$58,800,000

CREDIT AGREEMENT

Dated as of September 28, 1998

Between

JEFFERSON VILLAGE, L.P.,
JEFFERSON AT SUNSET VALLEY, L.P.
AND
JPI CORAL SPRINGS, L. P.

as the Borrowers,

and

GERMAN AMERICAN CAPITAL CORPORATION

as the Lender

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TABLE OF CONTENTS

            Section     Page   ARTICLE I   DEFINITIONS AND ACCOUNTING TERMS  
1.01.   Certain Defined Terms   1   1.02. Computation of Time Periods 11 
1.03. Accounting Terms 12    ARTICLE II

AMOUNT AND TERMS OF THE LOAN   2.01. The Loan 12  2.02. Making the Loan 12 
2.03. Repayment of the Loan 12  2.04. Application of Payments 12 
2.05. Prepayment 12  2.06. Replacement 13  2.07. Fees 17  2.08. Taxes 18 
2.09. Increased Costs, Etc 19  2.10. Security for the Loan 20  2.11. The
Notes 20    ARTICLE III

CONDITIONS OF LENDING   3.01. Conditions Precedent to Disbursement of the
Loan 20    ARTICLE IV

REPRESENTATIONS AND WARRANTIES   4.01. Representations and Warranties of the
Borrowers 25 

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            Section     Page   ARTICLE V

COVENANTS   5.01. Covenants of the Borrowers 26    ARTICLE VI

DEFAULT   6.01. Events of Default 28    ARTICLE VII

SECONDARY MARKET SERVICING    7.01. Assignments and Participations 31 
7.02. Securitization 33  7.03. Servicing 33    ARTICLE VIII

CROSS-GUARANTY   8.01. Cross-Guaranty of Payment 34  8.02. Obligations
Unconditional 34  8.03. Modifications 35  8.04. Waiver of Rights 35 
8.05. Reinstatement 36  8.06. Remedies 36  8.07. Limitation of
Cross-Guaranty 36    ARTICLE IX

PARTIAL RELEASE OF COLLATERAL; ASSUMPTION OF MORTGAGE   9.01. Partial Release of
Collateral 36  9.02. Application of the Release Payment 38 

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            ARTICLE X

MISCELLANEOUS   10.01. Amendments, Etc. 38  10.02. Notices, Etc. 38  10.03. No
Waiver; Remedies 39  10.04. Costs, Expenses 39  10.05. Binding Effect 42 
10.06. Execution in Counterparts 42  10.07. Jurisdiction, Etc. 42  
10.08. Governing Law 43  10.09. Waiver of Jury Trial 43  10.10. Compliance with
Usury Laws 43  10.11. Limitation on Personal Liability 43    SCHEDULES   
Schedule A - List of Properties and Allocated Loan Amounts    Schedule B -
Disclosure Schedule     EXHIBITS    Exhibit A - Form of Limited Indemnity   
Exhibit B - Form of Assignment and Acceptance     Exhibit C - Partial Release 

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CREDIT AGREEMENT

               CREDIT AGREEMENT (this “Agreement”) dated as of September 28,
1998 by and among JEFFERSON VILLAGE, L.P., JEFFERSON AT SUNSET VALLEY, L.P. and
JPI CORAL SPRINGS, L.P. (each a “Borrower” and collectively, the “Borrowers”),
each having an address at 600 East Las Colinas Boulevard, Suite 1800, Irving,
Texas 75039 and GERMAN AMERICAN CAPITAL CORPORATION, a Maryland corporation
(together with its successors and assigns, the “Lender”), having an address at
31 West 52nd Street, New York, New York 10019.

WITNESSETH:

               WHEREAS, the Borrowers are the respective owners of the
properties listed on Schedule A attached hereto (each a “Property” and
collectively, the “Properties”);

               WHEREAS, the Borrowers have requested and the Lender has agreed
to make loans to the Borrowers in an aggregate principal amount of FIFTY-EIGHT
MILLION EIGHT DOLLARS ($58,800,000) (the “Loan”), which will be secured, inter
alia, by a first mortgage lien on the Properties, all on the terms and
conditions of this Agreement;

               WHEREAS, the Borrowers are special purpose Affiliates of JPI
Investment Company, L.P.;

               NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

               SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):

               “Affiliate” means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person or is a director or officer of such Person. For purposes of
this definition, the term “control” (including the terms “controlling,”
“controlled by” and “under common control with”) of a Person means the
possession, direct or indirect, of the power to vote ten percent (10%) or more
of the Voting Stock of such Person or to direct or cause the direction of the
management and

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policies of such Person, whether through the ownership of Voting Stock, by
contract or otherwise.

