender.

(A)              Loan Documents. On or before the Closing Date, Borrower shall
execute and deliver and cause to be executed and delivered to Lender all of the
Loan Documents, each, unless otherwise noted, of even date herewith, duly
executed, in form and substance satisfactory to Lender and in quantities
designated by Lender (except for the Note, of which only one shall be signed),
which Loan Documents shall become effective upon the Closing.

(B)              Origination Fees and Deposits. At the Closing and retained from
the proceeds of the Loan, Lender shall have received its origination fee, if
any, as set forth on the closing statement for the Loan, and the deposits
required herein, including without limitation, the initial deposits into the
Reserves and Accounts, shall have been made (and at Borrower’s option, the same
may be made from the proceeds of the Loan).

(C)              Performance of Agreements, Truth of Representations and
Warranties. Each Borrower Party and all other Persons executing any agreement on
behalf of any Borrower Party

26

--------------------------------------------------------------------------------

shall have performed in all material respects all agreements which this Loan
Agreement provides shall be performed on or before the Closing Date. The
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of the
Closing Date.

(D)              Closing Certificate. On or before the Closing Date, Lender
shall have received certificates of even date herewith executed on behalf of
Borrower by the chief financial officer (or similar officer of each Borrower)
truly and correctly stating that: (i) on such date, no Default or Event of
Default has occurred and is continuing; (ii) no material adverse change in the
financial condition or operations of the business of the Borrower, any
Guarantor, any principal of Borrower, any Individual Property or any tenant
under a material Lease at the Property and no material adverse change in the
projected cash flow of Borrower or the Property has occurred since the delivery
to Lender of any financial statements, budgets, proformas, or similar materials
(or if there has been any change, specifying such change in detail), and that
such materials delivered to Lender are true and materially complete and fairly
represent the financial condition of Borrower, Guarantor and principal of
Borrower and the cash flow of the Property; and (iii) there are no material
adverse facts or conditions concerning the Property, Guarantor and principals of
Borrower or any Borrower Party that have not been disclosed to Lender.

(E)               Opinions of Counsel. On or before the Closing Date, Lender
shall have received from legal counsel for each Borrower Party reasonably
satisfactory to Lender, such counsel’s written opinion as to such matters as
Lender shall reasonably request, including opinions to the effect that (i) each
of the Borrower Parties is duly formed, validly existing, and in good standing
in its state of organization and, in the case of Borrower, in the state where
the Property is located, (ii) this Loan Agreement and the Loan Documents have
been duly authorized, executed and delivered and are enforceable in accordance
with their terms subject to customary qualifications for bankruptcy and general
equitable principles; and (iii) Borrower would not be consolidated in
bankruptcies of its constituent owners, Manager or certain other Affiliates of
Borrower specified by Lender. Also on or before the Closing Date, Lender shall
have received an opinion of Borrower’s local counsel in the state where the
Property is located as to the enforceability of the Loan Documents and such
other matters as Lender may reasonably request.

(F)               Title Policy. On or before the Closing Date, Lender shall have
received and approved the pro forma Title Policy for the Property, and as of the
Closing, the Title Company shall be irrevocably committed and prepared to issue
the Title Policy.  The Title Policy shall be in form and substance satisfactory
to Lender, and include such reinsurance and direct access agreements as Lender
may require, insuring that the Mortgage is a valid first and prior enforceable
lien on the Property (including any easements appurtenant thereto) subject only
to such exceptions to coverage as are acceptable to Lender. The Title Policy
shall contain such endorsements as Lender may require (to the extent available
in the state where the Property is located) in form reasonably acceptable to
Lender, including deletion of the creditors’ rights exception and affirmative
endorsement coverage for creditors’ rights risks.

(G)              Survey. Lender shall have received a survey of the Property,
certified to Lender and its successors, assigns and designees and to the Title
Company by a surveyor reasonably satisfactory to Lender (the “Survey”). The
Survey shall contain the minimum detail for land surveys as most recently
adopted by ALTA/ACSM, shall comply with Lender’s survey

27

--------------------------------------------------------------------------------

requirements and shall contain Lender’s standard form certification. The Survey
shall show no state of facts or conditions reasonably objectionable to Lender.

(H)              Zoning. On or before the Closing Date, Lender shall have
received evidence reasonably satisfactory to Lender as to the zoning and
subdivision compliance of the Property.

(I)                 Certificates of Formation and Good Standing. On or before
the Closing Date, Lender shall have received copies of the organizational
documents and filings of each Borrower Party, together with good standing
certificates (or similar documentation) (including verification of tax status if
available) from the state of its formation, from the state in which its
principal place of business is located, and from all states in which the laws
thereof require such Person to be qualified and/or licensed to do business
(including without limitation, the state in which the Property is located for
Borrower). Each such certificate shall be dated not more than forty-five (45)
days prior to the Closing Date, as applicable, and certified by the applicable
Secretary of State or other authorized governmental entity. In addition, on or
before the Closing Date the secretary or corresponding officer of each Borrower
Party, or the secretary or corresponding officer of the partner, trustee, or
other Person as required by such Borrower Party’s organizational documents (as
the case may be, the “Borrower Party Secretary”) shall have delivered to Lender
a certificate stating that the copies of the organizational documents as
delivered to Lender are true and complete and are in full force and effect, and
that the same have not been amended except by such amendments as have been so
delivered to Lender.

(J)                Certificates of Incumbency and Resolutions. On or before the
Closing Date, Lender shall have received certificates of incumbency and
resolutions of each Borrower Party and its constituents as requested by Lender,
approving and authorizing the Loan and the execution, delivery and performance
of the Loan Documents, certified as of the Closing Date by the Borrower Party
Secretary as being in full force and effect without modification or amendment.

(K)             Financial Statements. On or before the Closing Date, Lender
shall have received such financial statements and other financial information as
shall be satisfactory to Lender for each Borrower Party and for the Property.
All such financial statements shall be certified to Lender by the applicable
Borrower Party (through its chief financial officer), which certification shall
be in form and substance reasonably satisfactory to Lender.

(L)               Agreements. On or before the Closing Date, Lender shall have
received copies of all material operating agreements, service contracts and
equipment leases, if any, relating to Borrower’s ownership and operation of the
Property.

(M)            Management Agreement. On or before the Closing Date, Lender shall
have received copies of the existing Management Agreement and any leasing
brokerage agreements pertaining to the Property and the Assignment of Management
Agreement, duly executed by current Manager and Borrower.

(N)             Operating and Capital Expenditure Budgets. On or before the
Closing Date, Lender shall have received the Operating Budget and Capital
Expenditure Budget for each Property for the remainder of the current calendar
year.

28

--------------------------------------------------------------------------------

(O)             Rent Rolls, Leases. Prior to the Closing, Lender shall have
received from the Borrower a certified copy of the current rent roll (the “Rent
Roll”) for each Individual Property in form and substance satisfactory to
Lender.  Also prior to the Closing, Lender shall have received true and complete
copies of the Leases.

(P)               Licenses, Permits and Approvals. On or before Closing Date,
Lender shall have received copies of the final, unconditional certificates of
occupancy issued with respect to the Property, together with all other
applicable licenses, permits and approvals required for the Borrower to own,
use, occupy, operate and maintain the Property.

(Q)             Insurance Policies and Endorsements. On or before the Closing
Date, Lender shall have received copies of insurance policies required to be
maintained under this Loan Agreement and the other Loan Documents and
certificates of insurance dated not more than twenty (20) days prior to the
Closing Date evidencing such insurance coverages, together with endorsements
reasonably satisfactory to Lender naming Lender as an additional insured and
loss payee, as required by Lender, under such policies. In addition, as to any
insurance matters arising under Environmental Laws or pertaining to any
environmental insurance that Borrower maintains with respect to the Property,
the same shall be endorsed to Lender as required by Lender.

(R)              Environmental Assessment. Lender shall have received and
approved the Environmental Report relating to the Property, together with
letter(s) from the preparers thereof entitling Lender and its successors and
assigns to rely upon said Environmental Report (if same is not addressed to
Lender).

(S)               Property Condition Reports. On or before the Closing Date,
Lender shall have received property condition reports for the Property addressed
to Lender and its successors and assigns, which shall be prepared by an engineer
or other consultant reasonably satisfactory to Lender and otherwise shall be in
form and substance satisfactory to Lender in its sole discretion (collectively,
the “Property Condition Report”). Such reports shall set forth any items of
deferred maintenance at the Property.

(T)               Appraisals. On or before the Closing Date, Lender shall have
received an independent appraisal of each Individual Property from a state
certified appraiser engaged by Lender, dated not more than sixty (60) days prior
to the Closing Date, which indicates a fair market value of the Property which
would reflect a loan-to-value ratio for the Loan acceptable to Lender, and is
otherwise satisfactory to Lender in its sole discretion in all respects. Each
such appraisal shall conform in all respects to the criteria for appraisals set
forth in the Financial Institutions Reform and Recovery Act of 1989 and the
regulations promulgated thereunder (as if Lender were an institution under the
jurisdiction thereof) and the Uniform Standards of Professional Appraisal
Practices of the Appraisal Foundation.

(U)              Searches. Prior to the Closing Date Lender shall have received
certified copies of Uniform Commercial Code, judgment, tax lien, bankruptcy and
litigation search reports with respect to all Borrower Parties satisfactory to
Lender.

29

--------------------------------------------------------------------------------

(V)              Documentation Regarding Application of Proceeds. Prior to the
Closing Date, Lender shall have received payoff demand letters and wiring
instructions from each lender or other obligee of any existing indebtedness
which is required to be repaid pursuant to this Loan Agreement and by Borrower
regarding the application of any remaining available proceeds of the Loan.

(W)            Legal Fees; Closing Expenses. Borrower shall have paid any and
all reasonable legal fees and expenses of counsel to Lender, together with all
recording fees and taxes, title insurance premiums, appraisal reports,
environmental inspection reports, property condition reports, Lender’s site
inspection and processing fee, and other reasonable costs and expenses related
to the Closing.

(X)              Other Review. Lender shall have completed all other review of
Borrower, the Borrower Parties, the Property, and such other items as it
reasonably determines relevant, and shall have determined based upon such review
to fund the Loan. Borrower Parties shall have satisfied such other reasonable
criteria as Lender may reasonably specify.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

In order to induce Lender to enter into this Loan Agreement and to make the
Loan, Borrower represents and warrants to Lender that the statements set forth
in this Article IV, after giving effect to the Closing, will be, true, correct
and complete in all material respects as of the Closing Date.

Section 4.1      Organization, Powers, Capitalization, Good Standing, Business.

(A)              Organization and Powers. Borrower is a limited liability
company, duly organized, validly existing and in good standing under the laws of
the State of Delaware. Borrower has all requisite power and authority to own and
operate its properties, to carry on its business as now conducted and proposed
to be conducted, and to enter into each Loan Document to which it is a party and
to perform the terms thereof.

(B)              Qualification. Borrower is duly qualified and in good standing
in the state of its formation. Borrower is also duly qualified and in good
standing in the state where the Property is located, and in each state where
necessary to carry on its present business and operations.

(C)              Organization. The organizational chart set forth as Schedule
4.1(C) accurately sets forth the direct and indirect ownership structure of the
Borrower.

Section 4.2      Authorization of Borrowing, etc.

(A)              Authorization of Borrowing. Borrower has the power and
authority to incur the Indebtedness evidenced by the Note. The execution,
delivery and performance by each Borrower Party of each of the Loan Documents to
which it is a party and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary limited liability company,
partnership, trust, corporate or other action, as the case may be.

30

--------------------------------------------------------------------------------

(B)              No Conflict. The execution, delivery and performance by each
Borrower Party of the Loan Documents to which it is a party and the consummation
of the transactions contemplated thereby do not and will not: (1) violate (x)
any provision of law applicable to any Borrower Party; (y) the partnership
agreement, certificate of limited partnership, certificate of incorporation,
bylaws, declaration of trust, certificate of organization, operating agreement
or other organizational documents, as the case may be, of each Borrower Party;
or (z) any order, judgment or decree of any court or other agency of government
binding on any Borrower Party or any of its Affiliates; (2) conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contractual Obligation of any Borrower Party or any of its
Affiliates; (3) result in or require the creation or imposition of any material
Lien (other than the Lien of the Loan Documents) upon the Property or assets of
any Borrower Party or any of its Affiliates; or (4) require any approval or
consent of any Person under any Contractual Obligation of any Borrower Party.

(C)              Governmental Consents. The execution, delivery and performance
by each Borrower Party of the Loan Documents to which it is a party, and the
consummation of the transactions contemplated thereby do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body except for the recording of the Mortgage and filings and
recordings required in connection with the creation or perfection of any other
security interests with respect to the Collateral granted under this Loan
Agreement or any of the other Loan Documents.

(D)              Binding Obligations. This Loan Agreement is, and the Loan
Documents, including the Note, when executed and delivered will be, the legally
valid and binding obligations of each Borrower Party, as applicable, enforceable
against the Borrower Parties, as applicable, in accordance with their respective
terms, subject to bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting creditor’s rights generally. No Borrower Party has any
defense or offset to any of its obligations under the Loan Documents. No
Borrower Party has any claim against Lender or any Affiliate of Lender.

Section 4.3      Financial Statements. All financial statements concerning the
Borrower, its Affiliates, Guarantor and the Property which have been or will
hereafter be furnished by or on behalf of Borrower to Lender pursuant to this
Loan Agreement have been or will be prepared in accordance with GAAP
consistently applied (except as disclosed therein) and do (or will, as to those
statements that are not yet due) present fairly the financial condition of the
Persons covered thereby as at the dates thereof and the results of their
operations for the periods then ended. Since the date of the most recent
financial statements of Borrower, Guarantor and the Property delivered to
Lender, there has been no material adverse change in the financial condition,
operations or business of the Borrower Parties or the Property from that set
forth in said financial statements.

Section 4.4      Indebtedness and Contingent Obligations. As of the Closing,
Borrower has no Indebtedness or Contingent Obligations other than the
Obligations and any other Indebtedness expressly permitted under Section 5.17 of
this Loan Agreement.

Section 4.5      Title to Property. Borrower has good marketable and insurable
fee simple title to the Property, free and clear of all Liens except for
Permitted Encumbrances. Borrower owns and

31

--------------------------------------------------------------------------------

will own at all times all personal property relating to the Property other than
personal property which is leased by Borrower (as to which Borrower has valid
leasehold title) or owned by tenants of the Property and not used or necessary
for the operation of the Property), subject only to Permitted Encumbrances.
There are no pending proceedings in condemnation or eminent domain affecting the
Property, and to the knowledge of Borrower, none is threatened. No Person has
any option or other right to purchase all or any portion of the Property or any
interest therein. There are no mechanic’s, materialman’s or other similar liens
or claims which have been filed for work, labor or materials affecting the
Property which are or may be liens prior to, or equal or coordinate with, the
lien of the Mortgage. None of the Permitted Encumbrances, individually or in the
aggregate, materially interfere with the benefits of the security intended to be
provided by the Mortgage and this Loan Agreement, materially and adversely
affect the value of the Property, impair the use or operations of the Property
or impair Borrower’s ability to pay its obligations in a timely manner.

Section 4.6      Zoning; Compliance with Laws. Each Individual Property is zoned
for office use, which zoning designation is unconditional, in full force and
effect, and is beyond all applicable appeal periods. The Property and the use
thereof complies in all material respects with all applicable zoning,
subdivision and land use laws, regulations and ordinances, all applicable
health, fire, building codes, parking laws and all other laws, statutes, codes,
ordinances, rules and regulations applicable to the Property, including without
limitation the Americans with Disabilities Act. To the knowledge of Borrower,
there are no illegal activities relating to controlled substances on the
Property. All certificates of occupancy or the equivalent, and all other
required permits, licenses and certificates for the lawful use and operation of
the Property have been obtained and are current and in full force and effect. In
the event that all or any part of the Improvements located on the Property are
destroyed or damaged, said Improvements can be legally reconstructed to their
condition prior to such damage or destruction, and thereafter exist for the same
use without violating any zoning or other ordinances applicable thereto and
without the necessity of obtaining any variances or special permits, other than
customary demolition, building and other construction related permits. No legal
proceedings are pending or, to the knowledge of Borrower, threatened with
respect to the zoning of the Property. Neither the zoning nor any other right to
construct, use or operate the Property is in any way dependent upon or related
to any real estate other than the Property. No tract map, parcel map,
condominium plan, condominium declaration, or plat of subdivision will be
recorded by Borrower with respect to the Property without Lender’s prior written
consent.

Section 4.7      Leases; Agreements.

(A)              Leases; Agreements. Borrower has delivered to Lender true,
complete and fully executed copies of all (i) Leases and (ii) material contracts
and agreements affecting the operation and management of the Property,
including, without limitation, the existing Management Agreement, any leasing
brokerage agreement and any service and maintenance contracts and such Leases,
contracts and agreements have not been modified or amended except pursuant to
amendments or modifications delivered to Lender. Except for the rights of the
current Manager pursuant to the existing Management Agreement, no Person has any
right or obligation to manage the Property or to receive compensation in
connection with such management. Except for the parties to any leasing brokerage
agreement that has been delivered

32

--------------------------------------------------------------------------------

to Lender, no Person has any right or obligation to lease or solicit tenants for
the Property, or to receive compensation in connection with such leasing.

(B)              Rent Roll; Disclosure. A true and correct copy of the Rent Roll
for each Individual Property has been provided to Lender and except for the
Leases described in the Rent Roll the Property is not subject to any Leases.
Except as specified in the Rent Roll: (i) the Leases are in full force and
effect; (ii) neither Borrower nor any Affiliate of Borrower, has given any
notice of default to any tenant under any Lease which remains uncured; (iii) no
tenant has asserted in writing any rights of set off, claims or defenses under
any Lease and no tenant has any such rights of set off, claim or defense to the
enforcement of any Lease except as expressly set forth in the Leases; (iv) no
tenant is in arrears in the payment of rent, additional rent or any other
material charges due under any Lease, or, to the knowledge of Borrower, is in
default in the performance of any other obligations under the applicable Lease;
(v) Borrower has completed all work or alterations required to be completed by
the landlord or lessor under each Lease as of the date hereof, and all of the
other obligations of landlord or lessor under the Leases required to be
completed as of the date hereof, have been performed; (vi) there are no rent
concessions (whether in form of cash contributions, work agreements, assumption
of an existing tenant’s other obligations, or otherwise) or extensions of time
whatsoever not reflected in the Rent Roll; (vii) except as expressly set forth
in the Leases, no tenant has an option to terminate its respective Lease and
(viii) to the best of Borrower’s knowledge, no bankruptcy or insolvency
proceeding has been commenced (and is continuing) by or against any tenant under
any Lease. The Security Deposits held by Lender with respect to each Lease is as
set forth on the Rent Roll.

(C)              Lease Issues. There are no legal proceedings commenced (or, to
the knowledge of the Borrower, threatened) against Borrower or any Affiliate
thereof by any tenant or former tenant. No rental in excess of one month’s rent
has been prepaid under any of the Leases (except for Security Deposits and
estimated additional rent amounts paid on account of operating expenses, taxes
and other expense escalations or pass-throughs). Each of the Leases is valid and
binding on the parties thereto in accordance with its terms.

(D)              No Residential Units. There are no residential units in the
Property. To Borrower’s knowledge, no person occupies any part of the Property
for dwelling purposes.

Section 4.8      Condition of Property. To Borrower’s knowledge, except as set
forth in the property condition reports for the Property delivered to Lender,
all Improvements at the Property including, without limitation, the roof and all
structural components, plumbing systems, HVAC systems, fire protection systems,
electrical systems, equipment, elevators, exterior doors, parking facilities,
sidewalks and landscaping are in good condition and repair. To Borrower’s
knowledge, there is no latent or patent structural or other material defect or
deficiency in the Property. City water supply, storm and sanitary sewers, and
electrical, gas and telephone facilities are available to each Individual
Property within the boundary lines of such Individual Property, are fully
connected to the Improvements and are fully operational, are sufficient to meet
the reasonable needs of each Individual Property as now used or presently
contemplated to be used, and no other utility facilities are necessary to meet
the reasonable needs of any Individual Property as now used or presently
contemplated. To Borrower’s knowledge, the design and as-built conditions of
each Individual Property are such that surface and storm water does not
accumulate on any Individual Property (except in facilities specifically
designed for the same) and does not

33

--------------------------------------------------------------------------------

drain from any Individual Property across land of adjacent property owners
except pursuant to easements benefiting the related Individual Property which
are specified in and insured under the Title Policy. With the exception of
Permitted Encumbrances which are insured by endorsement to the Title Policy,
none of the Improvements create encroachment over, across or upon any Individual
Property’s boundary lines, rights of way or easements, and no building or other
improvements on adjoining land create such an encroachment. Access to each
Individual Property for the current and contemplated uses thereof is provided by
means of dedicated, all weather public roads and streets which are physically
and legally open for use by the public. To Borrower’s knowledge, any liquid or
solid waste disposal, septic or sewer system located at any Individual Property
is in good and safe condition and repair and in compliance with all applicable
law. Each Individual Property is in compliance in all material respects with all
laws, governmental regulations and requirements including, but not limited to,
matters of sanitation, health, fire and other hazards.

Section 4.9      Litigation; Adverse Facts. There are no judgments outstanding
against any Borrower Party, or affecting the Property or any property of any
Borrower Party, nor is there any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration now pending or,
to Borrower’s knowledge after due inquiry, threatened against any Borrower Party
or affecting the Property.

Section 4.10    Payment of Taxes. All federal, state and local tax returns and
reports of each Borrower Party required to be filed have been timely filed, and
all taxes, assessments, fees and other governmental charges (including any
payments in lieu of taxes) upon such Person and upon its properties, assets,
income and franchises which are due and payable have been paid when due and
payable, except for those taxes which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been established.
Except as otherwise disclosed in writing to Lender, there is not presently
pending (and to the Borrower’s knowledge, there is not contemplated) any special
assessment against the Property or any part thereof. No tax liens have been
filed and to the knowledge of Borrower Parties, no claims are being asserted
with respect to any such taxes. The charges, accruals and reserves on the books
of Borrower Parties in respect of any taxes or other governmental charges are in
accordance with GAAP.

Section 4.11    Adverse Contracts. Except for the Loan Documents, none of the
Borrower Parties is a party to or bound by, nor is any property of such Person
subject to or bound by, any contract or other agreement which restricts such
Person’s ability to conduct its business in the ordinary course or, either
individually or in the aggregate, has a Material Adverse Effect or could
reasonably be expected to have a Material Adverse Effect.

Section 4.12    Performance of Agreements. No Borrower Party is in default in
the performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any Contractual Obligation of any such
Person beyond any applicable notice and cure period, and no condition exists
that, with the giving of notice or the lapse of time or both, would constitute
such a default.

Section 4.13    Governmental Regulation. No Borrower Party is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act or the Investment Company

34

--------------------------------------------------------------------------------

Act of 1940 or to any federal or state statute or regulation limiting its
ability to incur indebtedness for borrowed money.

Section 4.14    Employee Benefit Plans. No Borrower Party maintains or
contributes to, or has any obligation (including a contingent obligation) under,
any Employee Benefit Plans.

Section 4.15    Broker’s Fees. No broker’s or finder’s fee, commission or
similar compensation will be payable by or pursuant to any contract or other
obligation of any Borrower Party with respect to the making of the Loan or any
of the other transactions contemplated hereby or by any of the Loan Documents.
Borrower shall indemnify, save harmless and defend Lender from and against all
claims for brokers’ or finders’ fees and commissions in connection with the
Loan, with such indemnity to include Lender’s cost for reasonable attorneys’
fees.

Section 4.16    Environmental Compliance.

(A)              No Environmental Claims. There are no claims, liabilities,
investigations, litigation, administrative proceedings, pending or, to
Borrower’s knowledge, threatened, or judgments, liens or orders relating to any
Hazardous Materials (collectively, “Environmental Claims”) asserted or, to
Borrower’s knowledge, threatened against Borrower or relating to the Property.
Except as disclosed in the Environmental Report delivered to Lender prior to
Closing, none of the Borrower Parties nor, to Borrower’s knowledge after due
inquiry, any other Person has caused or permitted any Hazardous Material to be
used, generated, reclaimed, transported, released, treated, stored or disposed
of in a manner which could form the basis for an Environmental Claim against
Borrower or relating to the Property. Additionally, but without limitation of
the foregoing, no liens are presently recorded with the appropriate land records
under or pursuant to any Environmental Law with respect to the Property and no
Governmental Authority has been taking or is in the process of taking any action
that could subject the Property to Liens under any Environmental Law. There have
been no environmental investigations, studies, audits, reviews or other analyses
conducted by or that are in the possession of Borrower or its Affiliates in
relation to the Property which have not been made available to Lender.