               “Allocated Loan Amount” means, with respect to each Property, the
portion of the outstanding principal amount of the Loan as of the relevant date
of determination allocated to such Property as set forth on Schedule A attached
hereto.

               “Assignee” means any assignee of the Lender pursuant to Section
7.01.

               “Assignment and Acceptance” means an assignment and acceptance
entered into by the Lender and an Assignee, and accepted by the Lender, in
accordance with Section 7.01 and in substantially the form of Exhibit B hereto.

               “Borrowers” has the meaning specified in the recitals to this
Agreement.

               “Business Day” means a day of the year on which banks are not
required or authorized by law to close in New York City or the city in which the
principal office of the Loan Servicer is located.

               “Carmil” means Carmil Capital Corporation, a Texas corporation,
which is the sole member of the General Partner.

               “Change of Control” means with respect to any Person (i) the sale
or transfer by Persons who are the direct beneficial owners of such Person as of
the Closing Date of more than forty-nine and nine-tenths percent (49.9%) of the
direct or indirect right to distributions from such Person in the aggregate to
Persons who were not direct beneficial owners as of such date or (ii) the sale
or transfer by such direct beneficial owners of such Person as of the Closing
Date of more than forty-nine and nine-tenths percent (49.9%) of the direct or
indirect voting rights in such Person to Persons who were not direct beneficial
owners as of such date.

               “Closing Date” means the date on which the proceeds of the Loan
are disbursed to the Borrowers.

               “Collateral” means all “Collateral” referred to in the Collateral
Documents and all other property that is or is intended to be subject to any
Lien in favor of the Lender.

               “Collateral Documents” means the Mortgages and any other
agreement that creates or purports to create a Lien in favor of the Lender.

               “Cross-Guarantors” means each of the Borrowers as guarantors in
accordance with Article VIII.

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               “Cross-Guaranty” has the meaning set forth in Section 8.01.

               “Debt” of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all Obligations of such
Person for the deferred purchase price of property or services (other than trade
payables not overdue by more than ninety (90) days incurred in the ordinary
course of such Person’s business), (c) all Obligations of such Person evidenced
by notes, bonds, debentures or other similar instruments, (d) all Obligations of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all Obligations of such Person as lessee under Capitalized Leases, (f) all
Obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities, (g) all Obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in respect of any capital
stock of or other ownership or profit interest in such Person or any other
Person, valued, in the case of redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all Debt of others referred to in clauses (a) through (g) above
or clause (i) below guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the holder of such
Debt against loss, (iii) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (i) all Debt referred to in
clauses (a) through (h) above of another Person secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Debt.

               “Debt Service” means, for any period, the principal, interest
payment, Default Rate interest and Late Charges that accrue or are due and
payable in accordance with the Loan Documents or the Mezzanine Loan Documents
during such period. For purposes hereof: (i) “Debt Services” with respect to the
Mezzanine Loan shall be determined in accordance with the definition of “Debt
Service Coverage Ratios” set forth in the Mezzanine Loan Agreement and (ii)
“Debt Service” with respect to the Loan shall be equal to the monthly payments
that would be payable with respect to the Loan during the applicable period in
accordance with this Agreement and the Notes.

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               “Debt Service Coverage Ratio” means the ratio, expressed in
decimals, obtained by dividing Net Operating Cash Flow by the Debt Service.

               “Default” means any Event of Default or any event that would
constitute an Event of Default under this Agreement but for the requirement that
notice be given or time elapse or both.

               “Disclosed Litigation” has the meaning specified in Section
3.01(b).

               “Events of Default” has the meaning specified in Section 6.01.

               “Expenses” means, with respect to any Property for any given
period, all expenses paid, accrued or payable, as determined in accordance with
GAAP by Mezzanine Borrower or the Company or the General Partner, as the case
may be, during that period in connection with the operation of such Property, as
provided for in the current Approved Operating Budget or expressly approved of
in advance by Mezzanine Lender, in each case to be determined without
duplication, including, without limitation:

               1. expenses for cleaning, repair, maintenance, decoration and
painting of the Properties (including, without limitation, parking lots and
roadways), net of any insurance proceeds in respect of any of the foregoing;

               2. wages (including overtime payments), benefits, payroll taxes
and all other related expenses for on-site personnel, up to and including (but
not above) the level of the on-site property manager, engaged in the repair,
operation and maintenance of such Property and service to tenants and on-site
personnel engaged in audit and accounting functions performed by Mezzanine
Borrower, the Company or the General Partner;