(B)              Storage of Hazardous Materials. Except as disclosed in the
Environmental Report delivered to Lender prior to Closing, and except for
materials customarily used or stored in connection with operation and management
of properties similar to the Property, which materials at the Property exist
only in reasonable quantities and are stored, contained, transported, used,
released, and disposed of reasonably and without violation of any Environmental
Laws, to Borrower’s knowledge after due inquiry, no Hazardous Materials are or
were stored or otherwise located, and no underground storage tanks or surface
impoundments are or were located, on the Property, or to the knowledge of
Borrower after due inquiry, on adjacent parcels of real property, and no part of
the property, or to Borrower’s knowledge no part of such adjacent parcels of
real property, including the groundwater located therein or thereunder, is
presently contaminated by Hazardous Materials. Except as disclosed in the
Environmental Report, to the knowledge of the Borrower, the Property is not
listed by any Governmental Authority as containing any Hazardous Materials.
Without limiting the generality of the foregoing, there is not present at, on,
in or under the Property, PCB-containing equipment, asbestos or asbestos
containing materials, underground storage tanks or surface impoundments

35

--------------------------------------------------------------------------------

for Hazardous Substances, lead in drinking water (except in concentrations that
comply with all Environmental Laws), or lead based paint.

(C)              Compliance with Environmental Laws. Except as may be set forth
in the Environmental Report, Borrower has been and is currently in compliance in
all material respects with all applicable Environmental Laws, including
obtaining and maintaining in effect all permits, licenses or other
authorizations required by applicable Environmental Laws.

Section 4.17    Solvency. Borrower (a) has not entered into the transaction or
any Loan Document with the actual intent to hinder, delay, or defraud any
creditor and (b) has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Borrower’s assets exceeds and will, immediately following the
making of the Loan, exceed Borrower’s total liabilities, including, without
limitation, subordinated, unliquidated, disputed and Contingent Obligations. The
fair saleable value of Borrower’s assets is and will, immediately following the
making of the Loan, be greater than Borrower’s probable liabilities, including
the maximum amount of its Contingent Obligations on its debts as such debts
become absolute and matured. Borrower’s assets do not and, immediately following
the making of the Loan will not, constitute unreasonably small capital to carry
out its business as conducted or as proposed to be conducted. Borrower does not
intend to, and does not believe that it will, incur Indebtedness and liabilities
(including Contingent Obligations and other commitments) beyond its ability to
pay such Indebtedness and liabilities as they mature (taking into account the
timing and amounts of cash to be received by Borrower and the amounts to be
payable on or in respect of obligations of Borrower).

Section 4.18    Disclosure. No financial statements, Loan Document or any other
document, certificate or written statement furnished to Lender by any Borrower
Party and, to the knowledge of Borrower, no document or statement furnished by
any third party on behalf of any Borrower Party, for use in connection with the
Loan contains any untrue representation, warranty or statement of a material
fact, and none omits or will omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading. There is no
material fact known to Borrower that has had or will have a Material Adverse
Effect and that has not been disclosed in writing to Lender by Borrower.

Section 4.19    Use of Proceeds and Margin Security. Borrower shall use the
proceeds of the Loan only for the purposes set forth herein and consistent with
all applicable laws, statutes, rules and regulations. No portion of the proceeds
of the Loan shall be used by Borrower or any Person in any manner that might
cause the borrowing or the application of such proceeds to violate Regulation T,
Regulation U or Regulation X or any other regulation of the Board of Governors
of the Federal Reserve System.

Section 4.20    Insurance. Borrower has in effect all of the policies of
insurance required in Section 5.4 hereof, and no notice of cancellation has been
received with respect to such policies, and, to Borrower’s knowledge after due
inquiry, Borrower is in compliance with all conditions contained in such
policies.

Section 4.21    Separate Tax Lots. Each Individual Property is comprised of one
(1) or more parcels which constitute separate tax lots. No part of any
Individual Property is included or

36

--------------------------------------------------------------------------------

assessed under or as part of another tax lot or parcel, and no part of any other
property is included or assessed under or as part of the tax lots or parcels
comprising any Individual Property.

Section 4.22    Investments. Borrower has no (i) direct or indirect interest in,
including without limitation stock, partnership interest or other securities of,
any other Person, or (ii) direct or indirect loan, advance or capital
contribution made to any other Person, including all indebtedness and accounts
receivable from that other Person.

Section 4.23    Bankruptcy. No Borrower Party is or has been a debtor, and no
property of any of them (including the Property) is property of the estate, in
any voluntary or involuntary case under the Bankruptcy Code or under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect. No Borrower Party and no property of any of them is or has been under
the possession or control of a receiver, trustee or other custodian. No Borrower
Party has made any assignment for the benefit of creditors. No such assignment
or bankruptcy or similar case or proceeding is now contemplated.

Section 4.24    Defaults. No Default or Event of Default exists and no event has
occurred which with the passage of time or the giving of notice, or both, would
be or become a Default or Event of Default.

Section 4.25    No Plan Assets. Borrower is not and will not be (i) an employee
benefit plan as defined in Section 3(3) of ERISA which is subject to ERISA, (ii)
a plan as defined in Section 4975(e)(1) of the IRC which is subject to Section
4975 of the IRC, or (iii) an entity whose underlying assets constitute “plan
assets” of any such employee benefit plan or plan for purposes of Title I of
ERISA or Section 4975 of the IRC.  Borrower is not and will not be a
“governmental plan” within the meaning of Section 3(32) of ERISA and
transactions by or with Borrower are not and will not be subject to state
statutes applicable to Borrower regulating investments of and fiduciary
obligations with obligations with respect to governmental plans.  Borrower and
each of the other ERISA Affiliates have made, and shall continue to make, all
required contributions to all employee benefit plans, if any, that Borrower and
each of the other ERISA Affiliates maintain or contribute to, within the time
periods required by the applicable provisions of ERISA and any other federal or
state law, and Borrower and each of the other ERISA Affiliates have no knowledge
of any material liability which has been incurred by any thereof which remains
unsatisfied for any taxes or penalties with respect to any employee benefit plan
or any multi-employer plan.  Each such employee benefit plan (other than any
multi-employer plan) has been administered in compliance with its terms and the
applicable provisions of ERISA and any other federal or state law.

Section 4.26    No Prohibited Transaction.  The execution, delivery and
performance of this Agreement, each Note, the Mortgage and the other Loan
Documents do not constitute a Prohibited Transaction, assuming solely for this
purpose that Lender is a party in interest as defined in Section 3(14) of ERISA
(“Party In Interest”) or a disqualified person as defined in Section 4975(e)(2) 
of the IRC (“Disqualified Person”) with respect to an employee benefit plan, if
any, which has directly or indirectly invested in Borrower.

37

--------------------------------------------------------------------------------

Section 4.27    Not Foreign Person.   No Borrower Party is a “foreign person”
within the meaning of Section 1445(f)(3) of the IRC.

Section 4.28    No Collective Bargaining Agreements. No Borrower Party is a
party to any collective bargaining agreement.

Section 4.29    Compliance. To Borrower’s knowledge, Borrower is in compliance
with all applicable Legal Requirements, and Borrower is not in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority.

Section 4.30    Intellectual Property. All material Intellectual Property that
Borrower owns or has pending, or under which it is licensed, are in good
standing and uncontested. There is no right under any Intellectual Property
necessary to the business of Borrower as presently conducted or as Borrower
contemplates conducting its business. Borrower has not infringed, is not
infringing, and has not received notice of infringement with respect to asserted
Intellectual Property of others. There is no infringement by others of material
Intellectual Property of Borrower.

Section 4.31    Pre-Closing Date Activities. Borrower has not conducted any
business or other activity on or prior to the Closing Date, other than in
connection with the acquisition and operation of the Property.

Section 4.32    Mortgage and Other Liens. Each Mortgage creates a valid and
enforceable first priority Lien on the Individual Property described therein, as
security for the repayment of the Obligations, subject only to the Permitted
Encumbrances applicable to the Individual Property. Each Loan Document
purporting to grant, transfer, assign or otherwise create a Lien as security for
the Loan establishes and creates a valid, subsisting and enforceable Lien on and
a security interest in, or claim to, the rights and property described therein.
All property covered by any Loan Document purporting to grant, transfer, assign
or otherwise create a Lien as security for the Loan is subject to a UCC
financing statement filed and/or recorded, as appropriate (or irrevocably
delivered to an agent for such recordation or filing) in all places necessary to
perfect a valid first priority Lien with respect to the rights and property that
are the subject of such Loan Document to the extent governed by the UCC.

Section 4.33    Management Agreement. The Management Agreement is in full force
and effect. There is no default, breach or violation existing thereunder by any
party thereto and no event (other than payments due but not yet delinquent)
which, with the passage of time or with notice and the expiration of any grace
or cure period, would constitute a default, breach or violation by any party
thereunder.

Section 4.34    No Prohibited Persons. Neither Borrower, Guarantor, nor any of
their respective offices, directors, partners, members, Affiliates or, to the
knowledge of Borrower, shareholders in an entity or person: (i) that is listed
in the Annex to, or is otherwise subject to the provisions of Executive Order
13224 issued on September 24, 2001 (“EO13224”); (ii) whose name appears on the
United States 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 time to time in various mediums including, but
not limited to, the OFAC website,

38

--------------------------------------------------------------------------------

http:www.treas.gov/ofac/t11sdn.pdf); (iii) who commits, threatens to commit or
supports “terrorism”, as that term is defined in EO13224; or (iv) who is
otherwise affiliated with any entity or person listed above (any and all parties
or persons described in clauses (i) through (iv) above are herein referred to as
a “Prohibited Person”).

ARTICLE V
COVENANTS OF BORROWER PARTIES

Borrower covenants and agrees that until payment in full of the Loan, all
accrued and unpaid interest and all other Obligations, unless Lender shall
otherwise give its prior written consent, such Person shall perform and comply
with, or cause the performance and compliance of the applicable Borrower Parties
with, all covenants in this Article V.

Section 5.1      Financial Statements and Other Reports.

(A)       Financial Statements.

                                                (i)                  Annual
Reporting. Within ninety (90) days after the end of Borrower’s Fiscal Year,
Borrower shall provide true and complete copies of Borrower’s and Guarantor’s
Financial Statements for such year to Lender. All such Financial Statements
shall be audited by a “Big Four” accounting firm or by other independent
certified public accountants reasonably acceptable to Lender, and accompanied by
a certificate of such audit executed by such accounting firm in customary form,
subject only to such exceptions as shall be reasonably approved in writing by
Lender; provided that (1) Guarantor’s Financial Statements may be consolidated
into the Financial Statements of its ultimate parent, Investors Real Estate
Trust, and (2) a separate audit of Borrower’s Financial Statements will not be
required as long as Guarantor’s (consolidated with its parent as aforesaid)
Financial Statements are audited on a consolidated basis with its subsidiaries,
including Borrower.  The annual Financial Statements for Borrower and Guarantor
shall each be accompanied by a certification executed by the entity’s chief
executive officer or chief financial officer or the individual Guarantor, in the
case of an individual Guarantor, satisfying the criteria set forth below. The
annual Financial Statements of Borrower shall also be accompanied by a
Compliance Certificate (as defined below).

                                              (ii)                  Quarterly
Reporting - Borrower. Within forty-five (45) days after the end of each Fiscal
Quarter, Borrower shall provide true and complete copies of its Financial
Statements for such quarter to Lender, together with a certification executed on
behalf of Borrower by its chief executive officer or chief financial officer in
accordance with the criteria set forth below. The quarterly Financial Statements
of Borrower also shall be accompanied by a Compliance Certificate (as defined
below).

                                             (iii)                  Quarterly
Reporting - Guarantor. Within forty-five (45) days after the end of each Fiscal
Quarter, Borrower shall provide true and complete copies of Guarantor’s
Financial Statements for such quarter to Lender, together with a certification
executed on behalf of Guarantor by its chief executive officer or chief
financial officer (or by the individual Guarantor, in the ease of an individual
Guarantor) in accordance with the criteria set forth below; provided that
information concerning the Guarantor shall be limited to publicly available SEC
reports concerning Guarantor, IRET, Inc. and IRET Properties, so long as
Guarantor, the owner

39

--------------------------------------------------------------------------------

of 100% of the stock in IRET, Inc., in turn the general partner of IRET
Properties, is a publicly traded company that files SEC reports.

                                            (iv)                  Leasing
Reports. Within thirty (30) days after the end of each Fiscal Quarter, Borrower
shall provide to Lender a certified Rent Roll, rental status report and a
schedule of Security Deposits held under Leases for each Individual Property, in
form and substance reasonably acceptable to Lender, together with copies of any
Leases (or amendments to Leases) that have not previously been provided to
Lender.

                                              (v)                  Monthly
Reporting. Within thirty (30) days after the end of each Fiscal Quarter,
Borrower shall provide to Lender (a) accrual basis operating statements,
together with a statement of cash flow, for each Individual Property, each in a
form reasonably satisfactory to Lender, (i) for such month, (ii) for Borrower’s
Fiscal Year to date with a comparison and reconciliation with the Operating
Budget and Capital Expenditures Budget indicating all variances on a line item
basis and (iii) for the Borrower’s most recently completed Fiscal Year, together
with (b) a certification executed on behalf of Borrower by its chief financial
officer (or other responsible officer or representative reasonably acceptable to
Lender) in accordance with the criteria set forth below.

                                            (vi)                  Additional
Reporting. In addition to the foregoing, Borrower shall promptly provide to
Lender, and cause each other Borrower Party to promptly provide to Lender, such
further documents and information concerning its operations, properties,
ownership, and finances as Lender shall from time to time reasonably request,
provided that information concerning the Guarantor shall be limited to publicly
available SEC reports concerning Guarantor, IRET, Inc. and IRET Properties, so
long as Guarantor, the owner of 100% of the stock in IRET, Inc., in turn the
general partner of IRET Properties, is a publicly traded company that files SEC
reports.

                                           (vii)                  GAAP. Borrower
will maintain systems of accounting established and administered in accordance
with sound business practices and sufficient in all respects to permit
preparation of Financial Statements in conformity with GAAP. All Financial
Statements shall be prepared in accordance with GAAP, consistently applied.

                                         (viii)                  Certifications
of Financial Statements and Other Documents, Compliance Certificate. Together
with the Financial Statements and other documents and information provided to
Lender by or on behalf of any Borrower Party under this Section, such Borrower
Party also shall deliver to Lender a certification in form and substance
reasonably satisfactory to Lender, executed on behalf of such Borrower Party by
its chief executive officer or chief financial officer (or by the individual
Guarantor if the Guarantor is an individual) stating that, to such officer’s or
individual’s knowledge, such Financial Statements, documents, and information
are true and complete in all material respects and do not omit to state any
material information without which the same might reasonably be misleading. In
addition, where this Loan Agreement requires a “Compliance Certificate”, the
Borrower Party required to submit the same shall deliver a certificate duly
executed on behalf of such Borrower Party by its chief executive officer or
chief financial officer, in form and substance reasonably satisfactory to
Lender, stating that there does not exist any Default or Event of Default under
the Loan Documents (or if any exists, specifying the same in detail).

40

--------------------------------------------------------------------------------

                                            (ix)                  Fiscal Year.
Borrower agrees that it shall not change its Fiscal Year without Lender’s
written consent, which consent shall not be unreasonably withheld.

(B)       Material Notices.

                                                (i)                  Borrower
shall promptly deliver, or cause to be delivered to Lender, copies of all
notices of default given or received by any Borrower Party with respect to
noncompliance related to any material Indebtedness of any Borrower Party.

                                              (ii)                  Borrower
shall promptly deliver to Lender copies of any and all material notices
(including without limitation any notice alleging any material default or
breach) received by Borrower from any manager, any franchisors, any licensors,
or any tenants for or pertaining to each Individual Property.

(C)              Events of Default, etc. Promptly upon Borrower obtaining
knowledge of any of the following events or conditions, Borrower shall deliver a
certificate executed on its behalf by its chief financial officer or similar
officer specifying the nature and period of existence of such condition or event
and what action Borrower or any Affiliate thereof has taken, is taking and
proposes to take with respect thereto: (i) any condition or event that
constitutes an Event of Default or Default; (ii) any Material Adverse Effect; or
(iii) any actual or alleged breach or default or assertion of (or written threat
to assert) remedies under any Management Agreement.

(D)              Litigation. Promptly upon Borrower’s obtaining knowledge of (1)
the institution, or threat thereof, of any action, suit, proceeding,
governmental investigation or arbitration against or affecting Borrower or any
Individual Property not previously disclosed in writing by Borrower to Lender,
or (2) any material development in any action, suit, proceeding, governmental
investigation or arbitration at any time pending against or affecting Borrower
or any Individual Property, Borrower will give notice thereof to Lender and
provide such other information as may be reasonably available to enable Lender
and its counsel to evaluate such matter.

(E)               Insurance. Within the thirty (30) day period prior to the end
of each insurance policy period of Borrower, Borrower will deliver certificates
of insurance evidencing renewal of any existing coverages (or copies of any new
insurance policies not previously delivered to Lender upon receipt by Borrower
from its carriers), reports, and/or other information (all in form and substance
reasonably satisfactory to Lender), outlining all material insurance coverage
maintained as of the date thereof by Borrower and all material insurance
coverage planned to be maintained by Borrower in the subsequent insurance policy
period.  Upon Lender’s written request, Borrower will deliver evidence of
payment in full of the premiums for such insurance policies.

(F)               Other Information. With reasonable promptness, each Borrower
Party will deliver such other information and data with respect to such Person
and its Affiliates or the Property as from time to time may be reasonably
requested by Lender, provided that information concerning the Guarantor shall be
limited to publicly available SEC reports concerning Guarantor, IRET, Inc. and
IRET Properties, so long as Guarantor, the owner of 100% of the

41

--------------------------------------------------------------------------------

stock in IRET, Inc., in turn the general partner of IRET Properties, is a
publicly traded company that files SEC reports.

Section 5.2      Existence; Qualification. Borrower will at all times preserve
and keep in full force and effect its existence as a limited partnership,
limited liability company, or corporation, as the case may be and all rights and
franchises material to its business, including its qualification to do business
in each state where it is required by law to so qualify. Without limitation of
the foregoing, Borrower shall at all times be qualified to do business in each
state where any Individual Property is located.

Section 5.3      Payment of Impositions and Claims.

(A)              Subject to Borrower’s contest rights set forth in subsection
(B) below, Borrower will pay when due (i) all Impositions; (ii) all claims
(including claims for labor, services, materials and supplies) for sums that
have become due and payable and that by law have or may become a Lien upon any
of its properties or assets (hereinafter referred to as the “Claims”); and (iii)
all federal, state and local income taxes, sales taxes, excise taxes and all
other taxes and assessments of Borrower on its business, income or assets; in
each instance before any penalty or fine is incurred with respect thereto.

(B)              Borrower shall not be required to pay, discharge or remove any
Imposition or Claim so long as the Borrower contests in good faith such
Imposition or Claim or the validity, applicability or amount thereof by an
appropriate legal proceeding which operates to prevent the collection of such
amounts and the sale of the applicable Individual Property or any portion
thereof, so long as: (i) no Event of Default shall have occurred and be
continuing; (ii) prior to the date on which such Imposition or Claim would
otherwise have become delinquent, Borrower shall have given Lender prior written
notice of its intent to contest said Imposition or Claim; (iii) prior to the
date on which such Imposition or Claim would otherwise have become delinquent,
Borrower shall have deposited with Lender (or with a court of competent
jurisdiction or other appropriate body approved by Lender) such additional
amounts as are necessary to keep on deposit at all times, an amount equal to at
least one hundred fifty percent (150%) (or such higher amount as may be required
by applicable law) of the total of (x) the balance of such Imposition or Claim
then remaining unpaid, and (y) all interest, penalties, costs and charges
accrued or accumulated thereon, together with such other security as may be
required in the proceeding, or as may be required by Lender, to insure the
payment of any such Imposition or Claim and all interest and penalties thereon;
(iv) no risk of sale, forfeiture or loss of any interest in the applicable
Individual Property or any part thereof arises, in Lender’s judgment, during the
pendency of such contest; (v) such contest does not, in Lender’s determination,
have a Material Adverse Effect; (vi) such contest is based on bona fide,
material, and reasonable claims or defenses; (vii) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any other
instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all
applicable statutes, laws and ordinances; and (viii) Borrower shall have
obtained such endorsements to the Title Policy with respect to such Imposition
or Claim as Lender may require. Any such contest shall be prosecuted with due
diligence, and Borrower shall promptly pay the amount of such Imposition or
Claim as finally determined, together with all interest and penalties payable in
connection therewith. Lender shall have full power and authority, but no
obligation, to apply any

42

--------------------------------------------------------------------------------

amount deposited with Lender under this subsection to the payment of any unpaid
Imposition or Claim to prevent the sale or forfeiture of the applicable
Individual Property or any portion thereof for non-payment thereof, if Lender
reasonably believes that such sale or forfeiture is threatened. Any surplus
retained by Lender after payment of the Imposition or Claim for which a deposit
was made shall be promptly repaid to Borrower unless an Event of Default shall
have occurred, in which case said surplus may be retained by Lender to be
applied to the Obligations. Notwithstanding any provision of this Section to the
contrary, Borrower shall pay any Imposition or Claim which it might otherwise be
entitled to contest if an Event of Default shall occur, or if, in the reasonable
determination of Lender, the applicable Individual Property is in jeopardy or in
danger of being forfeited or foreclosed. If Borrower refuses to pay any such
Imposition or Claim, upon five (5) Business Days’ prior written notice, Lender
may (but shall not be obligated to) make such payment and Borrower shall
reimburse Lender on demand for all such advances.

Section 5.4      Maintenance of Insurance. Borrower will maintain or cause to be
maintained, with financially sound and reputable insurers, public liability,
fire and extended coverage and property damage, rent loss or business
interruption and other types of insurance with respect to its business and each
Individual Property (including all Improvements now existing or hereafter
erected thereon) against all losses, hazards, casualties, liabilities and
contingencies as customarily carried or maintained by Persons of established
reputation engaged in similar businesses and as Lender shall require and in such
amounts and for such periods as Lender shall require. Without limitation of the
foregoing, Borrower shall maintain or cause to be maintained policies of
insurance with respect to each Individual Property in the following amounts and
covering the following risks:

                                                   (i)               Property
damage insurance covering loss or damage to each Individual Property caused by
fire, lightning, hail, hurricane, windstorm, tidal wave, explosion, acts of
terrorism, vandalism, malicious mischief, and such other losses, hazards,
casualties, liabilities and contingencies as are normally and usually covered by
fire, extended coverage and all risk policies in effect where each Individual
Property is located endorsed to include all of the extended coverage perils and
other broad form perils, including the standard “all risks” clauses, with such
endorsements as Lender may from time to time reasonably require including,
without limitation, building ordinance and law (including demolition costs and
increased cost of construction coverage), lightning, hurricane, windstorm, tidal
wave, civil commotion, acts of terrorism, hail, riot, strike, water damage,
sprinkler leakage, collapse and malicious mischief. Such policy shall be in an
amount not less than that necessary to comply with any coinsurance percentage
stipulated in the policy, but not less than 100% of the full replacement cost of
all Improvements at each Individual Property (without any deduction for
depreciation). The deductible under such policy shall not exceed $100,000, or
such other higher amount as is approved by Lender from time to time. In addition
to and without limiting the foregoing, the property insurance required under
this Section 5.4(i), and the property insurance and business interruption and
rent loss insurance required under Sections 5.4(v) and (vi) below shall be
required to cover perils of terrorism and acts of terrorism.

                                                 (ii)               Broad form
boiler and machinery insurance in an amount equal to the full replacement cost
of the Improvements at such Property (without any deduction for depreciation) in
which the boiler or similar vessel is located, and including coverage against
loss or damage from (1) leakage of sprinkler systems and (2) damage, breakdown
or explosion of steam boilers,

43

--------------------------------------------------------------------------------

electrical machinery and equipment, air conditioning, refrigeration, pressure
vessels or similar apparatus and mechanical objects now or hereafter installed
at each Individual Property.

                                                (iii)               If an
Individual Property is located in area prone to geological phenomena, including,
but not limited to, sinkholes, mine subsidence, tidal waves or earthquakes,
insurance covering such risks in an amount not less than 100% of the full
replacement cost of the Improvements at such Individual Property without any
deduction for depreciation, or such other amount as is approved by Lender from
time to time (which approval shall not be unreasonably withheld), with a maximum
permissible deductible of $100,000, or such higher amount as is approved by
Lender from time to time.

                                               (iv)               Flood
insurance if an Individual Property is located, in whole or in part, in an area
now or hereafter designated as “flood prone” or a “special flood hazard area”
(as defined under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994 (as
each may be amended, or any successor law, collectively, the “Flood Insurance
Acts”)). Such policy shall be in an amount equal to 100% of the full replacement
cost of the Improvements at such Individual Property, or such other amount as is
approved by Lender from time to time (which approval shall not be unreasonably
withheld), and shall have a maximum permissible deductible equal to $100,000, or
such other higher amount as is approved by Lender from time to time.

                                                 (v)               Business
interruption or rent loss insurance in an amount equal to the gross income or
rentals from each Individual Property for an indemnity period of twelve (12)
months, such amount being adjusted annually.

                                               (vi)               During any
period of reconstruction, renovation or alteration of an Individual Property by
Borrower, if the cost of said construction is reasonably anticipated to exceed
$750,000.00, a complete value, “All Risks” Builders Risk form or “Course of
Construction” insurance policy in non-reporting form and in an amount reasonably
satisfactory to Lender.

                                              (vii)               Commercial
General Liability insurance covering claims for bodily injury, death or property
damage occurring upon, in or about each Individual Property in an amount not
less than $1,000,000 per occurrence and $2,000,000 in the aggregate with no
deductible of self insurance retention, and an umbrella liability policy in the
amount of $25,000,000 (provided that such umbrella policy limit may be reduced
from $25,000,000 to $5,000,000 in the event and for such time as the Borrower
obtains and maintains an umbrella policy that covers only the Property and no
other property and demonstrates to Lender’s reasonable satisfaction that the
related umbrella policy covers only the Property and no other property).

                                            (viii)               If required by
applicable state laws, worker’s compensation or employer’s liability insurance
in accordance with such laws.

                                               (ix)               Such other
insurance and endorsements, if any, with respect to each Individual Property and
the operation thereof as Lender may reasonably require from time to time,
provided same are customarily required by institutional lenders of similar
borrowers for

44

--------------------------------------------------------------------------------

similar properties in the general vicinity of each Individual Property, or which
are otherwise required by the Loan Documents.

Each carrier providing any insurance, or portion thereof, required by this
Section shall be licensed to do business in the jurisdiction in which each
Individual Property is located, and shall have a claims paying ability rating by
S&P of not less than “A-”, and an A.M. Best Company, Inc. rating of not less
than “A” and financial size category of not less than “IX”. Except as otherwise
expressly set forth in this Loan Agreement, Borrower shall cause all insurance
(except general public liability and excess liability, as to which Lender shall
be named as additional insured, and workers’ compensation insurance) carried in
accordance with this Section to be payable to Lender as a mortgagee and loss
payee and not as a coinsured.

All insurance policies and renewals thereof (i) shall be in a form reasonably
acceptable to Lender, (ii) shall provide for a term of not less than one year,
(iii) shall provide by way of endorsement, rider or otherwise that such
insurance policy shall not be canceled, endorsed, altered, or reissued to effect
a change in coverage unless such insurer shall have first given Lender
thirty (30) days prior written notice thereof, (iv) shall include a standard
non-contributory mortgagee endorsement or its equivalent in favor of and in form
acceptable to Lender, (v) shall provide for claims to be made on an occurrence
basis, (vi) shall contain an agreed value clause updated annually (if the amount
of coverage under such policy is based upon the replacement cost of the
Property) and (vii) shall designate Lender as “mortgagee and loss payee” (except
general public liability and excess liability, as to which Lender shall be named
as additional insured).

Any insurance required by this Loan Agreement may, at the option of Borrower, be
effected by blanket and/or umbrella policies issued to Borrower covering the
Property and other properties of Borrower’s Affiliates provided that, in each
case, the policies otherwise comply with the provisions of this Loan Agreement
and allocate to each Individual Property, from time to time, the coverage
required under this Loan Agreement, without possibility of reduction or
coinsurance by reason of, or damage to, any other property (real or personal)
named therein. If the insurance required by this Loan Agreement shall be
effected by any such blanket or umbrella policies, Borrower shall furnish to
Lender certificates or insurance evidencing same, with schedules attached
thereto showing the amount of the insurance provided under such policies which
is applicable to the Property.

Section 5.5      Maintenance of the Property; Alterations; Casualty or Taking.

(A)              Maintenance of the Property; Alterations. Borrower will
maintain each Individual Property or cause each Individual Property to be
maintained in good repair, working order and condition, and will make or cause
to be made all appropriate repairs, renewals and replacements thereof. Without
limitation of the foregoing, Borrower will operate and maintain each Individual
Property substantially in accordance with the applicable Operating Budget and
Capital Expenditure Budget. In addition, unless Lender agrees otherwise,
Borrower shall cause all items in the Capital Expenditure Budget to be performed
and completed in substantially in accordance with such plan. All work required
or permitted under this Loan Agreement shall be performed in a good and
workmanlike manner and in compliance with all applicable laws. So long as no
Event of Default has occurred and is continuing, Borrower may, without Lender’s
consent, perform

45

--------------------------------------------------------------------------------

alterations to each Individual Property which (i) do not constitute a Material
Alteration, (ii) do not adversely affect Borrower’s financial condition or the
value or net operating income of such Individual Property, and (iii) are in the
ordinary course of Borrower’s business. Borrower shall not perform any Material
Alteration without Lender’s prior written consent, which consent shall not be
unreasonably withheld for Material Alterations which are required by Legal
Requirements or which are required to satisfy tenant improvement obligations of
the Borrower under Leases (regardless of whether the tenant improvements are
performed by the landlord or the tenant thereunder); provided, however, that
Lender may, in its sole and absolute discretion, withhold consent to any
Material Alteration which Lender determines may result in a decrease of net
operating income from such Individual Property. Lender may, as a condition to
giving its consent to a Material Alteration, require that Borrower deposit cash
with Lender for payment of the cost of such Material Alteration in an amount
equal to 150% of the cost of the Material Alteration as estimated by Lender;
provided, however, that in the event that such Material Alterations consist
solely of tenant improvement work, there are sufficient funds contained in the
applicable Leasing Reserve, and the conditions for disbursement from the
applicable Leasing Reserve set forth in Section 6.5 hereof have been satisfied,
then Lender shall not require the foregoing deposit. Upon substantial completion
of the Material Alteration, Borrower shall provide evidence reasonably
satisfactory to Lender that (i) the Material Alteration was constructed in
accordance with all applicable laws and substantially in accordance with plans
and specifications approved by Lender (which approval shall not be unreasonably
withheld or delayed), (ii) all contractors, subcontractors, materialmen and
professionals who provided work, materials or services in connection with the
Material Alteration have been paid in full and have delivered unconditional
releases of lien and (iii) all material licenses necessary for the use,
operation and occupancy of the Material Alteration (other than those which
depend on the performance of tenant improvement work) have been issued. Borrower
shall reimburse Lender upon demand for all reasonable out-of-pocket costs and
expenses (including the reasonable fees of any architect, engineer or other
professional engaged by Lender) incurred by Lender in reviewing plans and
specifications or in making any determinations necessary to implement the
provisions of this Section 5.5(A).

(B)              Casualty or Taking.  In the event of a Taking, or a casualty or
loss reasonably estimated to exceed $100,000, at any Individual Property,
Borrower shall give immediate written notice of the same to the insurance
carrier and to Lender and shall promptly commence and diligently prosecute to
completion, in accordance with the terms hereof, all Legal Requirements, the
repair and restoration of such Individual Property as nearly as possible to the
Pre-Existing Condition (hereinafter defined) (a “Restoration”).  Borrower shall
pay all costs of such Restoration whether or not such costs are covered by
insurance or Condemnation Proceeds. Borrower hereby authorizes and empowers
Lender, if an Event of Default exists or if the casualty or Taking involves a
loss in excess of the Restoration Threshold, (a) to make proof of loss, to
adjust and compromise or settle any claim under insurance policies, including
without limitation business interruption or rent loss insurance, or in
connection with a Taking, (b) to appear in and prosecute any action arising from
any insurance policies or Taking, (c) to collect and receive insurance proceeds
and Condemnation Proceeds, and (d) to deduct therefrom Lender’s expenses
incurred in the collection of such proceeds; provided however, that nothing
contained in this Section shall require Lender to incur any expense or take any
action hereunder. Borrower further authorizes Lender, at Lender’s option, if the
casualty involves a loss in excess of the Restoration Threshold, (i) to hold the
balance of such proceeds to be used to pay for the cost of Restoration

46

--------------------------------------------------------------------------------

of the affected Individual Property or (ii) subject to Section 5.5(C), to apply
such proceeds to payment of the Obligations whether or not then due, in any
order, and, provided that no Event of Default has occurred and is continuing,
upon any such application of insurance proceeds or Condemnation Proceeds to the
Obligations pursuant to the foregoing, no Prepayment Consideration shall be due
and payable.  Notwithstanding the foregoing, in the event of a casualty or
Taking where the loss does not exceed the Restoration Threshold, Borrower shall,
without the necessity of Lender’s consent or participation, directly receive all
insurance proceeds from its insurance carrier(s) and settle and adjust such
claim; provided that (a) no Event of Default has occurred and is continuing and
(b) such adjustment and the Restoration are carried out in a commercially
reasonable and timely manner.

(C)              Proceeds Application to Restoration. Lender shall not exercise
Lender’s option to apply insurance proceeds or Condemnation Proceeds to payment
of the Obligations and Lender shall make the proceeds available for Restoration
if all of the following conditions are met: (i) no Event of Default then exists;
(ii) Lender reasonably determines that there will be sufficient funds to
complete the Restoration of the Property to at least the Pre-Existing Condition
and to timely make all payments due under the Loan Documents during the
Restoration of the affected Individual Property; (iii) Lender reasonably
determines that the fair market value of the affected Individual Property after
Restoration will not be less than the fair market value of such Individual
Property prior to the occurrence of the loss or casualty to such Individual
Property or the Taking, and that the rental income of the affected Individual
Property and the other Property, after the Restoration of the affected
Individual Property to the Pre-Existing Condition, will be sufficient to meet
all operating expenses and payments of principal and interest under the Loan and
maintain a debt service coverage ratio at least equal to 1.15:1.00 based upon an
assumed debt service equal to the higher of actual annualized debt service or
the Loan amount multiplied by 0.0715; and (iv) Lender reasonably determines that
the Restoration of the affected Individual Property to the Pre-Existing
Condition will be completed within one (1) year of the date of the loss or
casualty to the Individual Property or the Taking, but in no event later than
six (6) months prior to the Maturity Date; (v) in Lender’s reasonable judgment
less than thirty percent (30%) (in the case of a fire or other loss or casualty
to the Individual Property) or fifteen percent (15%) (in the case of a Taking)
of the fair market value of the affected Individual Property has been damaged,
destroyed or rendered unusable as a result of such fire or other casualty or
Taking; (vi) Lender is reasonably satisfied that tenant leases covering in the
aggregate 65% of the rentable square footage of the affected Individual Property
shall remain in full force and effect during and after the Restoration of the
affected Individual Property (subject to the rent abatement provisions thereof
applicable as a result of the casualty or Taking, so long as such abatement will
end, and full rental payments shall resume, upon substantial completion of the
Restoration); and (vii) Lender is reasonably satisfied that the affected
Individual Property can be restored and repaired as nearly as possible to the
condition it was in immediately prior to such casualty or Taking and in
compliance with all applicable zoning, building and other laws and codes (the
“Pre-Existing Condition”), and in the case of a Taking Lender is reasonably
satisfied that the Taking will, upon completion of the Restoration, have no
material adverse effect on the use, operation or value of the affected
Individual Property. Notwithstanding anything to the contrary set forth in this
Section 5.5, where a loss exceeds the Restoration Threshold, Lender may retain
business interruption or rent loss insurance proceeds as a reserve, and disburse
the same on a monthly basis for application to debt service on the Loan until
such time as Restoration is complete.

47

--------------------------------------------------------------------------------

(D)              Disbursement for Restoration. Where a loss exceeds the
Restoration Threshold and Lender elects to hold the insurance proceeds, and if
Lender elects to make the insurance proceeds or Condemnation Proceeds available
for Restoration of the affected Individual Property (or is required to make such
proceeds available pursuant to Section 5.5(C) above), the proceeds shall be
disbursed by Lender to, or as directed by, Borrower from time to time during the
course of the Restoration, but not more frequently than once a month and in
requested amounts of not less than $10,000, upon receipt of evidence
satisfactory to Lender that (i) all materials installed and work and labor
performed in connection with the Restoration have been paid for in full (other
than that to be paid from the current pending disbursement), and (ii) there
exist no notices of pendency, mechanic’s or materialman’s liens or notices of
intention to file same, or any other liens or encumbrances of any nature
whatsoever on the affected Individual Property. Borrower agrees that, if at any
time during the Restoration of a loss that exceeds the Restoration Threshold,
the cost of completing such Restoration, as reasonably determined by Lender,
exceeds the undisbursed insurance proceeds, Borrower shall, promptly upon demand
by Lender, deposit the amount of such excess with Lender, and Lender shall first
disburse such deposit to pay for the costs of such Restoration on the same terms
and conditions as the insurance proceeds are disbursed. If Borrower deposits
such excess with Lender and if, after completion of the Restoration, any funds
remain from the combination of insurance proceeds or Condemnation Proceeds and
the funds so deposited with Lender by Borrower, and if no Event of Default shall
have occurred and be continuing, then Lender shall disburse such remaining funds
to Borrower.

(E)               Disbursement Conditions. Lender may, at Lender’s option,
condition disbursement of any insurance proceeds or Condemnation Proceeds in
excess of the Restoration Threshold on Lender’s approval of plans and
specifications of an independent architect licensed in the state in which the
affected Individual Property is located, having at least five (5) years of
experience as an architect and reasonably satisfactory to Lender (an “Approved
Architect”), any and all material contractors, subcontractors and materialmen
engaged in the Restoration and the contracts and subcontracts under which they
have been engaged, contractor’s cost estimates, architect’s certificates,
waivers of liens, sworn statements of mechanics and materialmen and such other
evidence of costs, percentage completion of construction, application of
payments, and satisfaction of liens as Lender may reasonably require. Lender
shall not be obligated to disburse insurance proceeds or Condemnation Proceeds
more frequently than once every calendar month. If insurance proceeds or
Condemnation Proceeds are applied to the payment of the Obligations, any such
application of proceeds to principal shall not extend or postpone the due dates
of the monthly payments due under the Note or otherwise under the Loan
Documents, or change the amounts of such payments. Any amount of insurance
proceeds remaining in Lender’s possession after full and final payment and
discharge of all Obligations shall be refunded to Borrower or otherwise paid in
accordance with applicable law. If the affected Individual Property is sold at
foreclosure or if Lender acquires title to the affected Individual Property,
Lender shall have all of the right, title and interest of Borrower in and to any
insurance proceeds resulting from any damage to the Property prior to such sale
or acquisition, and to any Condemnation Proceeds.

(F)               Retainage. In no event shall Lender be obligated to make
disbursements of insurance proceeds or Condemnation Proceeds in excess of an
amount equal to the costs actually incurred from time to time for work in place
as part of the Restoration, as certified by the Approved Architect, less a
retainage equal to ten percent (10%) of such costs incurred until the

48

--------------------------------------------------------------------------------

Restoration has been completed. The retainage shall in no event be less than the
amount actually held back by Borrower from contractors, subcontractors and
materialmen engaged in the Restoration. The retainage shall not be released
until the Approved Architect certifies to Lender that the Restoration has been
completed substantially in accordance with the provisions of this Section 5.5
and that all material approvals necessary for the re-occupancy and use of the
affected Individual Property have been obtained from all appropriate
Governmental Authorities, and Lender receives evidence reasonably satisfactory
to Lender that the costs of the Restoration have been paid in full or will be
paid in full out of the retainage.

Section 5.6      Inspection. Borrower shall permit any authorized
representatives designated by Lender to visit and inspect during normal business
hours the Property and its business, including its financial and accounting
records, and to make copies and take extracts therefrom, and to discuss its
affairs, finances and business with its officers and independent public
accountants, at such reasonable times during normal business hours and as often
as may be reasonably requested. Unless an Event of Default has occurred, Lender
shall provide advance written notice of at least two (2) Business Days prior to
visiting or inspecting the Property or Borrower’s offices.

Section 5.7      Environmental Compliance.

(A)              Environmental Laws. Borrower shall at all times comply in all
material respects with all applicable Environmental Laws. Borrower shall not:
(i) violate any applicable Environmental Law; or (ii) generate, use, transport,
handle, store, release or dispose of any Hazardous Material in or into, on or
onto, or from any Individual Property (except in accordance with applicable
law); or (iii) permit any Lien imposed pursuant to any Environmental Law to be
imposed or to remain on any Individual Property.

(B)              Remedial Action. (i) Borrower shall promptly take and
diligently prosecute any and all necessary remedial actions upon obtaining
knowledge of the presence, storage, use, disposal, transportation, active or
passive migration, release or discharge of any Hazardous Materials on, under or
about any Individual Property in violation of any Environmental Laws; provided,
however, that whether or not such action is required under applicable
Environmental Laws, Borrower shall be required to take all remedial action
necessary to clean up and remove mold and microbial matter from any Individual
Property in the event that any action, suit or proceeding shall be commenced or
threatened (in writing) by any Person or Governmental Authority with respect
thereto or any investigation related to mold or microbial matter is commenced by
any Governmental Authority, which action, suit, proceeding or investigation, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect. In the event Borrower undertakes or causes to be undertaken any remedial
action with respect to any Hazardous Materials on, under or about any Individual
Property, Borrower shall conduct and complete such remedial action in compliance
with all applicable Environmental Laws and in accordance with the applicable
policies, orders and directives of all federal, state and local governmental
authorities.

(ii) If requested by Lender, all remedial actions under clause (i) above shall
be performed by contractors, and under the supervision of a consulting engineer,
which shall not be an Affiliate of Borrower, each approved in advance by Lender
which approval shall not be

49

--------------------------------------------------------------------------------

unreasonably withheld or delayed. All costs and expenses reasonably incurred in
connection with such remedial actions shall be paid by Borrower. If Borrower
does not timely commence and diligently prosecute to completion the remedial
actions, Lender may (but shall not be obligated to), upon 30 days prior written
notice to Borrower of its intention to do so, cause such remedial actions to be
performed. Borrower shall pay or reimburse Lender on demand for all expenses
(including reasonable attorneys’ fees and disbursements, but excluding internal
overhead, administrative and similar costs of Lender) reasonably relating to or
incurred by Lender in connection with monitoring, reviewing or performing any
remedial actions in accordance herewith.

(iii) Borrower shall not commence any remedial actions under clause (i) above
without Lender’s prior written approval which approval shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, if the presence or
threatened presence of Hazardous Material on, under or about any Individual
Property poses an immediate threat to the health, safety or welfare of any
Person or the environment, or is of such a nature that an immediate response is
necessary or required under applicable Environmental Law, then Borrower may
commence all necessary remedial actions without Lender’s prior written approval.
In such events, Borrower shall notify Lender as soon as practicable and, in any
event, within three Business Days, of any action taken. Borrower shall not enter
into any settlement agreement, consent decree or other compromise relating to
Hazardous Materials or Environmental Laws unless and until Lender has provided
its prior written consent thereto.

(C)              Further Assurance. If Lender at any time has a reasonable basis
to believe that a violation of any Environmental Law related to any Individual
Property has occurred and is continuing or that any basis for a material
Environmental Claim affecting any Borrower Party or related to any Individual
Property exists, then Borrower agrees, promptly after written request from
Lender, to provide Lender with such reports, certificates, engineering studies
or other written material or data as Lender may reasonably require so as to
satisfy Lender that the Borrower Parties and the related Individual Property are
in material compliance with all applicable Environmental Laws.

(D)              O & M Program. In the event the Environmental Report recommends
the development of an operation and maintenance program for any Individual
Property (including, without limitation, with respect to the presence of
asbestos and/or lead-based paint) (“O & M Program”), Borrower shall develop an O
& M Program, as approved by Lender, in Lender’s sole discretion, and shall,
during the term of the Loan, including any extension or renewal thereof, comply
in all respects with the terms and conditions of the O & M Program.  With
respect to the CCW Property, the O & M Program is that certain Operations and
Maintenance Program for Asbestos-Containing Materials dated June 19, 2006,
prepared by The LJM Group, Inc., LJM Project No. 06.03.0582, and Borrower shall
comply in all respects with the terms and conditions of such O & M Program.

Section 5.8      Environmental Disclosure.

(A)              Borrower shall promptly upon becoming aware thereof advise
Lender in writing and in reasonable detail of: (1) any release, disposal or
discharge of any Hazardous Material on, under, or about any Individual Property
required to be reported to any federal, state or local

50

--------------------------------------------------------------------------------

governmental or regulatory agency under the applicable Environmental Laws except
such releases, disposals or discharges pursuant to and in compliance with valid
permits, authorizations or registrations under said Environmental Laws; (2) any
and all written communications sent or received by Borrower with respect to any
Environmental Claims or any release, disposal or discharge of Hazardous Material
required to be reported to any federal, state or local governmental or
regulatory agency; (3) any remedial action taken by Borrower or any other Person
in response to any Hazardous Material on, under or about any Individual
Property; (4) the discovery by Borrower of any occurrence or condition on any
real property adjoining or in the vicinity of any Individual Property that could
cause such Individual Property or any part thereof to be classified as
“border‑zone property” or to be otherwise subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws the existence of which could result in an Environmental Claim with respect
to any Individual Property; and (5) any request for information from any
governmental agency that indicates such agency is investigating whether Borrower
may be potentially responsible for a release, disposal or discharge of Hazardous
Materials.

(B)              Borrower shall promptly notify Lender of any proposed action to
be taken pertaining in any way to any Individual Property to commence any
operations that could reasonably be expected to subject Borrower or any
Individual Property to additional laws, rules or regulations, including laws,
rules and regulations requiring additional or amended environmental permits or
licenses which could reasonably be expected to subject Borrower to any material
obligations or requirements under any Environmental Laws. Borrower shall, at its
own expense, provide copies of such documents or information as Lender may
reasonably request in relation to any matters disclosed pursuant to this
Section.

Section 5.9      Compliance with Laws and Contractual Obligations. Borrower will
(A) comply with the requirements of all present and future applicable laws,
rules, regulations and orders of any governmental authority in all jurisdictions
in which it is now doing business or may hereafter be doing business, (B)
maintain all licenses and permits now held or hereafter acquired by Borrower,
and (C) perform, observe, comply and fulfill all of its obligations, covenants
and conditions contained in any Contractual Obligation.

Section 5.10    Further Assurances. Borrower Parties and their Affiliates shall,
from time to time, execute and/or deliver such documents, instruments,
agreements, financing statements, and perform such acts as Lender at any time
may reasonably request to evidence, preserve and/or protect the Collateral at
any time securing or intended to secure the Obligations and/or to better and
more effectively carry out the purposes of this Loan Agreement and the other
Loan Documents.

Section 5.11    Performance of Agreements and Leases. Borrower shall duly and
punctually perform, observe and comply in all material respects with all of the
terms, provisions, conditions, covenants and agreements on its part to be
performed, observed and complied with (i) hereunder and under the other Loan
Documents to which it is a party, and (ii) agreements entered into or assumed by
such Person in connection with the Property, and will not suffer or permit any
default or event of default (giving effect to any applicable notice requirements
and cure periods) to exist under any of the foregoing. Borrower shall comply
with, observe and perform all of Borrower’s material obligations as landlord
under the Leases and shall enforce the material

51

--------------------------------------------------------------------------------

terms, covenants and conditions contained in the Leases upon the part of the
tenants thereunder to be observed or performed.

Section 5.12    Leases.

(A)              If any Event of Default exists, then without the prior written
consent of Lender, Borrower shall not (i) enter into any Lease; (ii) cancel or
terminate (including, without limitation, by exercise of any landlord recapture
rights) any Lease; (iii) approve any assignment of any Lease that releases the
original tenant from its obligations under such Lease, (iv) amend, modify or
waive the provisions of any Lease in any material respect (including, without
limitation, any amendment, modification or waiver reducing the fixed initial
term of any Lease, reducing the rent payable under any Lease, changing any
renewal provisions of any Lease or materially increasing the obligations of the
landlord or materially decreasing the obligations of the tenant under any Lease
or pursuant to which any premises covered by such Lease is surrendered); or (v)
cancel or modify any guaranty, or release any security deposit, letter of
credit, or other item constituting security pertaining to any Lease.