               3. management fees and other costs required to be reimbursed to
Manager pursuant to the Management Agreement approved by the Mezzanine Lender.
Such fees shall include all fees for management services whether such services
are performed at such Property or off-site;

               4. the costs of all electricity, oil, gas, water, steam, heat,
ventilation, air conditioning and any other energy, utility or similar item and
the costs of building and cleaning supplies;

               5. rent, liability, casualty, fidelity, errors and omissions,
workmen’s compensation and other required insurance premiums;

               6. legal, accounting and other professional fees and expenses;

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               7. the cost (including leasing and financing) of all equipment to
be used in the ordinary course of business, which is not capitalized in
accordance with GAAP;

               8. real estate, personal property and other taxes;

               9. advertising and other marketing costs and expenses;

               10. casualty losses to the extent not reimbursed by an
independent third party; and

               11. any payments pursuant to any contractual agreement which
provides for the servicing, maintenance, normal replacement or repair (as
opposed to capital replacement or capital repair) of the Properties.

               Notwithstanding the foregoing, Expenses shall not include (i)
depreciation or amortization; (ii) interest, principal, fees, costs and expense
reimbursements of the Mezzanine Lender or the First Mortgage Lender in
administering the loans; (iii) any expenditure (including leasing and financial
costs, leasing commissions, tenant concessions and improvements, and replacement
reserves) which is property treatable as a capital item under GAAP other than
those that are included in the Approved Operating Budget or otherwise are
approved of, in writing, by Mezzanine Lender; or (iv) any expenditure that would
otherwise constitute an Expense to the extent such item is funded from the First
Mortgage Loan Reserves, or from any reserve maintained under the Mezzanine Loan
Documents.

               “Fiscal Year” means a fiscal year of the Borrowers and their
Subsidiaries ending on December 31 in any calendar year or such other fiscal
year as the Borrower may select from time to time in accordance with the terms
of this Agreement.

               “GAAP” means generally accepted accounting principles
consistently applied and consistent with those applied in the preparation of the
financial statements referred to in Section 3.01.

               “General Partner” means JPI Portfolio I GP1 LLC, a Texas limited
liability company, which is the sole general partner of each Borrower.

               “Governmental Authority” shall mean (i) any nation or government,
(ii) any state or other political subdivision thereof, (iii) any entity or
officer exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, (iv) any court or
arbitrator having jurisdiction over the Loan Parties or any of their

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Subsidiaries, any of their respective Subsidiaries or any of their respective
Properties, and (v) any corporation or other entity which is an Affiliate of any
of the foregoing.

               “Guaranteed Obligations” shall mean:

               (i) the payment, as and when due, or by stated maturity,
acceleration, or otherwise, of the Notes and all other amounts due and payable
under the other Loan Documents to the Lender at such times and in the manner
provided for in the Loan Documents, and

               (ii) the payment of all other obligations of the Borrowers that
can be performed by the payment of monies, to the Lender directly or by
reimbursement of advances by it, including, without limitation, the payment of
income and other taxes by the Borrowers.

               “Limited Indemnity” has the meaning specified in Section
3.01(d)(viii).

               “Impositions” has the meaning specified in the Mortgages.

               “Indemnified Party” has the meaning specified in Section 9.04(f).

               “Indemnitor” means JPI Investment Company, L.P., together with
any successors thereto in accordance with the terms of the Limited Indemnity.

               “Independent” means, with respect to any specified Person, such a
Person who (a) does not have any direct financial interest or any material
indirect financial interest in JPI Investment Company, L.P., any of the
Borrowers or in any of their respective Affiliates, (b) is not connected with
JPI Investment Company, L.P. or the Borrowers as an officer, employee, promoter,
underwriter, trustee, partner or director and (c) is not controlled by or under
common control with JPI Investment Company, L.P., or the Borrowers.

               “Independent Director” who shall not have been at the time of
such individual’s appointment, and may not have been at any time during the
preceding five years, and shall not be at any time while serving as Independent
Director: (i) a shareholder of, or attorney, counsel, partner, member or
employee of, such corporation (other than an Independent Director thereof) (ii)
supplier to, or other person who derives more than 10% of its purchases or
revenues from its activities with such corporation or any Affiliate thereof,
(iii) a person or other entity controlling, controlled by or under common
control with any such shareholder, officer,

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director, attorney, counsel, partner, member, employee, customer, supplier or
other Person, or (iv) a member of the immediate family of any such shareholder,
officer, director, attorney, counsel, partner, member, employee, customer,
supplier or other Person. As used herein, the term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management, policies or activities of a Person or entity,
whether through ownership of voting securities or other beneficial interest, by
contract or otherwise, and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.

               “Interest Payment Date” means the first (1st) day of each
calendar month while any portion of the Loan remains unpaid; provided, however,
that if such Interest Payment Date is not a Business Day, such Interest Payment
Date shall be the immediately succeeding Business Day.

               “Internal Revenue Code” means the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated and rulings issued
thereunder.

               “Laws” means all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
determinations, awards and court orders of any federal, state, municipal or
local government, governmental authority, regulatory agency or authority.

               “Lender Party” means, collectively Lender and any assignee of all
or a portion of Lender’s interests in this Agreement or the Loan and any
subsequent assignee of any Lender Party.

               “Lender’s Account” means an account of the Lender or Loan
Servicer designated in writing by the Lender or Loan Servicer to the Borrowers.

               “Lien” means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on title
to real property.

               “Loan” has the meaning specified in the Recitals.

               “Loan Documents” means (i) this Agreement, (ii) the Notes, (iii)
the Mortgages, (iv) the Limited Indemnity and (v) any other written agreement,
document or instrument evidencing, securing or otherwise related to the Loan, in
each case as amended or otherwise modified from time to time.

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               “Loan Parties” means, collectively, the Borrowers (individually
and as Cross-Guarantors) and JPI Investment Company, L.P. in its capacity as
Indemnitor under the Limited Indemnity.

               “Loan Servicer” has the meaning specified in Section 7.03.

               “Management Agreement” means any management agreement between the
Borrowers and a Manager with respect to the management and operation of the
Properties.

               “Manager” means any property manager approved by the Lender for
any of the Properties.

               “Material Adverse Effect” means a material adverse effect on (a)
the business, condition (financial or otherwise), operations, performance or
properties of any the Borrowers or JPI Investment Company, L.P., (b) the rights
and remedies of the Lender under any Loan Document or (c) the ability of any of
the Borrowers or JPI Investment Company L.P. to perform its Obligations under
any Loan Document to which it is or is to be a party.

               “Maturity Date” means September 28, 2008.

               “Mezzanine Borrower” means JPI Portfolio I, L.P., the limited
partner of each Borrower.

               “Mezzanine Lender” means CAPITAL TRUST, a California business
trust, having an address at 605 Third Avenue, New York, New York 10016,
Attention: Loan Administrator, Telefax Number (212) 655-0044 (together with its
successors and assigns).

               “Mezzanine Loan” means three (3) loans (individually, and
collectively, the “Mezzanine Loan”) from Mezzanine Lender in the aggregate
principal amount of TEN MILLION DOLLARS ($10,000,000.00).

               “Mezzanine Loan Agreement” means that loan agreement dated as of
the date hereof between Mezzanine Lender and Mezzanine Borrower, as the same may
be amended or modified from time to time..

               “Mortgages” has the meaning specified in Section 3.01(d)(vii).

               “Mortgage Policy” has the meaning specified in Section
3.01(d)(vii)(B).

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               “Net Operating Cash Flow” means, for any 6-month period,
calculated on a trailing basis, the amount, determined by Mezzanine Lender,
equal to the excess of (a) annualized Receipts for such period (adjusted to give
effect, to the extent that the vacancy rate at any Property is less than 5%, to
a vacancy factor such that the sum of actual vacancy rate plus such vacancy
factor equals 5%), minus (b) annualized Expenses during the applicable period,
including amounts required during such period to fund structural replacement and
leasing reserves in accordance with the First Mortgage Loan Documents, less
amounts, if any, on deposit in the Replacement Reserve Account during the
applicable period.

               “Notes” means, collectively, a promissory note of each Borrower
payable to the order of the Lender, in form and substance satisfactory to the
Lender, evidencing the indebtedness of such Borrower to the Lender resulting
from the Loan made by the Lender. The principal amount of each Note shall be
equal to the Allocated Loan Value of the Property owned by the applicable
Borrower.

               “Obligation” means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including, without
limitation, any liability of such Person on any claim, whether or not the right
of any creditor to payment in respect of such claim is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not such claim is
discharged, stayed or otherwise affected by any proceeding. Without limiting the
generality of the foregoing, the Obligations of the Borrowers under the Loan
Documents include (a) the obligation to pay principal, interest, charges,
expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts
payable by the Borrowers under any Loan Document and (b) the obligation of the
Borrowers to reimburse any amount in respect of any of the foregoing that the
Lender, in its sole discretion, may elect to pay or advance on behalf of any
Borrower.