(B)              Provided that no Event of Default shall have occurred and be
continuing, Lender’s consent shall not be required for the creation, assignment,
termination, amendment or modification of any Lease provided that (i) the
applicable Lease (or amendment or modification of a Lease if such amendment or
modification adjusts or otherwise affects rent) is entered into on an
arms-length basis with a tenant not affiliated with Borrower and provides for
payment of a net effective rent (after taking into account any free rent,
construction allowances or other concessions granted by landlord) and other
material amounts payable no less than the then effective fair market rent then
prevailing for similar properties and leases in the market area (and taking into
account the type and creditworthiness of the tenant, the length of the term
including any renewals, and the location and size of the premises covered
thereby), and is otherwise on commercially reasonable terms, and (ii) such
Lease, amendment or modification does not contain any options or rights of first
offer or refusal or similar rights to purchase the Property or any portion
thereof.  Borrower shall not, without Lender’s prior written consent, enter into
Leases or amendments or modifications of Leases does not satisfy the foregoing
criteria.

(C)              Borrower shall promptly send Lender copies of any notices of
default received from the tenant under any Lease, and will enforce the
performance by each tenant of the tenant’s obligations under any Lease.  Except
for Security Deposits, no Lease shall provide for payment of rent more than one
month in advance, and Borrower shall not under any circumstances collect any
rent more than one month in advance. Borrower, at Lender’s written request,
shall furnish Lender with executed copies of all Leases hereafter made (to the
extent not theretofore provided to Lender). Each Lease (or a separate agreement
with the tenant of such Lease, in recordable form and substance reasonably
satisfactory to Lender) shall specifically provide that such Lease is
subordinate to the Mortgage; that the tenant attorns to Lender, such attornment
to be effective upon Lender’s acquisition of title to the Property; that the
tenant agrees to execute such further evidences of attornment as Lender may from
time to time reasonably request; that the attornment of the tenant shall not be
terminated by foreclosure; that in no event shall Lender, as holder of the
Mortgage or as successor landlord, be liable to the tenant for any act or
omission of any prior landlord or for any liability or obligation of any prior
landlord occurring prior to the date that Lender or any subsequent owner acquire
title to the Property.

52

--------------------------------------------------------------------------------

Section 5.13    Management and Leasing.

(A)              Borrower shall cause Manager to manage each Individual Property
in accordance with the Management Agreement. Borrower shall (i) diligently
perform and observe all of the material terms, covenants and conditions of the
Management Agreement on the part of Borrower to be performed and observed and
(ii) promptly notify Lender of any notice to Borrower of any default under the
Management Agreement of which it is aware. If Borrower shall default in the
performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Borrower to be performed or observed beyond
applicable notice and cure periods, then, without limiting Lender’s other rights
or remedies under this Agreement or the other Loan Documents, and without
waiving or releasing Borrower from any of its obligations hereunder or under the
Management Agreement upon five (5) Business Days’ notice to Borrower, Lender
shall have the right, but shall be under no obligation, to pay any sums and to
perform any act as may be appropriate to cause all the material terms, covenants
and conditions of the Management Agreement on the part of Borrower to be
performed or observed. Borrower shall cause any new Manager to execute and
deliver a subordination agreement reasonably satisfactory to Lender at the time
of execution and delivery of any Management Agreement.

(B)              Borrower shall not surrender, terminate, cancel, materially
modify, renew or extend such Management Agreement, or enter into any other
Management Agreement with Manager or any other Person, or consent to the
assignment by the Manager of its interest under the Management Agreement, in
each case without the express consent of Lender, which consent may be
conditioned upon Borrower delivering a Rating Confirmation. If at any time
Lender consents to the appointment of a new Manager (which consent shall not be
unreasonably withheld in the absence of an Event of Default if a Rating
Confirmation is obtained, or if Lender does not require a Rating Confirmation),
such new Manager and Borrower shall, as a condition of Lender’s consent, execute
a subordination of management agreement in the form delivered in connection with
the closing of the Loan.

(C)              Lender shall have the right to require Borrower to replace the
Manager with a Person chosen by Lender, upon the earliest to occur of any one or
more of the following events: (i) the occurrence and continuance of an Event of
Default; (ii) thirty (30) days after notice from Lender to Borrower that Manager
has engaged in fraud, gross negligence, malfeasance or willful misconduct
arising from or in connection with its performance under the Management
Agreement, or Manager’s material default under the Management Agreement which is
not cured within any applicable cure period provided under the Management
Agreement; or (iii) a change in control of Manager.

Section 5.14    Material Agreements. Except for Leases complying with the Loan
Documents and any Management Agreement complying with the foregoing, Borrower
shall not enter into or become obligated under any material agreement pertaining
to the Property, including without limitation brokerage agreements, unless the
same may be terminated without cause and without payment of a penalty or
premium, on not more than ninety (90) days’ prior written notice.

Section 5.15    Certain VCOC Provisions.  Lender, and its assignees and
participants, shall have, the following additional rights relating to the
management of Borrower: (i) the rights to discuss the business operations,
properties and financial and other condition of Borrower

53

--------------------------------------------------------------------------------

including significant business activities and business and financial
developments, with Borrower’s officers, employees and directors; (ii) the right
to submit proposals or suggestions to such Borrower’s management with the
requirement that Borrower’s management discuss such advice, proposals or
suggestions with the Lender within a reasonable period after such submission
considering them in good faith, in meetings which shall occur no less frequently
than bi-monthly; (iii) the right to examine the books and records, operating
reports, budgets and other financial reports of the Borrower on a regular basis,
and to visit and inspect Borrower’s facilities and to reasonably require
information at reasonable times and intervals concerning the general status of
the Borrower’s financial condition and operations; (iv) the right to be notified
of any material development to or affecting the Borrower’s business and to
consult with and advise management with respect to such matters; (v) the right
to discuss with management of Borrower, including management’s proposed
reorganization plans and operating plan for going forward after such plan of
reorganization has been effected; and (vi) the right to request from Borrower in
addition to the information provided pursuant to this Agreement, when available,
copies of all financial statements, forecasts and projections provided to or
approved by Borrower’s management to its members and/or such other business and
financial data may be reasonably requested.

Section 5.16    Estoppel Certificates. Within ten (10) Business Days following a
written request by Lender, Borrower shall provide to Lender a duly acknowledged
written statement confirming (i) the amount of the outstanding principal balance
of the Loan, (ii) the terms of payment and maturity date of the Note, (iii) the
date to which interest has been paid, (iv) to the actual knowledge of Borrower,
whether any offsets or defenses exist against the Obligations, and if any such
offsets or defenses are alleged to exist, the nature thereof shall be set forth
in detail, (v) that this Loan Agreement, the Note, the Mortgage and the other
Loan Documents have not been modified or amended, or, if modified or amended,
giving particulars of any such modification or amendment, and (vi) such other
factual matters as Lender shall reasonably request.

Section 5.17    Indebtedness. So long as the Loan is outstanding, Borrower will
not directly or indirectly create, incur, assume, guaranty, or otherwise become
or remain directly or indirectly liable with respect to any Indebtedness except:

(A)              the Obligations; and

(B)              unsecured trade payables not evidenced by a note and arising
out of purchases of goods or services in the ordinary course of business and
operation of the Property; provided that (i) each such trade payable is payable
not later than sixty (60) days after the original invoice date and is paid on or
before the date when due and (ii) the aggregate amount of such trade payables
outstanding does not, at any time, exceed $1,000,000. In no event shall any
Indebtedness other than the Loan be secured, in whole or in part, by the
Property or any portion thereof or interest therein.

Section 5.18    Liens and Related Matters. The obligations of Borrower under
this Section are in addition to and not in limitation of its obligations under
Article XI herein. So long as the Loan is outstanding:

54

--------------------------------------------------------------------------------

(A)              No Liens. Borrower will not directly or indirectly create,
incur, assume, suffer, or permit to exist any Lien on or with respect to the
Property, any other Collateral or any direct or indirect ownership interest in
Borrower, except Permitted Encumbrances.

(B)              No Negative Pledges. Borrower will not enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties or assets, whether now owned or hereafter
acquired.

Section 5.19    Contingent Obligations. Borrower will not directly or indirectly
create or become or be liable with respect to any Contingent Obligation

Section 5.20    Restriction on Fundamental Changes. Except as otherwise
expressly permitted under this Loan Agreement (or with the prior written consent
of Lender):

(A)              Borrower will not permit any other Person to, (i) amend, modify
or waive any term or provision of Borrower’s certificate of formation, limited
liability company agreement, operating agreement, or other organizational
documents relating to any of the representations, warranties or covenants of
Article IX of this Loan Agreement or this Section 5.20 or any other material
term or provision of Borrower’s organizational documents unless required by law;
or (ii) liquidate, terminate, wind‑up or dissolve Borrower; or (iii) merge with
or consolidate Borrower into another Person.

(B)              Borrower will not cancel or otherwise forgive or release any
material claim or debt owed to Borrower by any Person, except for adequate
consideration or in the ordinary course of Borrower’s business.

(C)              Borrower will not enter into any agreement which expressly
restricts the ability of Borrower to enter into amendments, modifications or
waivers of any of the Loan Documents.

(D)              Borrower will not assign or transfer any of its interest in any
licenses, permits, variances and certificates obtained by Borrower and used in
connection with the ownership, operation, use or occupancy of the Property
(including, without limitation, business licenses, state health department
licenses, licenses to conduct business and all such other permits, licenses and
rights, obtained from any Governmental Authority or private Person concerning
ownership, operation, use or occupancy of the Property).

(E)               Borrower will not, and will not permit or suffer any other
Person on its behalf, to (i) issue, sell, assign, pledge, convey, dispose or
otherwise encumber any stock, membership interest, partnership interest, or
other equity or beneficial interest in Borrower or (ii) grant any options,
warrants, purchase rights or other similar agreements or understandings with
respect thereto.

(F)               Borrower will not acquire by purchase or otherwise all or any
part of the business or assets of, or stock or other evidence of beneficial
ownership of, any Person.

Section 5.21    Transactions with Related Persons. Except for fees payable to
Manager under the Management Agreement, the Borrower shall not pay any
management, consulting, director or similar fees to any Related Person of
Borrower or to any director or manager (other than any

55

--------------------------------------------------------------------------------

customary fees of the Independent Director), officer or employee of Borrower.
Borrower shall not directly or indirectly enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Related Person of Borrower or with any
director, officer or employee of any Borrower Party, except transactions in the
ordinary course of and pursuant to the reasonable requirements of the business
of Borrower and upon fair and reasonable terms which are no less favorable to
Borrower than would be obtained in a comparable arm’s length transaction with a
Person that is not a Related Person of Borrower. Borrower shall not make any
payment or permit any payment to be made to any Related Person of Borrower when
or as to any time when any Event of Default shall exist.

Section 5.22    ERISA.

(A)              No ERISA Plans. Borrower will not establish any Employee
Benefit Plan, Pension Plan or Multiemployer Plan, or will commence making
contributions to (or become obligated to make contributions to) any Employee
Benefit Plan, Pension Plan or Multiemployer Plan.

(B)              Compliance with ERISA.  Borrower shall not:  (i) engage in any
Prohibited Transaction; or (ii) permit the establishment of any Employee Benefit
Plan providing post‑retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in liability
to Borrower or any ERISA Affiliate or increase the obligation of Borrower. In
addition to the prohibitions set forth in Article XI hereof, and not in
limitation thereof, Borrower shall not Transfer its interest or rights in this
Agreement or in the Property, or attempt to do any of the foregoing or suffer
any of the foregoing, nor shall any Person owning a direct or indirect interest
in Borrower Transfer any of its rights or interest (direct or indirect) in
Borrower, attempt to do any of the foregoing or suffer any of the foregoing, nor
shall Borrower or any Person owning a direct or indirect  interest in Borrower
take, without limitation, any action or fail to take any action, if, in any such
case, doing so would (i) cause the Loan or the exercise of any of Lender’s
rights in connection therewith to constitute a Prohibited Transaction (unless
Borrower furnishes a legal opinion reasonably satisfactory to Lender that the
same is exempt from the Prohibited Transaction provisions or ERISA and the IRC
or otherwise does not constitute a Prohibited Transaction), assuming solely for
this purpose that Lender is a Party In Interest or a Disqualified Person with
respect to an employee benefit plan, if any, which has directly or indirectly
invested in Borrower, or (ii) otherwise result in Lender being deemed in
violation of any applicable provisions of ERISA with respect to the Loan. 
Borrower shall take such steps as are necessary to assure that each of them (
and their respective shareholders, partners and members) does not commit any
act, or fail to commit any act, the occurrence of which or the failure of which
to occur would cause the Loan to be Prohibited Transaction.

(C)              No Plan Assets. Borrower shall not at any time during the term
of this Loan Agreement become (1) an employee benefit plan defined in Section
3(3) of ERISA which is subject to ERISA, (2) a plan as defined in Section
4975(e)(1) of the IRC which is subject to Section 4975 of the IRC, (3) a
“governmental plan” within the meaning of Section 3(32) of ERISA or (4) an
entity any of whose underlying assets constitute “plan assets” of any such
employee benefit plan, plan or governmental plan for purposes of Title I or
ERISA, Section 4975 of the IRC or any state statutes applicable to Borrower
regulating investments of governmental plans.  Borrower shall deliver to Lender
such certification or other evidence from time to time

56

--------------------------------------------------------------------------------

throughout the term of the Loan, as reasonably requested by Lender that the
assets of Borrower do not and will not constitute “plan assets” for the purposes
of Title I of ERISA of any “employee benefit plan” as defined in Section 3 (3)
of ERISA, which is subject  to Title I or ERISA because Borrower is a Real
Estate Operating Company as defined in the U.S. Department of Labor Asset
Regulation (29 C.F.R. 2510.3-101(e)).  For so long as any portion of the Loan is
outstanding, Borrower shall comply with all requirements and take all actions
necessary to maintain Borrower’s status as a “Real Estate Operating Company”
under the U.S. Department of Labor Plan Asset Regulations and to otherwise
operate so as to continue to qualify as a “Real Estate Operating Company” under
the Plan Asset Regulations (29 C.F.R. 2510.3-101(e)) such that Borrower will not
be deemed to be an “employee benefit plan” as defined in Section 3(3) of ERISA,
which is subject to Title I of ERISA, and the assets of Borrower will not be
deemed to constitute “plan assets” of one or more such plans for the purposes of
Title 1 of ERISA.  Notwithstanding the foregoing, for so long as long as any
portion of the Loan is outstanding, no transfer, restructuring, mergers or
changes of control with respect to Borrower shall be permitted to the extent
same would cause Borrower to no longer be a ‘Real Estate Operating Company’
under the Plan Asset Regulations.

(D)              Indemnification.  If the provisions of this Section 5.22 are
violated, Borrower agrees, at its own cost and expense, to take such steps
Lender shall reasonably request to prevent the occurrence of a Prohibited
Transaction or to correct the occurrence of a Prohibited Transaction.  Borrower
agrees to indemnify, defend and hold the Indemnified Parties free and harmless
from and against all loss, costs (including, without limitation, reasonable
attorney’s fees and expenses), taxes, penalties, damages and expenses any
Indemnified Party may suffer by reason of the investigation, defense and
settlement of claims based upon a breach of the foregoing provisions.  The
foregoing indemnification shall survive repayment of the Loan.

Section 5.23    Lender’s Expenses. Borrower shall pay, on written demand by
Lender, all reasonable expenses, charges, costs and fees (including reasonable
attorneys’ fees and expenses) in connection with the negotiation, documentation,
closing, administration, servicing, enforcement, interpretation, and collection
of the Loan and the Loan Documents, and in the preservation and protection of
Lender’s rights hereunder and thereunder, except for expenses, charges, costs
and fees incurred by Lender relating to Article X. Without limitation of the
foregoing, the Borrower shall pay all costs and expenses, including reasonable
attorneys’ fees, incurred by Lender in any case or proceeding under Title 11 of
the United States Code (or any law succeeding or replacing any of the same). At
the Closing, Lender is authorized to pay directly from the proceeds of the Loan
any or all of the foregoing expenses then or theretofore incurred.

Section 5.24    Environmental Matters; Inspection.

(A)              Borrower shall not permit any Hazardous Materials to be present
on, under or to emanate from the Property, or migrate from adjoining property
controlled by Borrower onto or into the Property, except under conditions
permitted by applicable Environmental Laws and, in the event that such Hazardous
Materials are present on, under or emanate from the Property, or migrate onto or
into the Property, Borrower shall cause the removal or remediation of such
Hazardous Materials, in accordance with this Loan Agreement and Environmental
Laws (including, where applicable, the National Contingency Plan promulgated
pursuant to the

57

--------------------------------------------------------------------------------

Comprehensive Environmental Response, Compensation and Liability Act). Borrower
shall use best efforts to prevent, and to seek the remediation of, any migration
of Hazardous Materials onto or into the Property from any adjoining property.

(B)              Upon reasonable prior written notice, Lender shall have the
right at all reasonable times to enter upon and inspect all or any portion of
the Property, provided that such inspections shall not unreasonably interfere
with the operation or the tenants, residents or occupants of the Property. If
Lender has reasonable grounds to suspect that remedial actions may be required,
Lender shall notify Borrower and, thereafter, may select a consulting engineer
to conduct and prepare reports of such inspections (with notice to Borrower
prior to the commencement of such inspection). Provided no Event of Default
exists, Borrower shall be given a reasonable opportunity to review any reports,
data and other documents or materials reviewed or prepared by the engineer, and
to submit comments and suggested revisions or rebuttals to same. The inspection
rights granted to Lender in this Section 5.24 shall be in addition to, and not
in limitation of, any other inspection rights granted to Lender in this Loan
Agreement, and shall expressly include the right (if Lender suspects that
remedial actions may be required) to conduct soil borings, establish ground
water monitoring wells and conduct other customary environmental tests,
assessments and audits.

(C)              Borrower agrees to bear and shall pay or reimburse Lender on
demand for all sums advanced and expenses incurred (including reasonable
attorneys’ fees and disbursements, but excluding internal overhead,
administrative and similar costs of Lender) reasonably relating to, or incurred
by Lender in connection with, the inspections and reports described in this
Section 5.24 (to the extent such inspections and reports relate to the Property)
in the following situations:

                                                   (i)               If Lender
has reasonable grounds to believe, at the time any such inspection is ordered,
that there exists an occurrence or condition that could lead to an Environmental
Claim;

                                                 (ii)               If any such
inspection reveals an occurrence or condition that is reasonably likely to lead
to an Environmental Claim; or

                                                (iii)               If an Event
of Default with respect to the Property exists at the time any such inspection
is ordered, and such Event of Default relates to any representation, covenant or
other obligation pertaining to Hazardous Materials, Environmental Laws or any
other environmental matter.

Section 5.25    Environmental Claims. Lender may join and participate in, as a
party if Lender so determines, any legal or administrative proceeding or action
concerning the Property or any portion thereof under any Environmental Law, if,
in Lender’s reasonable judgment, the interests of Lender shall not be adequately
protected by Borrower; provided, however, that Lender shall not participate in
day-to-day decision making with respect to environmental compliance. Borrower
shall pay or reimburse Lender on demand for all reasonable sums advanced and
expenses incurred (including reasonable attorneys’ fees and disbursements, but
excluding internal overhead, administrative and similar costs of Lender)
incurred by Lender in connection with any such action or proceeding.

Section 5.26    Environmental Indemnification. Borrower shall indemnify,
reimburse, defend, and hold harmless Lender and its parent, subsidiaries,
Affiliates, shareholders, directors, officers, employees, representatives,
agents, successors, assigns and attorneys (collectively, the “Indemnified
Parties”) for, from, and against all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, costs and expenses
(including, without limitation, interest, penalties, reasonable attorneys’ fees,
disbursements and expenses, and reasonable consultants’ fees, disbursements and
expenses (but excluding internal overhead, administrative and similar costs of
Lender)), asserted against, resulting to, imposed on, or incurred by any
Indemnified Party, directly or indirectly, in connection with any of the
following (except to the extent same are directly and solely caused by the
fraud, bad faith, gross negligence or willful misconduct of any Indemnified
Party:

58

--------------------------------------------------------------------------------

                                                      (i)            events,
circumstances, or conditions which are alleged to, or do, form the basis for an
Environmental Claim;

                                                    (ii)            any
pollution or threat to human health or the environment that is related in any
way to Borrower’s or any previous owner’s or operator’s management, use,
control, ownership or operation of any Individual Property (including, without
limitation, all on-site and off-site activities involving Hazardous Materials),
and whether occurring, existing or arising prior to or from and after the date
hereof, and whether or not the pollution or threat to human health or the
environment is described in the Environmental Reports;

                                                   (iii)            any
Environmental Claim against any Person whose liability for such Environmental
Claim Borrower has or may have assumed or retained either contractually or by
operation of law; or

                                                  (iv)            the breach of
any representation, warranty or covenant set forth in Section 5.7 or any of
Sections 5.24 through 5.26, inclusive.

The provisions of and undertakings and indemnification set forth in this Section
5.26 shall survive the satisfaction and payment of the Indebtedness and
termination of this Loan Agreement.

Section 5.27    Operation of Property. Borrower shall cause the operation of
each Individual Property to be conducted at all times in a manner consistent
with at least the level of operation of each Individual Property as of the
Closing Date for the Loan, including, without limitation, the following:

                                                      (i)            to maintain
or cause to be maintained the standard of each Individual Property at all times
at a level not lower than that maintained by prudent managers of similar
facilities or land in the region where each Individual Property is located;

                                                    (ii)            to operate
or cause to be operated each Individual Property in a prudent manner in
compliance in all material respects with applicable Legal Requirements and
Insurance Requirements relating thereto and maintain or cause to be maintained
all licenses, permits and any other agreements necessary for the continued use
and operation of each Individual Property; and

59

--------------------------------------------------------------------------------

                                                   (iii)            to maintain
or cause to be maintained sufficient inventory, equipment and other personal
property of types and quantities at each Individual Property to enable Borrower
to operate each Individual Property and to comply with all Leases affecting each
Individual Property.

Section 5.28    Taxes on Security. Borrower shall pay all taxes, charges,
filing, registration and recording fees, excises and levies payable with respect
to the Note or the Lien created or secured by the Loan Documents, other than
income, franchise, doing business and other analogous taxes imposed on Lender.
If there shall be enacted any law (1) deducting the Loan from the value of the
Collateral for the purpose of taxation, (2) affecting Lender’s Lien on the
Collateral or (3) changing existing laws of taxation of mortgages, deeds of
trust, security deeds, or debts secured by realty, or changing the manner of
collecting any such taxes, the Borrower shall promptly pay to Lender, on demand,
all taxes, costs and charges for which Lender is or may be liable as a result
thereof; provided, however, if such payment would be prohibited by law or would
render the Loan usurious, then instead of collecting such payment, Lender may
declare all amounts owing under the Loan Documents to be immediately due and
payable.

Section 5.29    Cooperate in Legal Proceedings. The Borrower shall reasonably
cooperate with Lender with respect to any proceedings before any Governmental
Authority which may in any way materially affect the rights of Lender hereunder
or any rights obtained by Lender under any of the Loan Documents and, in
connection therewith, shall not prohibit Lender, at its election, from
participating in any such proceedings.

Section 5.30    Insurance Benefits. The Borrower shall reasonably cooperate with
Lender in obtaining for Lender the benefits of any insurance proceeds lawfully
or equitably payable to Lender in connection with each Individual Property.
Lender shall be reimbursed for any expenses reasonably incurred in connection
therewith (including reasonable attorneys’ fees and disbursements and the
payment by the Borrower of the expense of an appraisal on behalf of Lender in
case of a fire or other casualty affecting any Individual Property or any part
thereof, but excluding internal overhead, administrative and similar costs of
Lender) out of such insurance proceeds, all as more specifically provided in
this Loan Agreement.