               “Organizational Documents” means, (i) with respect to any Person
that is a corporation, the certificate of incorporation or charter and by-laws
of such Person, (ii) with respect to any Person that is a partnership, the
partnership agreement and, if a limited partnership, certificate of limited
partnership of such person, and (iii) with respect to any Person that is a
limited liability company, the articles of organization and the operating
agreement of such Person.

               “Origination Fee” has the meaning specified in Section 2.09.

               “Owner” and “Owners” means each of, and collectively, JPI
Portfolio I GP2 LLC, a Texas limited liability company, which is the sole
general partner of the Mezzanine Borrower; and JPI Investment Company, L.P., a
Texas limited partnership, which is the

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sole limited partner of the Mezzanine Borrower, and their respective permitted
successors and assigns.

               “Person” means an individual, partnership, corporation (including
a business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.

               “Phase I Reports” means Phase I environmental assessment reports
with respect to each of the Properties, in form and substance satisfactory to
the Lender, prepared by E.M.G. or such other environmental consulting firm
reasonably acceptable to the Lender, which have been provided to Lender.

               “Premises” has the meaning specified in the Mortgages.

               “Principals” means JPIIC and Carmil.

               “Properties” has the meaning specified in the Recitals as listed
on Schedule A attached hereto, as more particularly described in the Mortgages.

               “Rating Agencies” means Fitch Investors Services, Inc., Moody’s
Investors Service, Inc., Duff & Phelps Credit Rating Co. and S&P or any
successor thereto, and any other nationally recognized statistical rating
organization to the extent that any of the foregoing have been or will be
engaged by Mezzanine Lender or its designees in connection with or in
anticipation of a Securitization (each individually a “Rating Agency”).

               “Register” has the meaning specified in Section 7.01(d).

               “Replacement Collateral” has the meaning specified in Section
2.06(C)(2).

               “Replacement Security Agreement” means the pledge and security
agreement, in form and substance reasonably satisfactory to Lender in its sole
discretion, creating a first priority security interest in favor of Lender in
the Replacement Collateral.

               “Responsible Officer” means any officer of any Loan Party or any
of its Subsidiaries.

               “Secured Obligations” has the meaning specified in the Mortgages.

               “Solvent” and “Solvency” mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person,

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(b) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature and (c) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

               “Specified Repairs” means those repairs with respect to the
Properties set forth on Schedule C attached hereto.

               “Subsidiary” of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or in which)
more than fifty percent (50%) of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of Directors of
such corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency), (b) the interest in the capital or profits of
such partnership, joint venture or limited liability company or (c) the
beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

               “Title Company” means Lawyers Title Insurance Company.

               SECTION 1.02. Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including” and the words “to” and “until”
each mean “to but excluding”.

               SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.

ARTICLE II

AMOUNT AND TERMS OF THE LOAN

               SECTION 2.01. The Loan. Subject to the terms and conditions set
forth in this Agreement, the Lender shall lend to the Borrowers, and the
Borrowers shall borrow from the Lender, a principal amount equal to FIFTY-EIGHT
MILLION EIGHT HUNDRED THOUSAND DOLLARS ($58,800,000). Amounts of the Loan
borrowed, repaid or prepaid by the Borrower may not be reborrowed.

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               SECTION 2.02. Making the Loan. Upon satisfaction of the
conditions precedent set forth in Article III to Lender’s obligation pursuant to
this Agreement, the Loan shall be made on the Closing Date. The Lender shall
disburse a portion of the aggregate principal amount of the Loan to each of the
Borrowers equal to the Allocated Loan Value of the Property owned by the
respective Borrowers.

               SECTION 2.03. Repayment of the Loan. Borrowers shall duly and
punctually pay or cause to be paid, the principal of and the interest and
premium, if any, on the Notes in accordance with the respective terms hereof and
thereof, without demand therefor or presentation of the Notes, in lawful money
of the United States of America.

               SECTION 2.04. Application of Payments. So long as no Event of
Default exists hereunder which has not been waived, each Monthly Payment shall
be applied first, to any amounts hereafter advanced by Lender under any Loan
Document, second, to any late fees and other amounts payable to Lender, third,
to the payment of accrued interest and last to reduction of principal.

               SECTION 2.05. Prepayment.

               (a) Except as otherwise provided in Sections 2.06 and 9.01, the
Loan may not be prepaid in whole or in part.

               (b) Partial prepayments of the Loan shall not be permitted,
except for partial prepayments resulting from Lender’s election to apply
insurance or condemnation proceeds to reduce the outstanding principal balance
of the Loan as provided in Section 3.1(b) of the Mortgages, in which event no
prepayment fee or premium shall be due unless, at the time of either Lender’s
receipt of such proceeds or the application of such proceeds to the outstanding
principal balance of the Loan, an Event of Default shall have occurred and not
been waived, in which case, the provisions of Section 15.2 of the Mortgages
shall be controlling.