Section 5.32    Prohibited Persons. Borrower covenants and agrees that neither
Borrower, Guarantor, nor any of their respective Affiliates, officers,
directors, partners or members will knowingly: (i) conduct any business, nor
engage in any transaction or dealing, with any Prohibited Person, including, but
not limited to, the making or receiving of any contribution of funds, goods, or
services, to or for the benefit of a Prohibited Person; or (ii) engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in EO13224. Borrower further covenants and agrees to deliver (from time to
time) to Lender any such certification or other evidence as may be requested by
Lender in its sole and absolute discretion, confirming that: (8) neither
Borrower, Guarantor, nor their respective officers, directors, partners, members
or Affiliates is a Prohibited Person; and (ii) neither Borrower, Guarantor, nor
their respective officers, directors, partners, members or Affiliates has to its
knowledge engaged in any business transaction or dealings with a Prohibited
Person, including, but not limited to, the making or receiving of any
contribution of funds, goods, or services, to or for the benefit of a Prohibited
Person.

60

--------------------------------------------------------------------------------

ARTICLE VI
RESERVES

Section 6.1      Security Interest in Reserves; Other Matters Pertaining to
Reserves.

(A)              Borrower hereby pledges, assigns and grants to Lender a
security interest in and to all of Borrower’s right, title and interest in and
to the Reserves, as security for payment and performance of all of the
Obligations hereunder and under the Note and the other Loan Documents. The
Reserves constitute Account Collateral and are subject to the security interest
in favor of Lender created herein and all provisions of this Loan Agreement and
the other Loan Documents pertaining to Account Collateral.

(B)              In addition to the rights and remedies provided in Article VII
and elsewhere herein, upon the occurrence of any Event of Default, Lender shall
have all rights and remedies pertaining to the Reserves as are provided for in
any of the Loan Documents or under any applicable law. Without limiting the
foregoing, upon and at all times after the occurrence and during the continuance
of any Event of Default, Lender in its sole and absolute discretion, may use the
Reserves (or any portion thereof) for any purpose, including but not limited to
any combination of the following: (i) payment of any of the Obligations
including the Prepayment Consideration applicable upon such payment in such
order as Lender may determine in its sole discretion; provided, however, that
such application of funds shall not cure or be deemed to cure any default; (ii)
reimbursement of Lender for any losses or expenses (including, without
limitation, reasonable legal fees) suffered or incurred as a result of such
Event of Default; (iii) payment for the work or obligation for which such
Reserves were reserved or were required to be reserved; and (iv) application of
the Reserves in connection with the exercise of any and all rights and remedies
available to Lender at law or in equity or under this Loan Agreement or pursuant
to any of the other Loan Documents.

Section 6.2      Funds Deposited with Lender.  Except only as expressly provided
otherwise herein, all funds of Borrower which are deposited with Lender as
Reserves hereunder shall be held by Lender in one or more Permitted Investments.
Lender is authorized to commingle any of the Reserves with each other and with
any other funds held by Lender. All interest which accrues on the Reserves shall
be taxable to Borrower and shall be added to and disbursed in the same manner
and under the same conditions as the principal sum on which said interest
accrued.

Section 6.3      Impositions and Insurance Reserve. Subject to the proviso
below, Borrower shall deposit with Lender monthly, on each Payment Date
commencing with the First Payment Date, 1/12th of the annual charges (as
estimated by Lender) for all Impositions and Insurance Premiums payable with
respect to the Property hereunder (said funds, together with any interest
thereon and any additions thereto, the “Impositions and Insurance Reserve”), and
Borrower shall also deposit with Lender on demand, to be added to and included
within such reserve, a sum of money which Lender reasonably estimates, together
with such monthly deposits, will be sufficient to make the payment of each such
charge at least thirty (30) days prior to the date initially due; provided, that
no deposits shall be required into the Impositions and Insurance Reserve so long
as no Event of Default exists and continues beyond any applicable cure period
provided herein and Borrower provides Lender with paid receipts and other
evidence satisfactory to Lender that all Impositions and Insurance Premiums have
been and continue to be fully and

61

--------------------------------------------------------------------------------

timely paid, and in any event, in the case of Impositions, prior to any
delinquency or assessment of late payment interest or penalties.  If deposits
are required in the Impositions and Insurance Reserve, Borrower shall provide
Lender with bills and all other documents necessary for the payment of the
foregoing charges at least thirty (30) days prior to the date on which each
payment shall first become due, and so long as (i) no Event of Default has
occurred and is continuing, (ii) Borrower has provided Lender with the foregoing
bills and other documents in a timely manner, and (iii) sufficient funds are
held by Lender for the payment of the Impositions and Insurance Premiums (if
applicable) relating to the Property, Lender shall pay said items or disburse to
Borrower from such Reserve amounts sufficient to pay said items.

Section 6.4      Guaranty in Lieu of Rollover Reserve.  In lieu of requiring
monthly deposits into a leasing rollover reserve, Guarantor has, pursuant to the
Guaranty, guaranteed the payment of the unpaid balance of the Obligations
subject to a maximum liability limitation of $655,000 (such guaranty, as
distinguished from the other obligations and matters guaranteed by Guarantor
under the Guaranty, is herein referred to as the “Limited Debt Guaranty”);
provided that at any time after January 1, 2008 Borrower shall be entitled to
obtain the termination of such Limited Debt Guaranty, and such Limited Debt
Guaranty shall terminate and be of no further force and effect (a “Limited Debt
Guaranty Termination”; a Limited Debt Guaranty Termination shall not, however,
terminate, limit or otherwise affect the other obligations of Guarantor under
the Guaranty or the other recourse obligations of Borrower hereunder, which
shall survive and continue in full force and effect notwithstanding any Limited
Debt Guaranty Termination), if Borrower satisfies the following conditions (the
“Limited Debt Guaranty Termination Conditions”):

(A)              no Event of Default shall exist and be continuing;

(B)              Borrower shall make a written request to Lender for termination
of the Limited Debt Guaranty (the “Termination Request”), which request may only
be made after January 1, 2008, as such Limited Debt Guaranty is being provided
in lieu of a rollover reserve for anticipated lease rollovers prior to January
1, 2008;

(C)              Borrower shall demonstrate to Lender’s reasonable satisfaction,
providing such evidence and calculations as Lender may reasonably require, that
based upon Leases in place at the time of Borrower’s Termination Request, the
Property DSCR (as defined below) is at least equal to 1.15:1.00. 

As used herein, the “Property DSCR” at any time of determination thereof shall
be the ratio of Property Annualized NOI (as defined below) to Adjusted
Annualized Debt Service (as defined below).

As used herein, the “Property Annualized NOI” at any time of determination
thereof shall mean the excess at such time of determination of (a) annualized
base rents and monthly recoveries under bona fide Leases at the Property with
tenants in occupancy, open for business and paying rent at such time of
determination over (b) annualized Operating Expenses, based upon actual
Operating Expenses for the twelve month period ending at the time of such
determination, in each case adjusted to reflect Lender’s reasonable
determination of (i) a vacancy factor equal to the greatest of (A) the market
vacancy rate (as reasonably determined by Lender) for similar

62

--------------------------------------------------------------------------------

properties in the commercial business district or market area in which the
Property is located, (B) the actual vacancy rate at the Property, and (C) 8.3%
of the rentable area of the Property; (ii) a reduction of above market rents at
the Property to market rents as reasonably determined by Lender; (iii) a base
management fee equal to the greater of (A) the actual base management fees at
the time of such determination, annualized, and (B) 3% of annualized Property
gross revenues; (iv) subtraction of (A) an underwritten annualized capital
reserve amount equal to $0.20 per rentable square foot at the Property per annum
(regardless of whether a reserve therefor is required hereunder or the amount of
such reserve), and (B) an underwritten annualized leasing reserve amount equal
to $0.70 per rentable square foot at the Property per annum (regardless of
whether a reserve therefor is required hereunder or the amount of such reserve);
and (v) exclusion of (X) amounts representing non-recurring items and (Z)
amounts received from tenants not currently in occupancy and paying rent, from
tenants affiliated with any Borrower Parties, from tenants in default or in
bankruptcy and from tenants under month-to-month Leases or Leases where the term
is about to expire. 

As used herein, the “Adjusted Annualized Debt Service” shall be an amount equal
to the product of the outstanding principal balance of the Loan multiplied by an
assumed mortgage constant of 0.0715.

Section 6.5      Contingent Leasing Reserve.

(A)              Assurant Lease.  In the event the tenant under the Assurant
Lease exercises its Assurant Early Termination Option, Borrower shall promptly,
and in any event within five (5) Business Days, notify Lender, deposit with
Lender the Assurant Early Termination Payment, and additionally thereafter
Borrower shall deposit with Lender monthly, on each Payment Date commencing with
the Payment Date following the date upon which the tenant has provided notice of
its exercise of the Assurant Early Termination Option (the “Assurant Exercise
Date”), an amount equal to the Gateway Property Excess Cash Flow (as defined
below) for the month prior to the month containing such Payment Date (said
funds, together with any interest thereon and additions thereto, the “Gateway
Leasing Reserve”) for the purpose of creating a reserve for tenant improvement
costs or allowances therefor and leasing commissions required to be paid by
Borrower in connection with reletting the space at the Gateway Property pursuant
to Leases which have been approved, or are deemed approved, by Lender, or for
which no approval is required by Lender in accordance with the terms and
conditions hereof and the other Loan Documents (collectively, “Approved Gateway
Leasing Costs”). Upon the Borrower’s written request for disbursement, Lender
shall disburse funds from the Gateway Leasing Reserve to or for the account of
Borrower, to reimburse Borrower for such Approved Gateway Leasing Costs, on the
Payment Date following such request, upon satisfaction of each of the conditions
listed on Schedule 6.7 and each of the conditions set forth in Section 6.7.  The
“Gateway Property Excess Cash Flow” for any month shall be equal to the excess
of rents and other revenues from the Gateway Property for such month over the
sum of (a) 7.1% of the monthly interest payment under the Loan plus (b)
one-twelfth of the annualized real estate taxes and insurance premiums for the
Gateway Property plus (c) reasonable and customary cash operating expenses
(other than real estate taxes and insurance premiums, but including market
property management fees not in excess of 5% of revenues) for the Gateway
Property for such month.  Borrower shall on each Payment Date after the Assurant
Exercise Date provide Lender with a calculation of the amount of the Gateway
Property Excess Cash Flow, with reasonable supporting detail, certified by

63

--------------------------------------------------------------------------------

Borrower.  Such calculation shall be subject to Lender’s reasonable approval and
adjustment, and Borrower shall provide such supporting information and
documentation as Lender may reasonably request in connection with Lender’s
review.  In the event Lender requires an adjustment increasing the amount of the
Gateway Property Excess Cash Flow for a month, such increase shall be paid to
Lender for deposit into the Gateway Leasing Reserve, as an addition to the
regular installments of Gateway Property Excess Cash Flow, within ten (10) days
after Lender gives written notice to Borrower of the requirement to deposit such
increase.  Any interest, dividends or other earnings from funds deposited as
part of the Gateway Leasing Reserve shall deposited in the Gateway Leasing
Reserve as additional deposits therein.

(B)              AU Lease.  In the event the tenant under the AU Lease exercises
its AU Early Termination Option, Borrower shall promptly, and in any event
within five (5) Business Days, notify Lender, and thereafter Borrower shall
deposit with Lender monthly, on each Payment Date commencing with the Payment
Date following the date upon which the tenant has provided notice of its
exercise of the AU Early Termination Option (the “AU Exercise Date”), an amount
equal to the CCW Property Excess Cash Flow (as defined below) for the month
prior to the month containing such Payment Date (said funds, together with any
interest thereon and additions thereto, the “CCW Leasing Reserve”) for the
purpose of creating a reserve for tenant improvement costs or allowances
therefor and leasing commissions required to be paid by Borrower in connection
with reletting the space at the CCW Property pursuant to Leases which have been
approved, or are deemed approved, by Lender, or for which no approval is
required by Lender in accordance with the terms and conditions hereof and the
other Loan Documents (collectively, “Approved CCW Leasing Costs”). Upon the
Borrower’s written request for disbursement, Lender shall disburse funds from
the CCW Leasing Reserve to or for the account of Borrower, to reimburse Borrower
for such Approved CCW Leasing Costs, on the Payment Date following such request,
upon satisfaction of each of the conditions listed on Schedule 6.7 and each of
the conditions set forth in Section 6.7.  The “CCW Property Excess Cash Flow”
for any month shall be equal to the excess of rents and other revenues from the
CCW Property for such month over the sum of (a) 14.1% of the monthly interest
payment under the Loan plus (b) one-twelfth of the annualized real estate taxes
and insurance premiums for the CCW Property plus (c) reasonable and customary
cash operating expenses (other than real estate taxes and insurance premiums,
but including market property management fees not in excess of 5% of revenues)
for the CCW Property for such month.  Borrower shall on each Payment Date after
the AU Exercise Date provide Lender with a calculation of the amount of the CCW
Property Excess Cash Flow, with reasonable supporting detail, certified by
Borrower.  Such calculation shall be subject to Lender’s reasonable approval and
adjustment, and Borrower shall provide such supporting information and
documentation as Lender may reasonably request in connection with Lender’s
review.  In the event Lender requires an adjustment increasing the amount of the
CCW Property Excess Cash Flow for a month, such increase shall be paid to Lender
for deposit into the CCW Leasing Reserve, as an addition to the regular
installments of CCW Property Excess Cash Flow, within ten (10) days after Lender
gives written notice to Borrower of the requirement to deposit such increase. 
Any interest, dividends or other earnings from funds deposited as part of the
CCW Leasing Reserve shall deposited in the CCW Leasing Reserve as additional
deposits therein.

(C)              Certain Definitions.  As used herein, the term “Leasing
Reserve” shall mean the Gateway Leasing Reserve and the CCW Leasing Reserve, as
applicable to the reserved funds in

64

--------------------------------------------------------------------------------

question, and the term “Approved Leasing Costs” shall mean the Approved Gateway
Leasing Costs and the Approved CCW Leasing Costs, as applicable to the reserved
funds in question.      

Section 6.6      Security Deposits; Lease Recoveries.

(A)              Borrower shall if an Event of Default exists transfer all
Security Deposits to Lender and, in the case of Security Deposits which are in
the form of letters of credit, deliver such letters of credit to Lender and
execute such documents and take such actions as are necessary to create a
perfected security interest in favor of Lender in such letters of credit and the
proceeds thereof, as determined by Lender, including without limitation, if
Lender requires, causing the Lender or its designee to become the beneficiary
under such letters of credit; in addition, Borrower hereby constitutes and
appoints Lender its true and lawful attorney-in-fact with full power of
substitution to take in the name of Borrower any and all actions necessary to
cause such letters of credit to be transferred or re-issued to Lender as
beneficiary if an Event of Default exists. Such power of attorney shall be
deemed to be a power coupled with an interest and cannot be revoked.

(B)              If an Event of Default exists, Borrower shall additionally from
time to time deposit with Lender any Lease termination payments (whether such
payments are payable in accordance with the terms of any Lease or by agreement
between landlord and tenant, with Lender’s approval if required hereunder) or
recoveries upon the enforcement of the Leases and the guaranties, if any,
thereof, upon any default beyond the applicable cure period (provided that the
Assurant Early Termination Payment shall be paid to Lender pursuant to Section
6.5 above regardless of whether an Event of Default exists).

Section 6.7      Conditions to Disbursements from the Replacement Reserve and
Leasing Reserve; Performance of Work.

(A)              Disbursements from the Leasing Reserve. Upon Borrower’s request
for disbursement, Lender shall disburse funds from the applicable Leasing
Reserve (such Reserves, the “Work Reserves”) to or for the account of Borrower,
to reimburse Borrower for the applicable Approved Leasing Costs (collectively,
“Approved Expenditures”; and the related tenant improvements to which any such
request for disbursement relates shall be referred to as the “Work”), on the
Payment Date following such request, upon satisfaction of each of the conditions
listed on Schedule 6.7 and each of the conditions set forth below:

                                                      (i)            Except as
provided in this Section 6.7, each request for disbursement from the Work
Reserves shall be made only after completion of the Approved Expenditures for
which disbursement is requested.

                                                    (ii)            If (1) the
cost of a particular item of the Approved Expenditures exceeds $25,000, (2) the
contractor performing such item of the Approved Expenditures requires periodic
payments pursuant to the terms of a written contract, and (3) Lender has
approved in writing in advance such periodic payments (such approval not to be
unreasonably withheld or delayed), a request for disbursement from the Work
Reserves may be made after completion of a portion of the work under such
contract, provided (v) such contract requires payment upon completion of such
portion of the work, (w) the materials for which the request is made are on site
at the

65

--------------------------------------------------------------------------------

Property and are properly secured or have been installed in the Property, (x)
all other conditions in this Loan Agreement for disbursement have been
satisfied, (y) funds remaining in the applicable Work Reserve together with the
amounts that are scheduled to be deposited therein by Borrower are, in Lender’s
reasonable judgment, sufficient to complete such item of Approved Expenditures,
and (z) if required by Lender, each contractor or subcontractor receiving
payments under such contract shall provide a waiver of lien with respect to
amounts which have been paid to that contractor or subcontractor.

                                                   (iii)            Each
disbursement from a Work Reserve, except for a final disbursement, shall be in
the amount of actual costs incurred for completed Work (as certified by an
Approved Architect) less a retainage equal to ten percent (10%) of such costs
incurred until such Work has been completed. The retainage shall in no event be
less than the percentage of such costs that the contract with the relevant
contractor or supplier specifies to be retained and advanced as part of the
final disbursement. No funds will be advanced for materials stored at any
Property unless such materials are properly stored and secured at the Property
in accordance with the Borrower’s customary procedures and sound construction
practices as reasonably determined by Lender. The retainage shall not be
released until the Approved Architect certifies to Lender that the Work has been
completed substantially in accordance with the provisions of this Section 6.7
and that all material approvals necessary for occupancy and use of the subject
leased space at the Property have been obtained from all appropriate
Governmental Authorities, and Lender receives evidence reasonably satisfactory
to Lender that the costs of the Work have been paid in full or will be paid in
full out of the retainage.

                                                  (iv)            The amount of
all invoices in connection with the Work with respect to which a disbursement is
requested and which has been approved by Lender shall be disbursed by Lender
either directly to Borrower (in which event, Borrower covenants and agrees to
promptly pay such invoices) or, if an Event of Default has occurred and is
continuing, at Lender’s option and in Lender’s sole and absolute discretion,
directly to the contractor, supplier, materialman, mechanic or subcontractor
indicated on said invoices unless already paid by Borrower and Lender has
received satisfactory evidence of such payment in which case Lender shall
reimburse Borrower. In the event that any Borrower requests that any amounts be
disbursed directly to Borrower pursuant to the foregoing sentence, Borrower
shall be required to deliver evidence reasonably acceptable to Lender of payment
of all invoices for which disbursements were previously made to Borrower as a
condition to such requested disbursement.

                                                    (v)            No more than
one disbursement will be made by Lender from a Work Reserve in any calendar
month, and no disbursement will be made on any day other than a Payment Date.
Lender shall not be required to make any disbursement from a Work Reserve with
respect to the Property unless such requested disbursement is in an amount equal
to or greater than $10,000.

                                                  (vi)            Lender
reserves the right, at its option and as a condition to any disbursement from a
Work Reserve, to approve (1) all drawings and plans and specifications, if any,
for any Work which require aggregate payments in amounts exceeding $25,000, and
(2) all contracts and work orders with materialmen, mechanics, suppliers,
subcontractors, contractors and other parties providing labor or materials in
connection with any Work which require aggregate payments in amounts exceeding
$25,000. Any such approval shall not be unreasonably

66

--------------------------------------------------------------------------------

withheld, conditioned or delayed and shall be deemed given if Lender fails to
respond within ten (10) Business Days after Lender receives all information
reasonably required to adequately review such drawings, plans and
specifications, contracts or work orders.

                                                 (vii)            For any Work
which requires aggregate payments in amounts exceeding $25,000 or is structural
in nature or relates to the fire life safety systems at the Property, Lender may
require an inspection of the Property prior to making a monthly disbursement
from the applicable Work Reserve in order to verify completion of the work for
which disbursement is sought. Lender may require that such inspection be
conducted by an appropriate independent qualified architect or engineer selected
by Lender and/or may require a copy of a certificate of completion by an
independent qualified architect or engineer licensed in the state where the
applicable Property is located and otherwise acceptable to Lender prior to the
disbursement of any amounts from the applicable Work Reserve. Borrower shall pay
the reasonable, out-of-pocket expense of such inspections as required hereunder,
whether such inspections are conducted by Lender or by an independent qualified
professional, up to a maximum of four (4) such inspections during any calendar
year. If Lender should require more than four (4) such inspections during any
calendar year, unless an Event of Default has occurred during such calendar
year, the expense of each additional inspection in any calendar year (over the
four maximum) shall be borne by Lender.

                                               (viii)            In addition to
the above conditions, (1) any retainage held by Lender pursuant to Section
6.7(A)(iii) above in connection with any Approved Expenditures shall not be
released until Borrower has delivered to Lender an estoppel certificate or
letter executed by the applicable tenant certifying that all applicable Work has
been completed (except for minor or insubstantial details of construction that
remain to be performed (i.e., so-called “punch list” items)) by Borrower in
accordance with the applicable Lease and that such tenant has accepted the
premises covered thereby and (2) payment of any leasing commissions from the
applicable Leasing Reserve shall be subject to satisfaction of all conditions
precedent to payment of same under the brokerage or leasing agreement pursuant
to which such commissions are payable.

(B)       Performance of Work.

                                                      (i)            Borrower
shall complete all Work in a good and workmanlike manner as soon as practicable
following the commencement thereof in accordance with all Legal Requirements.
The insufficiency of the balance in the applicable Work Reserve shall not
relieve Borrower from its obligation to perform and complete the related Work as
herein provided or to fulfill all other preservation and maintenance covenants
in the Loan Documents.

                                                    (ii)            In the event
Lender determines in its reasonable discretion that any Work is not being
performed in a workmanlike or timely manner or that any Work has not been
completed in a workmanlike manner, Lender shall have the option to withhold
disbursement for such unsatisfactory work and so notify Borrower with reasonable
detail regarding the basis for Lender’s dissatisfaction and, after the
expiration of thirty (30) days from the giving of such notice by Lender to
Borrower of such unsatisfactory work without the cure thereof (or, if such
unsatisfactory work is susceptible of a cure but cannot reasonably be cured
within said thirty (30) day period and provided that Borrower shall have
commenced to cure such unsatisfactory work within said thirty (30) day period
and thereafter diligently and expeditiously proceeds to cure the

67

--------------------------------------------------------------------------------

same, after the expiration of such longer period as is reasonably necessary for
Borrower in the exercise of due diligence to cure such unsatisfactory work, up
to a maximum of an additional sixty (60) days, without the cure thereof), Lender
may proceed under existing contracts or contract with third parties to complete
such Work, as the case may be, and apply amounts contained in the applicable
Work Reserve toward the labor and materials necessary to complete the same,
without providing any additional prior notice to Borrower, and exercise any and
all other remedies available to Lender upon and during the continuance of an
Event of Default hereunder.

                                                   (iii)            In order to
facilitate Lender’s completion or making of any Work pursuant to Section
6.7(B)(ii) above, Borrower grants Lender the right to enter onto the Property
after the expiration of the notice specified above and perform any and all work
and labor necessary to complete the applicable Work and/or employ watchmen to
protect the Property from damage. All sums so expended by Lender shall be deemed
to have been advanced under the Loan to Borrower and secured by the Mortgage.
For this purpose, Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
applicable Work in the name of Borrower pursuant to Section 6.7(B)(ii) above.
Such power of attorney shall be deemed to be a power coupled with an interest
and cannot be revoked. Borrower empowers said attorney-in-fact as follows: (1)
to use any funds in the applicable Work Reserve for the purpose of making or
completing any Work; (2) to make such additions, changes and corrections to any
Work as shall be reasonably necessary or desirable to complete the same; (3) to
employ such contractors, subcontractors, agents, architects and inspectors as
shall be required for such purposes; (4) to pay, settle or compromise all
existing bills and claims which are or may become Liens against the Property, or
as may be necessary or desirable for the completion of any Work, or for
clearance of title; (5) to execute all applications and certificates in the name
of Borrower which may be required by any of the contract documents; (6) in its
reasonable discretion, to prosecute and defend all actions or proceedings in
connection with the Property or the rehabilitation and repair of the Property;
and (7) to do any and every act which Borrower might do in its own behalf to
fulfill the terms of this Loan Agreement.

                                                  (iv)            Nothing in
this Section shall: (1) make Lender responsible for making or completing any
Work; (2) require Lender to expend funds in addition to the amounts on deposit
in the applicable Work Reserve to make or complete any Work; (3) obligate Lender
to proceed with any Work; or (4) obligate Lender to demand from Borrower
additional sums to make or complete any Work.