               (c) If the indebtedness evidenced by the Notes shall have been
declared due and payable by Lender pursuant to the terms thereof or the terms
hereof or the provisions of any other Loan Document due to a default by
Borrowers, then there shall also then be immediately due and payable, a
prepayment fee in an amount equal to the greater of (A) five percent (5%) of the
then outstanding principal balance of the Notes on the date of acceleration, and
(B) the Premium (as defined and calculated pursuant to Section 2.06 below) or
(C) the maximum prepayment fee allowed to be collected by law. In the event that
any prepayment fee is due hereunder, Lender shall deliver to Borrowers a
statement setting forth the amount and determination of the prepayment fee, and
provided that Lender shall have in good faith applied the formula described
above, B orrowers shall not have the right to challenge the calculation or the
method of calculation set forth in any such statement in the absence of manifest
error.

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               SECTION 2.06. Replacement. Notwithstanding any provision of the
Mortgages to the contrary, at any time after the date which (1) is two years
after the “startup day,” within the meaning of Section 860G(a)(9) of the
Internal Revenue Code of 1986, as amended from time to time or any successor
statute (the “Code”), of a “real estate mortgage investment conduit,” (“REMIC”)
within the meaning of Section 860D of the Code, that holds the Notes and the
Mortgages or (2) three (3) years after the date hereof, whichever shall earlier
occur, and provided no Event of Default has occurred, Borrowers may cause the
release by recordable instrument deed of the Mortgaged Properties from the liens
of the Mortgages and the other Loan Documents upon the satisfaction of the
following conditions :

     (A) not less than thirty (30) days prior written notice shall be given to
Lender specifying a Payment Date (the “Release Date”) on which the Replacement
Collateral is to be delivered;

     (B) all accrued and unpaid interest and all other sums due under the
Mortgages, the Notes and under the other Loan Documents up to the Release Date,
including, without limitation, all costs and expenses incurred by Lender or its
agents in connection with such release (including, without limitation, the
review of the proposed Replacement Collateral and the preparation of the
Replacement Security Agreement (as hereinafter defined) and related
documentation), shall be paid in full on or prior to the Release Date; and

     (C) Borrowers shall deliver to Lender on or prior to the Release Date:

          (1)   a pledge and security agreement, in form and substance
reasonably satisfactory to Lender, creating a first priority security interest
in favor of Lender in the Replacement Collateral (the “Replacement Security
Agreement”), which shall provide, among other things, that any payments
generated by the Replacement Collateral shall be paid directly to Lender and
applied by Lender in satisfaction of all amounts then due and payable hereunder
and any excess received by Lender from the Replacement Collateral over the
amounts payable by Borrowers hereunder or under the Notes shall be refunded to
Borrowers promptly after each Payment Date;

          (2)   direct, non-callable obligations of the United States of America
that provide for payments prior, but as close as possible, to all successive
Payment Dates occurring after the Release Date, with each such payment being
equal to or greater than the amount of the corresponding aggregate installment
of principal and interest required to be paid under the Notes (provided that for
all purposes of this Section 2.06(C)(2), all principal, accrued interest and
other amounts payable under the Mortgages, the Notes and the other Loan
Documents shall be due and payable in full on

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              the Maturity Date) (the “Replacement Collateral”), each of which
shall be duly endorsed by the holder thereof as directed by Lender or
accompanied by a written instrument of transfer in form and substance reasonably
satisfactory to Lender (including, without limitation, such instruments as may
be required by the depository institution holding such securities or the issuer
thereof, as the case may be, to effectuate book-entry transfers and pledges
through the book-entry facilities of such institution) in order to perfect upon
the delivery of the Replacement Security Agreement the first priority security
interest in the Replacement Collateral in favor of Lender in conformity with all
applicable state and federal laws governing granting of such security interests;

          (3)   a certificate of Borrowers certifying that all of the
requirements set forth in this Section 2.06 have been satisfied;

          (4)   an opinion of counsel for Borrowers in form and substance and
delivered by counsel reasonably satisfactory to Lender in its sole discretion
stating, among other things, that (x) Lender has a perfected first priority
security interest in the Replacement Collateral and that the Replacement
Security Agreement is enforceable against Borrowers in accordance with its terms
and (y) that any trust formed as a REMIC pursuant to a securitization will not
fail to maintain its status as a REMIC as a result of such replacement; and

          (5)   such other certificates, documents or instruments as Lender may
reasonably require.

               Upon compliance with the requirements of this Section 2.06, the
Mortgaged Properties shall be released from the lien of the Mortgages and the
other Loan Documents, and the Replacement Collateral shall constitute collateral
which shall secure the Notes and all other obligations under the Loan Documents.
Lender will, at Borrowers“ expense, execute and deliver a recordable release
instrument as aforesaid and any other instruments reasonably requested by
Borrowers to release the Mortgaged Properties from the lien of the Mortgages and
the other Loan Documents, with the exception of the Note which shall remain in
full force and effect. Upon the release of the Mortgaged Properties in
accordance with this Section 2.06, Borrowers may assign all their obligations
and rights under the Notes, together with the pledged Replacement C ollateral,
to a successor entity designated by Borrowers and approved by Lender in its sole
discretion. Such successor entity shall execute an assumption agreement in form
and substance reasonably satisfactory to Lender pursuant to which it shall
assume Borrowers’ obligations under the Notes and the Replacement Security
Agreement. As conditions to such assignment and assumption, Borrowers shall (x)
deliver to Lender an opinion of counsel in form and substance and delivered by
counsel satisfactory to Lender in its reasonable discretion stating,

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among other things, that such assumption agreement is enforceable against
Borrowers and such successor entity in accordance with its terms and that the
Notes, the Replacement Security Agreement and the other Loan Documents, as so
assumed, are enforceable against such successor entity in accordance with their
respective terms, and (y) pay all costs and expenses incurred by Lender or its
agents in connection with such assignment and assumption (including, without
limitation, the review of the proposed transferee and the preparation of the
assumption agreement and related documentation). Upon such assumption, Borrowers
shall be relieved of their obligations hereunder, under the other Loan Documents
and under the Replacement Security Agreement.

               Anything to the contrary provided in this Section 2.06
notwithstanding, in the event that Borrowers shall be unable to obtain the
opinion of counsel described in paragraph (4) above, then, in such event
Borrowers may prepay the principal balance of the Notes upon not less than sixty
(60) days’ prior written notice to Lender specifying the Payment Date on which
prepayment is to be made (the “Tender Date”) and upon payment of (a) interest
accrued and unpaid on the principal balance of the Notes to and including the
Tender Date, (b) all other sums then due under the Notes, the Mortgages and the
other Loan Documents, and (c) a prepayment consideration (the “Premium”) as
provided and determined below.

               If any notice of prepayment is given, the principal balance of
the Notes and the other sums required under the immediately preceding paragraph
shall be due and payable on the Tender Date. Lender shall not be obligated to
accept any prepayment of the principal balance of the Notes unless (a) the
payment is accompanied by the required Premium and all other sums required under
the immediately preceding paragraph and (b) the prepayment is made on the
applicable Tender Date. If, for any reason, the principal balance of the Notes
is paid on a date other than the first day of a month, in addition to the
amounts due and payable hereunder, the Borrowers shall pay interest accrued and
unpaid on the principal balance of the Notes to and including the first day of
the calendar month immediately following the Tender Date.

               The “Premium” shall be equal to the greater of (a) the present
value of the Income Difference (as hereinafter defined), or (b) one percent (1%)
of the unpaid principal balance of the Notes immediately preceding such
prepayment.

               The “Income Difference” is hereby defined, and shall be
calculated, as follows:

     (A) Calculate the total amount of interest (the “Interest Income”) that
would accrue to Lender on account of the principal balance of the Notes at the
Notes’ Rate (as defined in the Notes) between the Tender Date and the last day
of the Yield Maintenance Period (as hereinafter defined); then

     (B) Calculate the total amount of investment income (the “Investment
Income”) that would be earned by Lender from the Tender Date through the last
day of

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the Yield Maintenance Period if the principal balance of the Notes as of the
Tender Date were invested in United States Government general issue Treasury
Securities at the Comparable Treasury Rate (as hereinafter defined) during the
Yield Maintenance Period, and such investment called for a series of monthly
interest payments at that rate throughout the Yield Maintenance Period; then

     (C) Calculate the difference, if any, between the Investment Income and the
Interest Income during the Yield Maintenance Period (the “Income Difference”) by
subtracting the Investment Income from the Interest Income then

     (D) If the Income Difference is a positive number, the Premium shall be an
amount equal to the present value of the Income Difference as of the Tender
Date, based on (i) a stream of monthly interest payments corresponding to the
stream of payments comprising the Income Difference, and (ii) a discount rate
equal to the Comparable Treasury Rate and trading closest to par.