                                                    (v)            Borrower
shall permit Lender and Lender’s agents and representatives (including, without
limitation, Lender’s engineer, architect or inspector) or third parties
performing any Work pursuant to this Section 6.7 to enter onto the Property
during normal business hours upon reasonable prior notice (subject to the rights
of tenants under their Leases) to inspect the progress of any Work and all
materials being used in connection therewith, to examine all plans and shop
drawings relating thereto which are or may be kept at the Property, and to
complete any Work made pursuant to Section 6.7(B)(ii). Borrower shall cause all
contractors and subcontractors to cooperate with Lender or Lender’s
representatives or such other persons described above in connection with
inspections described in this Section 6.7(B) or the completion of the Work
pursuant to this Section 6.7(B).

68

--------------------------------------------------------------------------------

                                                  (vi)            All Work and
all materials, equipment, fixtures and any other item comprising a part thereof
shall be constructed, installed or completed, as applicable, free and clear of
all mechanic’s, materialman’s or other liens (except for the Permitted
Encumbrances).

                                                 (vii)            All Work shall
comply with all applicable legal requirements of all Governmental Authorities
having jurisdiction over the Property and applicable insurance requirements,
including, without limitation, applicable building codes, special use permits,
environmental regulations and requirements of insurance underwriters.

(C)       Indemnification. Borrower shall indemnify Lender and hold Lender
harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations, costs and expenses (including,
without limitation, litigation costs and reasonable attorneys fees and expenses)
arising from or in any way connected with the performance of the Work, except to
the extent caused by the bad faith, willful misconduct or gross negligence of
Lender. Borrower shall assign to Lender all rights and claims Borrower may have
against all Persons supplying labor or materials in connection with the Work;
provided, however, that Lender may not pursue any such right or claim unless an
Event of Default has occurred and remains uncured beyond any applicable cure
period contained herein.

Section 6.8      Immediate Repairs/Leasing Costs. Within six months after the
Closing (or eighteen months at Closing in the case of the Assurant Carpeting
Work, as defined below), Borrower shall complete in a good and workmanlike
manner and pay the cost of, on a lien-free basis, (i) the immediate physical
repairs, improvements and deferred maintenance required on the Property as
indicated in the Property Condition Report and/or Environmental report for the
Property prepared and delivered prior to the Closing and as such work is more
particularly described on Schedule 6.8, (ii) such repairs, replacements and/or
remediation with respect to the “carpet bubbling issue” identified by Assurant
in its tenant estoppel certificate as are required in order to resolve and
remediate (or replace if necessary) the purportedly defective
carpeting/carpeting adhesion problem at the Assurant premises and obtain and
deliver an updated tenant estoppel certificate from Assurant with respect to the
Assurant Lease showing that such “carpet bubbling issue” has been resolved (the
“Assurant Carpeting Work”) and (iii) the tenant improvement work and all tenant
improvement costs and/or allowances therefor and (if applicable) leasing
commissions and other leasing costs under and with respect to (a) the AU Lease,
indicated as a $945,220 incomplete lease obligation on the closing statement
with respect to Borrower’s acquisition of the CCW Property, and (b) the lease at
the Pacific Hills Property with CBS Home R.E., indicated as a $148,995
incomplete lease obligation on the closing statement with respect to the
Borrower’s acquisition of the Pacific Hills Property (the work and costs
identified in clauses (i)-(iii) above, the “Immediate Repairs/Leasing Costs”)
and shall provide to Lender such documentation, and other evidence of compliance
with law as Lender may reasonably require to evidence the completion and payment
of the Immediate Repairs/Leasing Costs.

69

--------------------------------------------------------------------------------

ARTICLE VII
CASH MANAGEMENT

Section 7.1      Establishment of Collection Account Upon Event of Default.

                                                      (i)            Collection
Account. If an Event of Default exists and continues beyond any applicable cure
period provided herein, Lender may establish, or upon Lender’s request Borrower
shall establish, with a depository institution selected by Lender, an Eligible
Account for the benefit of the Lender, as secured party hereunder, to serve as
the “Collection Account” (said account, and any account replacing the same in
accordance with this Loan Agreement, the “Collection Account”; and the
depository institution in which the Collection Account is maintained, the
“Collection Account Bank”).  The Collection Account shall each be under the sole
dominion and control of Lender (which dominion and control may be exercised by
Servicer), and Borrower shall have no rights to control or direct the investment
or payment of funds therein.  Lender may elect to change any financial
institutions in which the Collection Account is maintained.  The Collection
Account shall be deemed to contain such sub-accounts as Lender may designate
(“Sub-Accounts”), which may be maintained as separate ledger accounts and need
not be separate Eligible Accounts (the Collection Account and any Sub-Accounts
are herein collectively referred to as the “Accounts” and the Collection Account
Bank and any other financial institution at which Accounts may be maintained are
herein sometimes referred to each as an “Account Bank”).  At Lender’s request if
an Event of Default exist, Borrower shall enter into an account agreement with
the Account Bank in the form required by Lender and Account Bank, among other
things confirming Lender’s sole dominion and control of the Accounts.   

(B)              Account Name. Each Account shall be in the name designated by
Lender, which may be in the name of Lender, as secured party, or, at Lender’s
option, in the name of the Borrower for the benefit of Lender, as secured party,
or otherwise as Lender may from time to time designate.

(C)              Characterization of Accounts.  Each Account is and shall be
treated as a “securities account” as such term is defined in Section 8-501(a) of
the UCC or a “deposit account” as such term is defined in Section 9-102(a)(29)
of the UCC, as the context may require.  Each item of property (whether
investment property, financial asset, securities, instrument, cash or other
property) credited to each Account shall be treated as a “financial asset”
within the meaning of Section 8-102(a)(9) of the UCC.  Borrower agrees that each
Account Bank shall, subject to the terms of this Agreement, treat Lender as
entitled to exercise the rights that comprise any financial asset credited to
each Account.  All securities or other property underlying any financial assets
credited to each Account (other than cash) shall be registered in the name of
the applicable Account Bank, indorsed to the applicable Account Bank or in blank
or credited to another securities account maintained in the name of the
applicable Account Bank and in no case will any financial asset credited to any
Account be registered in the name of Borrower, payable to the order of Borrower
or specially indorsed to Borrower.

(D)              Permitted Investments.  Lender may direct the Account Bank to
invest sums on deposit in the Accounts in Permitted Investments as Lender shall
determine in its sole discretion.  Borrower shall be responsible for payment of
any federal, state or local income or other tax applicable to income earned from
Permitted Investments.  The Accounts may at Lender’s option

70

--------------------------------------------------------------------------------

be assigned the federal tax identification number of Borrower.  Any interest,
dividends or other earnings which may accrue on the Accounts shall be added to
the balance in the applicable Account and allocated and/or disbursed in
accordance with the terms hereof.

Section 7.2      Deposit of Receipts into the Collection Account.  If Lender
requires during the existence of an Event of Default that continues beyond any
applicable cure period provided herein, Borrower shall and shall cause Manager
to direct (i) all tenants under the Leases to pay all Rents thereunder directly
into the Collection Account and (ii) any and all other Receipts (including Rents
that are not paid into the Collection Account in accordance with the foregoing)
to be deposited promptly into the Collection Account and in no event later than
two (2) Business Days after the same are paid to or for the benefit of Borrower;
without limitation of the foregoing, Borrower shall notify and advise each
tenant under each Lease to send directly to the Collection Account all payments
of Rent pursuant to an instruction letter in the form of Schedule B attached
hereto (a “Tenant Direction Letter”).  While an Event of Default exists, without
the prior written consent of Lender, neither Borrower nor Manager shall (i)
terminate, amend, revoke or modify any Tenant Direction Letter in any manner
whatsoever, or (ii) direct or cause any tenant to pay any amount in any manner
other than as provided in the related Tenant Direction Letter.

Section 7.3      Application of Funds in Accounts.

(A)              Allocations. If any Event of Default shall occur and continue
beyond any applicable cure period provided herein, then notwithstanding anything
to the contrary in this Section or elsewhere, Lender shall have all rights and
remedies available under applicable law and under the Loan Documents. Without
limiting the foregoing, Lender may allocate funds on deposit in the Collection
Account on each Payment Date in the following amounts and order of priority:

                                                      (i)            First, to
Lender in the amount of the monthly deposit required to be made into the
Impositions and Insurance Reserve pursuant to Section 6.3 hereof on such Payment
Date;

                                                    (ii)            Second, to
Lender in the amount of the Monthly Debt Service Payment due on such Payment
Date;

                                                   (iii)            Third, to
Lender to pay any other amounts, if any, then due Lender under the Loan
Documents (including, if applicable, any deposits into the Leasing Reserve if
then required under Section 6.5);

                                                  (iv)            Fourth, for
disbursement to pay (or to Borrower for the payment of, at Lender’s election)
the applicable monthly operating expenses provided in the Approved Operating
Budget (or such other amount as shall be approved by Lender), which amount
Lender may hold in a Sub-Account (the “Operating Expenses Sub-Account”) under
the control of Lender; and

                                                    (v)            Fifth, all
available amounts on each Payment Date after allocation for items (i) through
(iv) above may be retained in the Collection Account (or in a Sub-Account

71

--------------------------------------------------------------------------------

thereof at Lender’s election, herein referred to as the “Supplemental Debt
Service Reserve Sub-Account”) and held as additional collateral for the
Obligations.

(B)       Intentionally Omitted.

(C)       Required Payments.  Borrower shall in all events be required to pay
when due hereunder the Monthly Debt Service Payments, any required monthly
deposits into Reserves and all other amounts due under this Loan Agreement and
the other Loan Documents, regardless of whether funds are deposited or held in
sufficient amount in the Collection Account or any other Accounts for such
payments.

(D)       Operating Expenses Disbursements. Lender may require compliance with
conditions prior to disbursement of amounts for Operating Expenses held in the
Operating Expenses Sub-Account including, without limitation, the following:

                                                      (i)            Borrower
shall submit a request for payment not more frequently than twice per calendar
month, which request shall include invoices, receipts, comparison with the
Approved Operating Budget and other evidence reasonably required by Lender with
respect to the Operating Expenses or other permitted expenditures which are the
subject of such request;

                                                    (ii)            Such request
for payment shall be signed by Borrower, certifying that the requested funds are
to be used to pay Operating Expenses in accordance with the Approved Operating
Budget for the Property and for no other purpose, and that all information in
such request is true and complete;

                                                   (iii)            Such request
shall include a line-item accounting comparing Operating Expenses incurred in
the subject month and on a year-to-date basis with the Approved Operating
Budget;

                                                  (iv)            There shall be
sufficient funds for such disbursement in the Operating Expense Sub-Account; and

                                                    (v)            At Lender’s
option, Lender may issue payment directly to Borrower or to Manager.     

(E)       Event of Default. Notwithstanding anything herein to the contrary,
upon the occurrence and during the continuance of an Event of Default beyond any
applicable cure period provided herein, all funds on deposit in the Accounts and
Reserves shall be disbursed to or as directed by Lender. Without in any way
limiting the foregoing or Lender’s rights and remedies upon an Event of Default,
and subject to Lender’s direction otherwise from time to time, in whole or in
part, in Lender’s sole and absolute discretion, after and during the continuance
of an Event of Default beyond any applicable cure period provided herein Lender
may direct the Account Banks to allocate all available funds on deposit in the
Accounts and in any Reserves to: (a) any debt service or other Obligation due
under this Loan Agreement or the other Loan Documents; (b) any reserve account
or sub-account established under this Loan Agreement for, or otherwise as a
reserve for, operating expenses, taxes, insurance, capital expenses, costs and
expenses of maintenance, repairs and restoration, and other expenditures
relating to the use, management, operation or leasing of the Property; and/or
(c) any costs and expenses incurred by

72

--------------------------------------------------------------------------------

Lender in connection with such Event of Default, or expended by Lender to
protect or preserve the value of the Property.

Section 7.4      Budgets. No later than thirty (30) days prior to the expiration
of each Fiscal Year, Borrower shall deliver to Lender the proposed Operating
Budget and the Capital Expenditure Budget (in each case presented on a monthly
and annual basis) for the Property for the following Fiscal Year. Each such
proposed Operating Budget shall identify and set forth Borrower’s best estimate,
after due consideration, of all revenue, costs, and expenses for the Property,
and shall specify gross revenues and Operating Expenses. The Capital Expenditure
Budget shall identify and set forth Borrower’s best estimate, after due
consideration, of all costs and expenses contemplated to be necessary in the
related budget year (and, as to projects initiated or to be initiated in or
prior to the budget year but not completed in the budget year, the estimated
cost and completion schedule) for capital improvements and leasehold
improvements, leasing commissions and other leasing costs not included in the
Operating Budget, and the contemplated sources of payment of the same. If an
Event of Default exists, the Operating Budget shall be subject to Lender’s
reasonable approval, and upon such approval shall, with any amendments thereto
approved by Lender from time to time, constitute the “Approved Operating Budget”
hereunder, and if a proposed Operating Budget is not in form and substance
reasonably satisfactory to Lender, Lender may disapprove the same and specify
the reasons therefor, and Borrower shall promptly amend and resubmit for
approval a revised budget, making such changes as are necessary to comply with
the reasonable requirements of Lender; provided that until such time as Borrower
has resubmitted the revised budget and Lender has approved such revised budget,
the parties shall operate under the provisions of this Article VII using the
budget submitted to Lender as proposed to be revised by Lender, except that
actual amounts shall be used for real estate taxes, insurance premiums for
insurance required hereunder and utilities expenses. Capital Expenditures shall
not be included in the Approved Operating Budget unless Lender shall approve the
same in writing in its sole and absolute discretion.

Section 7.5      Sole Dominion and Control. Borrower acknowledges and agrees
that the Accounts and Reserves are subject to the sole dominion, control and
discretion of Lender, its authorized agents or designees, subject to the terms
hereof. Notwithstanding anything set forth herein to the contrary, neither
Borrower nor any other Person, through or under Borrower, shall have any control
over the use of, or any right to withdraw any amount from, any Account. Borrower
acknowledges and agrees that each Account Bank shall comply with the
instructions of Lender with respect to the Accounts without the further consent
of Borrower or Manager. Borrower acknowledges and agrees that each Account Bank
shall comply with all “entitlement orders” (as defined in Section 8-102(a)(8) of
the UCC) and instructions originated by Lender without further consent by
Borrower or any other Person.

Section 7.6      Pledge of Accounts and Reserves.

(A)              Security for Obligations. To secure the full and punctual
payment and performance of all Obligations of Borrower under this Loan
Agreement, the Note, the Mortgage, and all other Loan Documents, Borrower hereby
grants to Lender a first priority continuing security interest in and to the
following property of Borrower, whether now owned or existing or hereafter
acquired or arising and regardless of where located (all of the same
constituting part of the Account Collateral hereunder:

73

--------------------------------------------------------------------------------

                                                      (i)            the
Accounts, Reserves and all cash, checks, drafts, certificates and instruments,
if any, from time to time deposited or held in the Accounts or Reserves,
including, without limitation, all deposits or wire transfers made to the
Accounts or Reserves; and any and all Account Collateral;

                                                    (ii)            any and all
amounts invested in Permitted Investments;

                                                   (iii)            all
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise payable in respect of, or in exchange for, any
or all of the foregoing; and

                                                  (iv)            to the extent
not covered by clauses (i), (ii) or (iii) above, all “proceeds” (as defined
under the UCC) of any or all of the foregoing.

Lender shall have with respect to the foregoing collateral, in addition to the
rights and remedies herein set forth, all of the rights and remedies available
to a secured party under the UCC, as if such rights and remedies were fully set
forth herein.

(B)              Rights on Default. Upon the occurrence and during the
continuance of an Event of Default beyond any applicable cure period provided
herein, Lender may direct each Account Bank to liquidate and transfer any
amounts then invested in Permitted Investments to the Accounts or reinvest such
amounts in other Permitted Investments as Lender may reasonably determine is
necessary to perfect or protect any security interest granted or purported to be
granted hereby or to enable each Account Bank, as agent for Lender, or Lender to
exercise and enforce Lender’s rights and remedies hereunder with respect to any
Account Collateral, and (c) Lender may apply any Account Collateral to any
Obligations in such order of priority as Lender may determine.  The proceeds of
any disposition of the Account Collateral, or any part thereof, may be applied
by Lender to the payment of the Obligations in such priority and proportions as
Lender in its discretion shall deem proper.

(C)              Financing Statement; Further Assurances. Borrower hereby
irrevocably authorizes Lender at any time and from time to time to file in any
filing office in any jurisdiction any initial financing statements and
amendments thereto that (1) indicate the Account Collateral and other Collateral
(i) as all assets of the Borrower or words of similar effect, regardless of
whether any particular asset comprised in the Account Collateral or other
Collateral falls within the scope of Article 9 of the UCC or such jurisdiction,
or (ii) as being of an equal or lesser scope or with greater detail, and (2)
contain any other information required by Part 5 of Article 9 of the UCC for the
sufficiency or filing office acceptance of any financing statement or amendment,
including (i) whether Borrower is an organization, the type of organization and
any organization identification number issued to such Borrower, and (ii) a
sufficient description of real property to which the Collateral relates.
Borrower agrees to furnish any such information to Lender promptly upon
request.  Borrower also ratifies its authorization for Lender to have filed in
any jurisdiction any initial financing statements or amendments thereto if filed
prior to the date hereof.  Borrower agrees that at any time and from time to
time, at the expense of such Borrower , such Borrower will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be reasonably necessary or desirable, or that Lender may reasonably request,
in order to perfect and protect any security interest granted or purported to be
granted hereby

74

--------------------------------------------------------------------------------

(including, without limitation, any security interest in and to any Permitted
Investments) or to enable Lender to exercise and enforce its rights and remedies
hereunder with respect to any Account Collateral. In the event of any change in
name, identity or structure of Borrower, such Borrower shall notify Lender
thereof and promptly after Lender’s request shall execute, file and record such
UCC financing statements as are necessary to maintain the priority of Lender's
lien upon and security interest in the Account Collateral, and shall pay all
expenses and fees in connection with the filing and recording thereof. If Lender
shall require the filing or recording of additional UCC financing or
continuation statements, Borrower shall, promptly after request, execute, file
and record such UCC financing or continuation statements as Lender shall deem
necessary, and shall pay all expenses and fees in connection with the filing and
recording thereof.

(D)              Security Agreement. This Loan Agreement is a security agreement
and shall create a continuing security interest in the Account Collateral.

Section 7.7      Lender Appointed Attorney-In-Fact. Borrower hereby irrevocably
constitutes and appoints Lender as Borrower’s true and lawful attorney-in-fact,
coupled with an interest and with full power of substitution, to execute,
acknowledge and deliver after an Event of Default that continues beyond any
applicable cure period provided herein any instruments and to exercise and
enforce every right, power, remedy, option and privilege of Borrower with
respect to the Account Collateral, and do in the name, place and stead of
Borrower, all such acts, things and deeds for and on behalf of and in the name
of Borrower, which Borrower is required to do hereunder or under the other Loan
Documents or which Lender may deem necessary or desirable to more fully vest in
Lender the rights and remedies provided for herein and to accomplish the
purposes of this Loan Agreement.

ARTICLE VIII
DEFAULT, RIGHTS AND REMEDIES

Section 8.1      Event of Default.

“Event of Default” shall mean the occurrence or existence of any one or more of
the following:

(A)              Scheduled Payments. Failure of Borrower to pay any scheduled
payment amount when the same is due under this Loan Agreement, the Note, or any
other Loan Documents (whether such amount is interest, principal, Reserves, or
otherwise), including without limitation the failure to pay all outstanding
Obligations on the Maturity Date; or

(B)              Other Payments. Failure of Borrower to pay any amount from time
to time owing under this Loan Agreement, the Note, or any other Loan Documents
(other than amounts subject to the preceding paragraph) within ten (10) days
after written notice from Lender to Borrower that same is due; or

(C)              Breach of Reporting Provisions. Failure of any Borrower Party
to perform or comply with any term or condition contained in Section 5.1 which
continues for a period of thirty (30) days after written notice; or

75

--------------------------------------------------------------------------------

(D)              Breach of Provisions Regarding Insurance, Transfers, Liens,
Single Purpose. (i) Failure to keep in force the insurance required by Section
5.4 hereof; (ii) the failure to comply with any other covenant of Section 5.4
which failure under this clause (ii) continues for five (5) Business Days after
written notice from Lender; (iii) breach of Article IX or Article XI hereof; or
(iv) breach or default under any of Sections 5.13(B), 5.17, 5.18 or 5.19 hereof,
which breach or default continues for five (5) Business Days after written
notice from Lender; or

(E)               Breach of Warranty. Any representation, warranty,
certification or other statement made by any Borrower Party or Affiliate thereof
in any Loan Document or in any statement or certificate at any time given in
writing pursuant to or in connection with any Loan Document is false or
misleading in any material respect as of the date made; or

(F)               Other Defaults Under Loan Documents. A default shall occur in
the performance of or compliance with any term contained in this Loan Agreement
or the other Loan Documents and such default is not fully cured within
thirty (30) days after receipt by Borrower of written notice from Lender of such
default (other than occurrences described in other provisions of this
Section 8.1 or the Loan Documents for which a different grace or cure period is
specified or which constitute immediate Events of Default); provided however
that if (i) the default is capable of cure but with diligence cannot be cured
within such period of thirty (30) days, (ii) Borrower has commenced the cure of
same within such thirty (30)-day period and at all times after such commencement
has pursued such cure diligently, and (iii) Borrower delivers to Lender promptly
following demand (which demand may be made from time to time by Lender) evidence
satisfactory to Lender of the foregoing, then such period shall be extended for
so long as is reasonably necessary for Borrower in the exercise of due diligence
to cure such default, but in no event beyond the ninetieth (90th) day after the
original notice of default; or

(G)              Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A
court enters a decree or order for relief with respect to Borrower in an
Involuntary Borrower Party Bankruptcy, which decree or order is not stayed or
other similar relief is not granted under any applicable federal or state law;
(ii) the occurrence and continuance of any of the following events for
sixty (60) days unless dismissed or discharged within such time: (x) an
Involuntary Borrower Party Bankruptcy is commenced, (y) a decree or order of a
court for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Borrower or over all or a
substantial part of its property, is entered, or (z) an interim receiver,
trustee or other custodian is appointed without the consent of Borrower, for all
or a substantial part of the property of such Person; or

(H)              Voluntary Bankruptcy; Appointment of Receiver, etc. (i) An
order for relief is entered with respect to Borrower, or any such Person
commences a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consents to the entry of an order for relief in an involuntary case or to the
conversion of an involuntary case to a voluntary case under any such law or
consents to the appointment of or taking possession by a receiver, trustee or
other custodian for Borrower or for all or a substantial part of the property of
Borrower; (ii) Borrower makes any assignment for the benefit of creditors; or
(iii) the Board of Directors or other governing body of Borrower adopts any
resolution or otherwise authorizes action to approve any of the actions referred
to in this Section 8.1(H); or

76

--------------------------------------------------------------------------------

(I)                 Bankruptcy Involving Ownership Interests or Property. Other
than as described in either of Sections 8.1(G) or (H), all or any portion of the
Collateral becomes property of the estate or subject to the automatic stay in
any case or proceeding under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect (provided that if the
same occurs in the context of an involuntary proceeding, it shall not constitute
an Event of Default if it is dismissed or discharged within sixty (60) days
following its occurrence); or

(J)                Solvency. Borrower ceases to be solvent or admits in writing
its inability to pay its debts as they become due; or

(K)             Judgment and Attachments. Any lien, money judgment, writ or
warrant of attachment, or similar process is entered or filed against Borrower
or any of its assets, which claim is not fully covered by insurance (other than
with respect to the amount of commercially reasonable deductibles permitted
hereunder), is in an amount in excess of $150,000 (when aggregated with all
other such matters) or could otherwise reasonably be expected to have a Material
Adverse Effect and remains undischarged, unvacated, unbonded or unstayed for a
period of thirty (30) days; or

(L)               Injunction. Borrower is enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting all or any material part of its business; or

(M)            Invalidity of Loan Documents. This Loan Agreement, the Mortgage
or any Loan Document for any reason ceases to be in full force and effect or
ceases to be a legally valid, binding and enforceable obligation of Borrower or
any Lien securing the Obligations shall, in whole or in part, cease to be a
perfected first priority Lien, subject to the Permitted Encumbrances (except in
any of the foregoing cases in accordance with the terms hereof or under any
other Loan Document), or any Person who is a party thereto, other than Lender,
denies that it has any further liability (as distinguished from denial of the
existence of a Default or Event of Default) under any Loan Documents to which it
is party, or gives notice to such effect; or

(N)             Cross-Default with Other Loan Documents. A default beyond any
applicable grace periods shall occur under any of the other Loan Documents; or

(O)             Default under Management Agreement. Any event of material
default on the part of Borrower shall occur and be continuing beyond any
applicable cure period under the Management Agreement; or

(P)               Other Event of Default.  Any event designated as an “Event of
Default” under this Agreement or the other Loan Documents shall occur or exist.

If more than one of the foregoing paragraphs shall describe the same condition
or event, then Lender shall have the right to select which paragraph or
paragraphs shall apply. In any such case, Lender shall have the right (but not
the obligation) to designate the paragraph or paragraphs which provide for
non-written notice (or for no notice) or for a shorter time to cure (or for no
time to cure).

77

--------------------------------------------------------------------------------

Section 8.2      Acceleration and Remedies.

(A)              Upon the occurrence of any Event of Default described in any of
Sections 8.1(G), (H), or (I), the unpaid principal amount of and accrued
interest and fees on the Loan and all other Obligations shall automatically
become immediately due and payable, without presentment, demand, protest, notice
of intent to accelerate, notice of acceleration or other requirements of any
kind, all of which are hereby expressly waived by each Borrower Party. Upon and
at any time after the occurrence of any other Event of Default, at the option of
Lender, which may be exercised without notice or demand to anyone, all or any
portion of the Loan and other Obligations shall immediately become due and
payable.

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

(C)              Lender shall have the right from time to time to foreclose or
partially foreclose or cause to be foreclosed or partially foreclosed or
exercise or cause to be exercised, fully or partially, any power of sale with
respect to each Mortgage in any manner and in any order and for any amounts
secured by such Mortgage then due and payable as determined by Lender in its
sole discretion including, without limitation, the following circumstances:
(i) in the event Borrower defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal and interest, Lender may
foreclose each or any Mortgage to recover such delinquent payments, or (ii) in
the event Lender elects to accelerate less than the entire outstanding principal
balance of the Loan, Lender may foreclose each or any Mortgage to recover so
much of the principal balance of the Loan as Lender may accelerate and such
other sums secured by the applicable Mortgage as Lender may elect.
Notwithstanding one or more partial foreclosures, the Property shall remain
subject to each Mortgage to secure payment of sums secured by each Mortgage and
not previously recovered.

(D)              Any amounts recovered from the Property or any other collateral
for the Loan after an Event of Default may be applied by Lender toward the
payment of any interest and/or principal of the Loan and/or

78

--------------------------------------------------------------------------------

any other amounts due under the Loan Documents in such order, priority and
proportions as Lender in its sole discretion shall determine.

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

Section 8.3      Performance by Lender.

(A)              If Borrower shall fail to perform, or cause to be performed,
any covenant, duty or agreement contained in any of the Loan Documents beyond
any applicable notice and cure period, Lender may (but shall have no obligation
to) perform or attempt to perform such covenant, duty or agreement on behalf of
Borrower. In such event, Borrower shall, at the request of Lender, promptly pay
to Lender any amount reasonably expended by Lender in such performance or
attempted performance, together with interest thereon at the Default Rate, from
the date of such expenditure until paid. Any amounts advanced or expended by
Lender to perform or attempt to perform any such matter shall be added to and
included within the indebtedness evidenced by the applicable Note and shall be
secured by all of the Collateral securing the applicable Loan. Notwithstanding
the foregoing, it is expressly agreed that Lender shall not have any liability
or responsibility for the performance of any obligation of Borrower under this
Loan Agreement or any other Loan Document.

(B)              Lender may cease or suspend any and all performance required of
Lender under the Loan Documents upon and during the continuance of any Event of
Default.

ARTICLE IX
SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
WARRANTIES AND COVENANTS

Section 9.1      Applicable to Borrower. Borrower hereby represents, warrants
and covenants as of the Closing Date and until such time as all Obligations are
paid in full, that absent express advance written waiver from Lender, which may
be withheld in Lender’s sole discretion, Borrower:

(A)              was organized solely for purpose of owning and operating the
Property;

(B)              has not owned, does not own and will not own any assets other
than the Property (including incidental personal property necessary for the
operation thereof and proceeds therefrom);

79

--------------------------------------------------------------------------------

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

(D)              other than entering into the Management Agreement with IRET
Properties, has not entered into and will not enter into any contract or
agreement with any partner, member, shareholder, trustee, beneficiary,
principal, joint venturer or Affiliate of Borrower except in the ordinary course
of its business pursuant to written agreements upon terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than such Affiliate;
with respect to the Management Agreement with IRET Properties, such Management
Agreement is on commercially reasonable terms similar to those available to
unaffiliated parties in an arms-length transaction;

(E)               has not incurred and will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation), other
than (i) the Obligations, and (ii) subject to the terms and conditions of
Section 5.17, unsecured trade payables incurred in the ordinary course of
business of operating the Property;

(F)               has not made and will not make any loan or advances to any
Person (including any of its Affiliates);

(G)              has remained and as of the Closing Date reasonably expects to
remain, solvent, and has maintained, and as of the Closing Date reasonably
expects to maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations;

(H)              has not acquired and will not acquire obligations or securities
of any Person;

(I)                 has not failed and will not fail to correct any known
misunderstanding regarding its separate identity;

(J)                has done or caused to be done and will do all things
necessary to preserve its existence;

(K)             shall continuously maintain its existence and be qualified to do
business in all states necessary to carry on its business, including the state
in which the Property is located;

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

(M)            has maintained and will maintain books, records, bank accounts,
accounting records and other entity documents separate from those of its
partners, members, shareholders, trustees, beneficiaries, principals,
Affiliates, and any other Person;

(N)             has been and will be, and at all times has held and will hold
itself out to the public as, a legal entity separate and distinct from any other
Person (including any of its partners, members, shareholders, trustees,
beneficiaries, principals and Affiliates, and any Affiliates of any of the
same), and not as a department or division of any Person;

80

--------------------------------------------------------------------------------

(O)             will file such tax returns with respect to itself as may be
required under applicable law and has prepared and will prepare separate tax
returns and financial statements, or if part of a consolidated group, is shown
as a separate member of such group;

(P)               has paid and shall pay its own liabilities, indebtedness, and
obligations of any kind, as the same shall become due, from its own separate
assets, rather than from those of other Persons;

(Q)             will not enter into any transaction of merger or consolidation,
or acquire by purchase or otherwise all or substantially all of the business or
assets of, or any stock or beneficial ownership of, any Person;

(R)              has not commingled and will not commingle or permit to be
commingled its funds or other assets with those of any other Person; and has
held and will hold its assets in its own name;

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

(T)               has not, does not and will not hold itself out to be
responsible for the debts or obligations of any other Person;

(U)              has not and will not guarantee or otherwise become liable on or
in connection with any obligation of any other Person;

(V)              except for funds deposited into the Accounts in accordance with
the Loan Documents, shall not hold title to its assets other than in its name;

(W)            complies and shall at all times hereafter comply with all of the
assumptions, statements, certifications, representations, warranties and
covenants regarding or made by it contained in or appended to the
nonconsolidation opinion delivered pursuant hereto;

(X)              has paid and will pay its own liabilities and expenses, out of
its own funds;

(Y)              has held and will hold regular meetings, as appropriate to
conduct its business and has observed and will observe all limited liability
company formalities and record keeping;

(Z)               has allocated and will allocate fairly and reasonably the
costs associated with common employees and any overhead for shared office space
and has used and will use separate stationery, invoices and checks;

(AA)        has not and will not identify any member of Borrower or any
Affiliate of Borrower or any member of Borrower, or any other Person, as a
division or part of it;

(BB)         has paid and will pay the salaries of its own employees and has
maintained and will maintain a sufficient number of employees in light of its
contemplated business operations;

81

--------------------------------------------------------------------------------

(CC)        maintains, and will continue to maintain, its own bank accounts
separate from any other Person;

(DD)        shall not (i) liquidate or dissolve, in whole or in part; (ii)
consolidate, merge or enter into any form of consolidation with or into any
other Person, nor convey, transfer or lease its assets substantially as an
entirety to any Person nor permit any Person to consolidate, merge or enter into
any form of consolidation with or into itself, nor convey, transfer or lease its
assets substantially as an entirety to any Person; or (iii) amend any provisions
of its organizational documents containing provisions similar to those contained
in this Article IX;

(EE)          is a limited liability company formed under the laws of the State
of Delaware with one (1) member (the “Single Member”) in addition to the
Independent Director (as defined below), whose certificate of formation and
operating agreement (the “Borrower Organizational Documents”) contain each of
the representations, covenants and warranties set forth in this Article 9 and
require Borrower to at all times cause there to be at least one (1) duly
appointed independent manager of Borrower who is a natural person and also a
non-economic member of Borrower (each an “Independent Director”) whose
affirmative vote will be required in order for a voluntary filing for protection
under the Bankruptcy Code or similar action by Borrower and who is not at the
time of such individual’s initial appointment, appointment as Independent
Director, shall not be during such individual’s tenure as Independent Director,
and may not have been at any time during the preceding five years, (i) a
shareholder, member or partner of, or an officer, director, except in his or her
capacity as Independent Director of Borrower, paid consultant or employee of,
customer of or supplier to or a member of the immediate family of Borrower
(except in his or her capacity as Independent Director of Borrower) or any of
its shareholders, members, partners, subsidiaries or affiliates or any person or
other entity controlling or under common control with any such shareholder,
member, partner, supplier or customer or any member of the immediate family of
any of them. As used herein, the term “control” means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a person or entity, whether through ownership of voting
securities, by contract or otherwise.

(FF)          The Borrower Organizational Documents provide and shall at all
times continue to provide that upon the occurrence of any event that causes the
Single Member to cease to be a member of Borrower, the Independent Director
shall, without action of any person and simultaneously with the Single Member
ceasing to be a member of Borrower, automatically continue as a member of such
Borrower and shall continue the Borrower without dissolution.

(GG)        Borrower shall cause reputable Delaware counsel acceptable to Lender
(the “Delaware Law Firm”) to deliver to Lender an opinion letter reasonably
satisfactory to Lender, whereby the Delaware Law Firm opines (which opinion may
be subject to standard assumptions, qualifications, limitations and exceptions
acceptable to Lender), among other requirements of Lender, that: (1) the
unanimous consent of the Single Member and the Independent Director is required
in order for Borrower to file a voluntary bankruptcy petition; (2) the provision
in Borrower Organizational Documents that requires unanimous consent as a
condition to filing a voluntary bankruptcy petition is enforceable against the
Single Member; (3) the bankruptcy, dissolution, liquidation or death of the
Single Member will not cause Borrower to be dissolved; (4) no creditor of the
Single Member shall have the right to obtain possession of, or otherwise

82

--------------------------------------------------------------------------------

exercise legal or equitable remedies with respect to, any Borrower’s property;
and (5) Delaware law, not federal law, governs the determination of what persons
or entities have the authority to file a voluntary bankruptcy petition on behalf
of Borrower.

(HH)        The Borrower Organizational Documents provide and shall at all times
continue to provide that Borrower shall not cause, permit, or empower the
members, board of managers, or any other person to vote on, authorize or take
any Material Action (as defined below) without the unanimous written consent of
the members and the Independent Director. As used herein, “Material Action”
shall mean to consolidate or merge Borrower into any other entity, or to
institute proceedings to have Borrower adjudicated bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings against
Borrower or file a petition seeking or consent to, reorganization or relief with
respect to Borrower under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of Borrower or a substantial
part of Borrower’s property, or make any assignment for the benefit of creditors
of Borrower, or admit in writing Borrower’s inability to pay its debts generally
as they become due, or take action in furtherance of any such action.

ARTICLE X
RESTRUCTURING LOAN, SECONDARY MARKET TRANSACTIONS

Section 10.1    Secondary Market Transactions Generally. Lender shall have the
right to engage in one or more Secondary Market Transactions with respect to the
Loan, and to structure and restructure all or any part of the Loan, including
without limitation in multiple tranches, as a wraparound loan, or for inclusion
in a Securitization. Without limitation, Lender shall have the right to cause
the Note and the Mortgage to be split into a first and a second mortgage loan,
or into a one or more loans secured by mortgages and by ownership interests in
Borrower in whatever proportion Lender determines, and thereafter to engage in
Secondary Market Transactions with respect to all or any part of the
indebtedness and loan documentation. Borrower acknowledges that it is the
intention of the parties that all or a portion of the Loan will be securitized
and that all or a portion of the Loan will be rated by one or more Rating
Agencies. Borrower further acknowledges that additional structural modifications
may be required to satisfy issues raised by any Rating Agencies. As used herein,
“Secondary Market Transaction” means any of (i) the sale, assignment, or other
transfer of all or any portion of the Obligations or the Loan Documents or any
interest therein to one or more investors, (ii) the sale, assignment, or other
transfer of one or more participation interests in the Obligations or Loan
Documents to one or more investors, (iii) the transfer or deposit of all or any
portion of the Obligations or Loan Documents to or with one or more trusts or
other entities which may sell certificates or other instruments to investors
evidencing an ownership interest in the assets of such trust or the right to
receive income or proceeds therefrom or (iv) any other Securitization backed in
whole or in part by the Loan or any interest therein.

Section 10.2    Cooperation; Limitations. Borrower shall use all reasonable
efforts and cooperate in good faith with Lender in effecting any such
restructuring or Secondary Market Transaction. Such cooperation shall include
without limitation, executing and delivering such amendments to the Loan
Documents and the organizational documents of Borrower Parties as Lender may
request, provided however that no such amendment shall modify (i) the aggregate

83

--------------------------------------------------------------------------------

weighted average of the interest rate payable under the Loan, (ii) the stated
maturity date of the Loan, (iii) the non-recourse provisions of the Loan or
(iv) any provision, the effect of which would materially and substantively
increase Borrower’s obligations or materially and substantively decrease
Borrower’s rights under the Loan Documents. Such cooperation also shall include
using reasonable efforts to obtain such certificates and assurances from
governmental entities and others as Lender may reasonably request.

Section 10.3    Information. Borrower shall provide such access to the Property,
personnel of the Manager and of Borrower’s constituent members and such
information, reports, copies of notices and documents relating to Borrower
Parties, Manager, the Property and Collateral and the business and operations of
all of the foregoing and such opinions of counsel (including, without
limitation, nonconsolidation opinions) as Lender may reasonably request or as
any Rating Agency may reasonably request in connection with any such Secondary
Market Transaction including, without limitation, updated financial information,
appraisals, market studies, environmental reviews (Phase Is and, if appropriate,
Phase IIs), property condition reports and other due diligence investigations
together with appropriate verification of such updated information and reports
through letters of auditors and consultants and, as of the closing date of the
Secondary Market Transaction, updated representations and warranties made in the
Loan Documents and such additional representations and warranties any Rating
Agency may reasonably request or Lender or any purchaser, transferee, assignee,
trustee, servicer or potential investor (the Rating Agencies and all of the
foregoing parties, collectively, “Interested Parties”) may reasonably request;
provided that if any requested information, reports, documents or opinions
cannot be provided by Borrower at no cost to Borrower, then Lender shall
reimburse Borrower for all third-party costs and expenses reasonably incurred by
Borrower in procuring and delivering said information, reports, documents or
opinions in accordance with this Section 10.3. Within thirty (30) days after
request by Lender and at Lender’s sole cost, the Borrower shall provide an
opinion of counsel reasonably satisfactory to Lender to the effect that the
description of the Loan and the terms of the Loan Documents contained in the
Disclosure Documents (hereinafter defined) and such other legal matters
contained therein as Lender may reasonably require do not contain any untrue
statement of any material fact or omit to state any material fact necessary to
make the statements therein not misleading and if required by any Rating Agency
or reasonably required by Lender, shall provide revisions or “bringdowns” to the
opinions delivered at Closing (including nonconsolidation opinions), or if
required new versions of such opinions, addressed to Lender, any trustee under
any Securitization backed in whole or in part by the Loan, any Rating Agency
that assigns a rating to any securities in connection therewith and any investor
purchasing securities therein. Lender shall be permitted to share all such
information with the investment banking firms, Rating Agencies, accounting
firms, law firms, other third party advisory firms, potential investors,
servicers and other service providers and other parties involved in any proposed
Secondary Market Transaction. Borrower understands that any such information may
be incorporated into any offering circular, prospectus, prospectus supplement,
private placement memorandum or other offering documents for any Secondary
Market Transaction. Without limiting the foregoing, Borrower shall provide in
connection with each of (i) a preliminary and a final private placement
memorandum or (ii) a preliminary and final prospectus or prospectus supplement,
as applicable (the documents referred to in the foregoing clauses (i) and (ii),
collectively, the “Disclosure Documents”), a written statement that Borrower has
examined such Disclosure Documents specified by Lender and that each such
Disclosure Document, as it relates to Borrower, Guarantor, any Affiliates, the
Property, Manager

84

--------------------------------------------------------------------------------

and those sections of the Loan specified, does not, to Borrower’s actual
knowledge without duty of inquiry, which such knowledge shall be limited to that
actually known by Thomas A. Wentz Jr. as of the date of the written statement,
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading (a “Disclosure
Certificate”).

Section 10.4    Additional Provisions. In any Secondary Market Transaction,
Lender may transfer its obligations under this Loan Agreement and under the
other Loan Documents (or may transfer the portion thereof corresponding to the
transferred portion of the Obligations), and thereafter Lender shall be relieved
of any obligations hereunder and under the other Loan Documents arising after
the date of said transfer with respect to the transferred interest. Each
transferee investor shall become a “Lender” hereunder. The holders from time to
time of the Loan and/or any other interest of the “Lender” under this Loan
Agreement and the other Loan Documents may from time to time enter into one or
more co-lender agreements, intercreditor agreements or other agreements with
each other and/or with the holder(s) of any other loans or other Persons in
their discretion. Borrower acknowledges and agrees that such agreements, as the
same may from time to time be amended, modified or restated, may govern the
exercise of the powers and discretionary authority of the Lender and/or any
other interest of the Lender hereunder and under the other Loan Documents, but
Borrower shall be entitled to rely upon any actions taken by Lender or the
designated servicer(s) or agent(s) for Lender, whether or not within the scope
of its power and authority under such other agreements.

ARTICLE XI
RESTRICTIONS ON LIENS, TRANSFERS; RELEASE OF PROPERTIES

Section 11.1    Restrictions on Transfer and Encumbrance. Except as expressly
permitted in this Article XI, Borrower shall not cause or suffer to occur or
exist, directly or indirectly, voluntarily or involuntarily, by operation of law
or otherwise, any sale, transfer, mortgage, pledge, Lien or encumbrance (other
than Permitted Encumbrances) of (i) all or any part of any Individual Property
or any interest therein, or (ii) any direct or indirect ownership or beneficial
interest in Borrower, irrespective of the number of tiers of ownership or any
profits or proceeds of any such direct or indirect ownership interest, or (iii)
any change of control of Borrower (any of the foregoing, a “Transfer”) without
the prior written consent of Lender, which Lender may withhold in its sole and
absolute discretion.

Section 11.2    Permitted Transfers of Beneficial Interests in Borrower.
Transfers, or creation of new, limited partnership interests in IRET Properties,
and transfers of shares of beneficial interest in Guarantor, the holder of 100%
of the stock in IRET, Inc., in turn the general partner of IRET Properties,
shall be permitted without notice to or the consent of Lender provided (i)
Guarantor continues to control IRET, Inc. and IRET, Inc. remains a wholly owned
subsidiary of Guarantor, (ii) IRET, Inc. continues to control IRET Properties as
its sole general partner, and to own not less than a 51% general partnership
interest in IRET Properties; (iii) IRET Properties continues to control and own
the 100% ownership interest in IRET-MR9 Holding, LLC, the sole member of
Borrower; (iv) IRET-MR9 Holding, LLC continues to control and own the entire
100% beneficial interest in Borrower; and (v)  as a result of such transfers no
single Person (with such Person’s affiliates) that does not currently own,
directly or indirectly, more than 49% of the

85

--------------------------------------------------------------------------------

beneficial ownership interests becomes the owner of more than 49% of the
beneficial direct or indirect ownership interests in Borrower.

            For purposes of this Section 11.2, “control” shall have the meaning
given thereto in the definition of “Affiliate” in Section 1.1 and a “change of
control” of any Person shall include the Transfer of legal or equitable
ownership interests in such Person which after giving effect to such Transfer
results in any transferee or pledgee of such interests holding more than a 49%
legal or equitable ownership interest or security interest in such Person.

Section 11.3    Assumability. In the event that the Borrower desires to transfer
all of the Property to another party (the “Transferee Borrower”) and have the
Transferee Borrower assume all of the Borrower’s obligations under the Loan
Documents, and have replacement guarantors and indemnitors assume all of the
obligations of Guarantor under the Loan Documents from and after such transfer
(collectively, a “Transfer and Assumption”), the Borrower may make a written
application to Lender for Lender’s consent to the Transfer and Assumption,
subject to the conditions set forth in this Section. Together with such written
application, Borrower shall pay to Lender the reasonable review fee then
required by Lender. Borrower also shall pay on demand all of the costs and
expenses incurred by Lender, including reasonable attorneys’ fees and expenses,
and including the fees and expenses of Rating Agencies and other outside
entities, in connection with considering any proposed Transfer and Assumption,
whether or not the same is permitted or occurs. Lender may grant or withhold its
consent to a Transfer and Assumption in its sole and absolute discretion.
Completion of any Transfer and Assumption shall be subject to such conditions as
Lender may determine to impose, and shall in any event be subject to
satisfaction of the following conditions:

                                                      (i)            No Default
or Event of Default shall have occurred and be continuing;

                                                    (ii)            Borrower
shall have submitted to Lender true, correct and complete copies of information
and documents reasonably requested by Lender concerning the Property, the
Transferee Borrower and any replacement guarantors and indemnitors;

                                                   (iii)            Evidence
satisfactory to Lender shall have been provided showing that the Transferee
Borrower and such of its Affiliates as shall be designated by Lender comply with
Article IX, as those provisions may be modified by Lender taking into account
the ownership structure of Transferee Borrower and its Affiliates;

                                                  (iv)            Borrower or
Transferee Borrower shall have obtained (and delivered to Lender) a Rating
Confirmation with respect to the Transfer and Assumption and all related
transactions;

                                                    (v)            The identity,
experience, and financial condition of the Transferee Borrower and the
replacement guarantors and indemnitors shall be acceptable to Lender in its sole
and absolute discretion;

                                                  (vi)            Borrower or
Transferee Borrower shall deliver to Lender at the closing of the Transfer and
Assumption an assumption fee in the amount of one percent (1%) of the then
unpaid principal balance of the Loan;

86

--------------------------------------------------------------------------------

                                                 (vii)            Borrower,
Transferee Borrower, the original and replacement guarantors and indemnitors
shall execute and deliver such documents as Lender may require, in form and
substance satisfactory to Lender, to evidence the Transfer and Assumption,
including replacement guaranties and indemnities and Loan Document
modifications;

                                               (viii)            Counsel to the
Transferee Borrower and replacement guarantors and indemnitors shall deliver to
Lender opinions in form and substance satisfactory to Lender as to substantially
the same matters for which opinions were required in connection with the
origination of the Loan (and as to such additional matters as the Lender and
Rating Agencies may require), including, without limitation, a bankruptcy
non-consolidation opinion;

                                                  (ix)            Borrower or
Transferee Borrower shall cause to be delivered to Lender, an endorsement to
Lender’s policy of title insurance in form and substance acceptable to Lender,
in Lender’s reasonable discretion, relating to, among other things, the change
in the identity of the vestee and execution and delivery of the Transfer and
Assumption documents and the continuing priority of the Lender’s Mortgage and
the continuing effect of the title insurance and all endorsements thereto; and

                                                    (x)            Borrower or
Transferee Borrower shall pay to Lender all reasonable costs and expenses
incurred by Lender in connection with the Transfer and Assumption, including but
not limited to, Lender’s reasonable attorneys’ fees and expenses, all recording
fees, Rating Agency fees and expenses, and all fees payable to the title company
in connection with the Transfer and Assumption.

ARTICLE II
RECOURSE; LIMITATIONS ON RECOURSE

Section 12.1    Limitations on Recourse. Subject to the provisions and
qualifications of this Article, Lender shall not enforce the liability and
obligation of the Borrower to perform and observe any of their obligations that
may be contained in the Note, this Loan Agreement, the Mortgage or any other
Loan Document by any action or proceeding wherein a money judgment shall be
sought against Borrower, except that Lender may bring a foreclosure action, an
action for specific performance or any other appropriate action or proceeding to
enable Lender to enforce and realize upon its interest under the Note, this
Agreement, the Mortgage and the other Loan Documents, or in the Property, the
Rents, or any other Collateral pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrower only to the extent of
Borrower’s interest in the Property, in the Rents and in any other Collateral.
Lender, by accepting the Note, this Loan Agreement, the Mortgage and the other
Loan Documents, shall not sue for, seek or demand any monetary judgment against
any Borrower in any such action or proceeding under or by reason of or under or
in connection with the Note, this Loan Agreement, the Mortgage or the other Loan
Documents. Notwithstanding anything to the contrary in this Loan Agreement, the
Mortgage or any of the Loan Documents, the provisions of this Section 12.1 and
the other provisions of the Loan Documents shall not, however: (a) constitute a
waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b)
or any other provisions of the Bankruptcy Code to file a claim for the full
amount of the Obligations secured by the Mortgage or to require that all
Collateral shall continue to secure all of the Obligations owing to Lender in

87

--------------------------------------------------------------------------------

accordance with the Loan Documents; (b) constitute a waiver, release or
impairment of any obligation evidenced or secured by any of the Loan Documents;
(c) impair the right of Lender to name Borrower as a party defendant in any
action or suit for foreclosure and sale under the Mortgage or other Loan
Documents; (d) impair the right of Lender to obtain the appointment of a
receiver; (e) impair the enforcement of the Assignment of Leases; or (f)
constitute a prohibition against Lender to seek a deficiency judgment against
Borrower in order to fully realize the security granted by the Mortgage and
other Loan Documents or to commence any other appropriate action or proceeding
in order for Lender to exercise its remedies against the Property or any other
Collateral.

Section 12.2    Recourse to Borrower and Guarantor. Notwithstanding the
provisions of Section 12.1 or anything contained herein to the contrary,
Borrower and Guarantor shall be personally liable for, and the provisions of
Section 12.1 shall not in any way limit or constitute a waiver of the right of
Lender to enforce the liability and obligation of Borrower and Guarantor, by
money judgment or otherwise, for the following, all of which shall be the
personal obligation and liability of Borrower under this Loan Agreement and of
Guarantor under the Guaranty: (A) the entire Loan and all the other Obligations
in the event of (i) a voluntary filing by Borrower under the Bankruptcy Code, or
similar voluntary filing by Borrower, as debtor, under any other applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or (ii)
Borrower, Guarantor or any Affiliate of any of them solicit or procure, or
collude with others to bring about, a filing against Borrower, as debtor, under
the Bankruptcy Code or other applicable bankruptcy, insolvency or other similar
law now or hereafter in effect; (B) without limiting the provisions of clause
(A) above, the amount of (i) any insurance proceeds, condemnation awards or
other sums or payments relating to the Property or the insurance required
hereunder which are not applied by any Borrower Party or any Affiliate thereof
in accordance with the provisions of the Loan Documents, or which are otherwise
misappropriated by any Borrower Party or any Affiliate thereof; (ii) any rents,
profits, issues, products and income of the Property, Security Deposits, Lease
termination payments or recoveries upon Leases, rents collected in advance or
any other funds received or collected by or on behalf of Borrower or any
Borrower Party or any Affiliate thereof which are not applied by any Borrower
Party or any Affiliate thereof in accordance with the Loan Documents, or which
are otherwise misappropriated by any Borrower Party or any Affiliate thereof,
including without limitation any failure or refusal to deliver Security Deposits
to Lender (including any failure to cause, if an Event of Default occurs, the
re-issuance or transfer into the name of Lender or its designee, as beneficiary,
of any letters of credit issued by tenants); (iii) any payments made by Borrower
to any Affiliate thereof in violation of the Loan Documents after the occurrence
and during the continuance of an Event of Default; and (iv) all reasonable costs
and expenses, including attorneys’ fees and expenses, incurred in collecting any
amount due under the Loan Documents which, as to Borrower, is a recourse
obligation of Borrower as described in this Section 12.2 or, as to Guarantor, is
a recourse obligation of Guarantor under the Guaranty, or is an obligation of
Borrower and/or Guarantor under the Environmental Indemnity; (C) without
limiting the provisions of clauses (A) and (B) above, any liability, loss,
damage, cost or expense (including, without limitation, attorneys’ fees and
expenses) suffered or incurred by Lender resulting from any and all of the
following: (i) the occurrence of any of the events described in the foregoing
clauses (A) and (B); (ii) fraud or intentional misrepresentation by any Borrower
Party or any Affiliate thereof in this Loan Agreement or any other Loan Document
or otherwise in connection with the Loan; (iii) any removal or disposal of any
portion of the Property by any Borrower Party, its agents, Affiliates,

88

--------------------------------------------------------------------------------

officers, employees or property manager to the extent such Property is not
replaced by the Borrower with like property of equivalent value; (iv) waste of
the Property; (v) any Borrower Party or any Affiliate of any of them contests or
in any way interferes with, directly or indirectly, any foreclosure action or
sale commenced by Lender or with any other enforcement of Lender’s rights,
powers or remedies under any of the Loan Documents or under any document
evidencing, securing or otherwise relating to the Property or any other
collateral for the Obligations (whether by making any motion, bringing any
counterclaim, claiming any defense, seeking any injunction or other restraint,
commencing any action seeking to consolidate any such foreclosure or other
enforcement with any other action, or otherwise), other than contests brought in
good faith by Borrower upon which such Borrower ultimately prevails pursuant to
a final, non-appealable judgment entered against Lender; (vi) Borrower’s failure
to pay mortgage tax or transfer fees and charges in connection with the
Mortgage, or in connection with any transfer of all or any part of the Property,
or any interest therein, to Borrower, or from Borrower to Borrower’s transferee,
or in connection with any transfer of any beneficial interest in Borrower; (vii)
failure by Borrower to comply with the covenants, obligations, liabilities,
warranties and representations contained in the Environmental Indemnity or
otherwise pertaining to environmental matters; (viii) failure by Borrower to pay
real and personal property taxes and assessments respecting the Property and
insurance premiums, other than those for which adequate reserves with Lender are
established under the Loan Documents; (ix) breach of Article IX hereof or
Article XI hereof; or (x) in the event that an Affiliate of Borrower is the
Manager, then any management fee taken by such Manager after the occurrence and
during the continuation of an Event of Default unless otherwise approved by
Lender in writing; (D) the performance by Borrower of its obligations to
complete and pay all costs of completing the Immediate Repairs/Leasing Costs
pursuant to and in accordance with Section 6.8 hereof; and (E) the entire Loan
and other Obligations subject to a maximum liability limitation under this
clause (E) of $655,000, provided that upon satisfaction of the Limited Debt
Termination Conditions a Limited Debt Guaranty Termination shall occur and
Borrower shall have no further recourse obligation or liability under this
clause (E), Guarantor’s Limited Debt Guaranty therefor under the Guaranty shall
terminate (a Limited Debt Guaranty Termination shall not, however, terminate,
limit or otherwise affect the other recourse obligations of Borrower hereunder
or under the Environmental Indemnity or the other obligations of Guarantor under
the Guaranty and Environmental Indemnity, which shall survive and continue in
full force and effect notwithstanding any Limited Debt Guaranty Termination).

Section 12.3    Miscellaneous. No provision of this Article shall (i) affect
(A) the enforcement of, or (B) the personal liability of and recourse against
any guarantor or indemnitor (including without limitation the Guarantor) and the
assets of any such guarantor and indemnitor for all liabilities and obligations
under, the Environmental Indemnity, the Guaranty or any guaranty or similar
agreement executed in connection with the Loan, (ii) release or reduce the debt
evidenced by the Note, (iii) impair the lien of the Mortgage, this Loan
Agreement or any other Loan Document, (iv) impair the rights of Lender to
enforce any provisions of the Loan Documents, or (v) limit Lender’s ability to
obtain a deficiency judgment or judgment on the Loan or otherwise against any
Borrower Party to the extent necessary to obtain any amount for which such
Borrower Party may be personally liable in accordance with this Article or any
other Loan Document.

89

--------------------------------------------------------------------------------

ARTICLE XIII
MISCELLANEOUS

Section 13.1    Expenses and Attorneys’ Fees. Whether or not the transactions
contemplated hereby shall be consummated, Borrower agrees to promptly pay all
reasonable fees, costs and expenses incurred by Lender in connection with any
matters contemplated by or arising out of this Loan Agreement, including the
following, and all such fees, costs and expenses shall be part of the
Obligations, payable on demand: (A) reasonable fees, costs and expenses
(including reasonable attorneys’ fees, and other professionals retained by
Lender) incurred in connection with the examination, review, due diligence
investigation, documentation and closing of the financing arrangements evidenced
by the Loan Documents; (B) reasonable fees, costs and expenses (including
reasonable attorneys’ fees and other professionals retained by Lender) incurred
in connection with the administration of the Loan Documents and the Loan and any
amendments, modifications and waivers relating thereto; (C) reasonable fees,
costs and expenses (including reasonable attorneys’ fees) incurred in connection
with the review, documentation, negotiation and administration of any
Borrower-initiated requests under or in connection with the Loan Documents
(including, without limitation, requests for lease, budget and management
approvals and subordination, non disturbance and/or attornment agreements); and
(D) reasonable fees, costs and expenses (including attorneys’ fees and fees of
other professionals retained by Lender) incurred in any action to enforce or
interpret this Loan Agreement or the other Loan Documents or to collect any
payments due from Borrower under this Loan Agreement, the Note or any other Loan
Document or incurred in connection with any refinancing or restructuring of the
credit arrangements provided under this Loan Agreement, whether in the nature of
a “workout” or in connection with any insolvency or bankruptcy proceedings or
otherwise, but excluding any fees, costs and expenses related to Article X. Any
costs and expenses due and payable to Lender after the Closing Date may be paid
to Lender pursuant to the terms hereof.

Section 13.2    Indemnity. In addition to the payment of expenses as required
elsewhere herein, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, defend, protect, pay and hold Lender,
its successors and assigns (including, without limitation, the trustee and/or
the trust under any trust agreement executed in connection with any
Securitization backed in whole or in part by the Loan and any other Person which
may hereafter be the holder of the Note or any interest therein), and the
officers, directors, stockholders, partners, members, employees, agents and
Affiliates of Lender and such successors and assigns (collectively called the
“Indemnitees”) harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, Tax Liabilities,
broker’s or finders fees, reasonable costs, expenses and disbursements of any
kind or nature whatsoever (including the reasonable fees and disbursements of
counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated a party thereto) that may be imposed on,
incurred by, or asserted against that Indemnitee, in any manner relating to or
arising out of any of the following (to the extent that insurance proceeds paid
on account of same shall be inadequate) (A) the enforcement of any of the Loan
Documents; (B) any breach by Borrower of any representation, warranty, covenant,
or other agreement contained in any of the Loan Documents; (C) the presence,
release, threatened release, disposal, removal, or cleanup of any Hazardous
Material located on, about, within or affecting any Individual Property or any
violation of any applicable Environmental Law for which Borrower is liable;
(D) any claim

90

--------------------------------------------------------------------------------

brought by any third party arising out of any condition or occurrence at or
pertaining to any Individual Property; (E) any design, construction, operation,
repair, maintenance, use, non‑use or condition of any Individual Property or
Improvements, including claims or penalties arising from violation of any
applicable laws or insurance requirements, as well as any claim based on any
patent or latent defect, whether or not discoverable by Lender; (F) any
performance of any labor or services or the furnishing of any materials or other
property in respect of any Individual Property or any part thereof; (G) any
contest referred to in Section 5.3(B) hereof; (H) any obligation or undertaking
relating to the performance or discharge of any of the terms, covenants and
conditions of the landlord contained in the Leases; or (I) the use or intended
use of the proceeds of any of the Loan (the foregoing liabilities herein
collectively referred to as the “Indemnified Liabilities”). Any amounts payable
to any Indemnitee by reason of the application of this Section 13.2 shall be
payable on demand and shall bear interest at the Default Rate from the date such
loss or damage is sustained by any Indemnitee until paid. The obligations and
liabilities of Borrower under this Section 13.2 shall survive the term of the
Loan and the exercise by Lender of any of its rights or remedies under the Loan
Documents, including the acquisition of any Individual Property by foreclosure
or a conveyance in lieu of foreclosure.

Section 13.3    Amendments and Waivers. Except as otherwise provided herein, no
amendment, modification, termination or waiver of any provision of this Loan
Agreement, the Note or any other Loan Document, or consent to any departure
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender and any other party to be charged. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Borrower in any case shall entitle Borrower or other Person to any
other or further notice or demand in similar or other circumstances (except for
any notices as expressly required herein or under the other Loan Documents).

Section 13.4    Retention of Borrower’s Documents. Lender may, in accordance
with Lender’s customary practices, destroy or otherwise dispose of all
documents, schedules, invoices or other papers, delivered by Borrower to Lender
unless Borrower requests in writing that same be returned. Upon such request and
at such Borrower’s expense, Lender shall return such papers when Lender’s actual
or anticipated need for same has terminated.

Section 13.5    Notices. Unless otherwise specifically provided herein, any
notice or other communication required or permitted to be given shall be in
writing and addressed to the respective party as set forth below. Notices shall
be effective (i) three (3) Business Days after the date such notice is mailed,
(ii) on the next Business Day if sent by a nationally recognized overnight
courier service, (iii) on the date of delivery by personal delivery and (iv) on
the date of transmission if sent by telefax during business hours on a Business
Day (otherwise on the next Business Day) (with receipt of confirmation). 
Notices shall be addressed as follows:

Notices shall be addressed as follows:
If to Borrower or any Borrower Party:

IRET-MR9, LLC (c/o IRET Properties)
12 South Main Street

91

--------------------------------------------------------------------------------

PO Box 1988

Minot, North Dakota 58702-1988
Attn: General Counsel
Facsimile: 701-838-7785

If to Lender:

Citigroup Global Markets Realty Corp.
388 Greenwich Street, 19th Floor
New York, New York 10013
Attn:     Amir Kornblum
Facsimile: (212) 812-8299

With copies to:

Sidley Austin LLP
One South Dearborn Street
Chicago, Illinois 60603
Attn:  Charles Schrank
Facsimile:  (312) 853-7036

Any party may change the address at which it is to receive notices to another
address in the United States at which business is conducted (and not a
post-office box or other similar receptacle), by giving notice of such change of
address in accordance with the foregoing. This provision shall not invalidate or
impose additional requirements for the delivery or effectiveness of any notice
(i) given in accordance with applicable statutes or rules of court, or (ii) by
service of process in accordance with applicable law. If there is any assignment
or transfer of Lender interest in the Loan, then the new Lender may give notice
to the parties in accordance with this Section, specifying the addresses at
which the new Lender shall receive notice, such new Lender shall be entitled to
notice at such address in accordance with this Section.

Section 13.6    Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement, the making of the Loan hereunder and the
execution and delivery of the Note. Notwithstanding anything in this Loan
Agreement or implied by law to the contrary, the agreements of Borrower Parties
to indemnify or release Lender or Persons related to Lender, or to pay Lender’s
costs, expenses, or taxes shall survive the payment of the Loan and the
termination of this Loan Agreement.

Section 13.7    Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Lender in the exercise of any power, right or
privilege hereunder or under the Note or any other Loan Document shall impair
such power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege. All rights and remedies existing under this
Loan Agreement, the Note and the other Loan Documents are cumulative to, and not
exclusive of, any rights or remedies otherwise available.

92

--------------------------------------------------------------------------------

Section 13.8    Marshaling; Payments Set Aside. Lender shall not be under any
obligation to marshal any assets in favor of any Person or against or in payment
of any or all of the Obligations. To the extent that any Person makes a payment
or payments to Lender, or Lender enforces its remedies or exercises its rights
of set off, and such payment or payments or the proceeds of such enforcement or
set off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
if any, and rights and remedies therefor, shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or set
off had not occurred.

Section 13.9    Severability. The invalidity, illegality or unenforceability in
any jurisdiction of any provision in or obligation under this Loan Agreement,
the Note or other Loan Documents shall not affect or impair the validity,
legality or enforceability of the remaining provisions or obligations under this
Loan Agreement, the Note or other Loan Documents or of such provision or
obligation in any other jurisdiction.

Section 13.10  Headings. Section and subsection headings in this Loan Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Loan Agreement for any other purpose or be given any substantive
effect.

Section 13.11  APPLICABLE LAW. THE PARTIES HEREBY AGREE AND IRREVOCABLY ELECT
THAT THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS
ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES, AND PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION AND ENFORCEMENT OF THE LIENS
AND SECURITY INTERESTS CREATED PURSUANT TO EACH MORTGAGE AND THE ASSIGNMENT OF
LEASES SHALL BE GOVERNED BY THE LAWS OF THE STATE WHERE THE RELATED INDIVIDUAL
PROPERTY ENCUMBERED THEREBY IS LOCATED, AND EXCEPT THAT THE SECURITY INTERESTS
IN ACCOUNT COLLATERAL SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK OR
THE STATE WHERE THE SAME IS HELD, AT THE OPTION OF LENDER.

Section 13.12  Successors and Assigns. This Loan Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns except that no Borrower Party may assign its rights or obligations
hereunder or under any of the other Loan Documents except as expressly provided
in Article XI.

Section 13.13  Sophisticated Parties, Reasonable Terms, No Fiduciary
Relationship. Borrower represents, warrants and acknowledges that (i) it is a
sophisticated real estate investor,

93

--------------------------------------------------------------------------------

familiar with transactions of this kind, and (ii) it has entered into this Loan
Agreement and the other Loan Documents after conducting its own assessment of
the alternatives available to them in the market, and after lengthy negotiations
in which it has been represented by competent legal counsel of its choice.
Borrower also acknowledges and agrees that the rights of Lender under this Loan
Agreement and the other Loan Documents are reasonable and appropriate, taking
into consideration all of the facts and circumstances including without
limitation the quantity of the Loan, the nature of the Property, and the risks
incurred by Lender in this transaction. No provision in this Loan Agreement or
in any of the other Loan Documents and no course of dealing between the parties
shall be deemed to create (i) any partnership or joint venture between Lender
and Borrower or any other Person, or (ii) any fiduciary or similar duty by
Lender to Borrower or any other Person. The relationship between Lender and
Borrower is exclusively the relationship of a creditor and a debtor, and all
relationships between Lender and any other Borrower Party are ancillary to such
creditor/debtor relationship.

Section 13.14  Reasonableness of Determinations. In any instance where any
consent, approval, determination or other action by Lender is, pursuant to the
Loan Documents or applicable law, required to be done reasonably or required not
to be unreasonably withheld, Borrower shall bear the burden of proof of showing
that the same was not reasonable. In all cases Lender shall conclusively be
deemed to be acting reasonably in refusing or delaying any consent due to the
existence of any Event of Default. In no event shall references herein or in the
other Loan Documents to the “existence” or “continuance” of an Event of Default
imply that any Event of Default, or any Default, once maturing into an Event of
Default due to the expiration of any applicable cure period or by operation of
this Loan Agreement in the event no cure period is provided hereunder, shall be
further susceptible of cure by Borrower or otherwise cease to be an Event of
Default in the absence of a written waiver of such Event of Default by the
Lender.

Section 13.15  No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to any Borrower Party or Affiliates thereof, or any other Person.

Section 13.16  Entire Agreement. This Loan Agreement, the Note, and the other
Loan Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties to the Loan
Documents.

Section 13.17  Construction; Supremacy of Loan Agreement. Borrower and Lender
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Loan Agreement and
the other Loan Documents with its legal counsel and that this Loan Agreement and
the other Loan Documents shall be construed as if jointly drafted by Borrower
and Lender. If any term, condition or provision of this Loan Agreement shall be
inconsistent with any term, condition or provision of any other Loan Document,
then this Loan Agreement shall control.

94

--------------------------------------------------------------------------------

Section 13.18  Consent to Jurisdiction. BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK OR WITHIN THE COUNTY AND STATE IN WHICH THE PROPERTY IS
LOCATED AND IRREVOCABLY AGREES THAT, SUBJECT TO LENDER’S ELECTION, ALL ACTIONS
OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR ITSELF AND IN
CONNECTION WITH THE PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS LOAN AGREEMENT, THE NOTE, SUCH OTHER LOAN DOCUMENTS OR
SUCH OBLIGATION. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER TO BRING
PROCEEDINGS AGAINST ANY BORROWER PARTY IN THE COURTS OF ANY OTHER JURISDICTION.

Section 13.19  Waiver of Jury Trial. EACH OF BORROWER AND LENDER HEREBY WAIVES
ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS LOAN AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY
DEALINGS BETWEEN BORROWER AND LENDER RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. EACH
OF BORROWER AND LENDER ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND
WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF IT. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL‑ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF BORROWER AND LENDER ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS LOAN AGREEMENT,
THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS LOAN AGREEMENT
AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THE FUTURE. EACH OF
BORROWER AND LENDER FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
13.19 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THE WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LOAN
AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE LOAN. IN THE EVENT OF

95

--------------------------------------------------------------------------------

LITIGATION, THIS LOAN AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.

Section 13.20  Counterparts; Effectiveness. This Loan Agreement and other Loan
Documents and any amendments or supplements thereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all of which counterparts together shall constitute but one and the same
instrument. This Loan Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto.

Section 13.21  Servicer. Lender shall have the right from time to time to
designate and appoint one or more Servicers, and to change or replace any
Servicer. All rights of the Lender hereunder may exercised by Servicer. Servicer
shall be entitled to the benefit of all obligations of any of Borrower Party in
favor of Lender.

Section 13.22  Waiver of Notice. Borrower shall not be entitled to any notices
of any nature whatsoever from Lender except with respect to matters for which
this Agreement or another Loan Document specifically and expressly provides for
the giving of notice by Lender to Borrower and except with respect to matters
for which Borrower is not, pursuant to applicable Legal Requirements, permitted
to waive the giving of notice. Borrower hereby expressly waives the right to
receive any notice from Lender with respect to any matter for which this Loan
Agreement or other Loan Documents does not specifically and expressly provide
for the giving of notice by Lender to Borrower.

Section 13.23  Offsets, Counterclaims and Defenses. Any assignee of Lender’s
interest in and to this Loan Agreement and the other Loan Documents shall take
the same free and clear of all offsets, counterclaims or defenses which are
unrelated to this Loan Agreement and the other Loan Documents which Borrower may
otherwise have against any assignor or this Loan Agreement and the other Loan
Documents. No such unrelated counterclaim or defense shall be interposed or
asserted by Borrower in any action or proceeding brought by any such assignee
upon this Loan Agreement or upon any other Loan Document. Any such right to
interpose or assert any such unrelated offset, counterclaim or defense in any
such action or proceeding is hereby expressly waived by Borrower.

Section 13.24  Brokers and Financial Advisors.  Other than Northmarq Capital,
Inc., Borrower hereby represents that neither it nor any of its Affiliates has
dealt with any financial advisors, brokers, underwriters, placement agents,
agents or finders in connection with the transactions contemplated by this Loan
Agreement. Borrower hereby agrees to indemnify and hold Lender harmless from and
against any and all claims, liabilities, costs and expenses of any kind in any
way relating to or arising from a claim by any Person that such Person acted on
behalf of the indemnifying party in connection with Borrower or its Affiliates
transactions contemplated herein. The provisions of this Section 13.24 shall
survive the expiration and termination of this Agreement and the repayment of
the Obligations.

96

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Loan Agreement as of the date first written above.

BORROWER:

IRET-MR9, LLC,
a Delaware limited liability company

  By:     IRET-MR9 Holding, LLC,
            a Delaware limited liability company,
            its Sole Member

            By:       IRET Properties, a North Dakota Limited Partnership,
                        its Sole Member

                        By:       IRET, Inc.,
                                    a North Dakota corporation,
                                    its General Partner

                                    By:       /s/ Thomas A. Wentz, Jr.
                                    Name:  Thomas A. Wentz, Jr.
                                    Its:        Senior Vice President 

LENDER:

CITIGROUP GLOBAL MARKETS REALTY CORP.,
a New York corporation

By:  /s/Amir Kornblum
Name: Amir Kornblum
Title: Authorized Signatory

--------------------------------------------------------------------------------