               The “Yield Maintenance Period” means the period of time beginning
as of the Tender Date, and ending on the Maturity Date. The “Comparable Treasury
Rate” means the rate of interest which is equal to the average yield (determined
by Lender as of the date which is seven (7) days prior to the Tender Date) on
then generally available United States Government general issue Treasury
Securities maturing nearest to the ending date of the Yield Maintenance Period.

               Borrowers acknowledge and agree that such Premium represents a
reasonable and fair estimate of compensation for the loss that Lender may
sustain from the prepayment of the Notes. Each of the Borrowers acknowledges and
agrees that it has no right to prepay the Notes without paying the Premium
except as specifically provided hereinafter and each of the Borrowers
specifically acknowledges and agrees that it shall be liable for the Premium
upon any acceleration of the Notes in accordance with their respective terms at
any time, in addition to the principal amount and all outstanding interest,
fees, penalties and other sums due hereunder, under the Mortgages or under any
of the other collateral documents.

               The Premium provided above shall be due, to the extent permitted
by applicable law, under any and all circumstances where all or any portion of
the Notes is paid prior to the Maturity Date, whether such prepayment is
voluntary or involuntary, even if such prepayment results from Lender’s exercise
of its rights upon Borrowers’ default and acceleration of the maturity date of
the Notes (irrespective of whether foreclosure proceedings have been commenced),
and shall be in addition to any other sums due hereunder, under the Mortgages or
under any of the other Loan Documents. Notwithstanding anything contained herein
to the contrary, no premium hall be payable in respect of a prepayment made
during the last one hundred eighty (180) calender days of the term of a Note.

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               If Lender elects to apply condemnation proceeds or casualty
proceeds as a full or partial prepayment of the outstanding principal amount of
the Notes, such application shall be without payment of a Premium, unless,
however, an Event of Default, or an event which, with notice and/or the passage
of time, or both, would constitute an Event of Default, has occurred, in which
event the applicable Premium shall be due and payable based upon the amount of
the prepayment.

               For purposes of the Notes, the term “Loan Year” shall mean a
period of twelve (12) full consecutive calendar months. The first Loan Year
shall commence on the first (1st) day of the first (1st) full calendar month
after the date hereof or, if the date hereof is the first (1st) day of a
calendar month, on the date hereof, and end on the day immediately preceding the
day that is the first anniversary of the date on which the first (1st) Loan Year
commences. Each Loan Year after the first (1st) Loan Year shall commence on the
date following the last day of the immediately preceding Loan Year and shall
continue for a period of twelve (12) full consecutive calendar months.

               SECTION 2.07. Fees. (a) Origination Fee. In consideration of the
Lender’s commitment to make the Loan pursuant to the terms of this Agreement,
the Borrowers shall pay to the Lender on the Closing Date an origination fee
(the “Origination Fee”) in the aggregate amount of ONE HUNDRED FIFTY-TWO
THOUSAND FIVE HUNDRED DOLLARS ($152,500). Lender hereby acknowledges that such
Origination Fee has been paid in full by Borrowers.

               SECTION 2.08. Taxes. (a) Any and all payments by each of the
Borrowers hereunder or under the Notes shall be made, in accordance with Section
2.02, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding taxes that are imposed on the Lender’s overall
net income by the United States, taxes that are imposed on the Lender’s overall
net income (and franchise taxes imposed in lieu thereof) by the state or foreign
jurisdiction under the laws of which the Lender is organized or does business or
any political subdivision thereof, and taxes that are imposed on Lender’s
overall net income in any jurisdiction where Lender does business or where any
of the Properties are located (all such excluded taxes being hereafter referred
to as “Excluded Taxes” and all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes being hereinafter referred to as “Taxes”). If any
of the Borrowers shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under the Notes to the Lender (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.08) the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrowers shall make such
deductions and (iii) the Borrowers shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.

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               (b) In addition, the Borrowers shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performing under, or otherwise with respect to,
this Agreement or the Notes other than Excluded Taxes (hereinafter referred to
as “Other Taxes”).

               (c) The Borrowers shall indemnify the Lender for and hold it
harmless against the full amount of Taxes and Other Taxes imposed on or paid by
the Lender and any liability (including penalties, additions to tax, interest
and expenses) arising therefrom or with respect thereto. This indemnification
shall be made within (30) thirty days from the date the Lender makes written
demand therefor.

               (d) Within (30) thirty days after the date of any payment of
Taxes, the Borrowers shall furnish to the Lender, at its address referred to in
Section 9.02, the original or a certified copy of a receipt evidencing such
payment or a copy of a canceled check evidencing such payment. In the case of
any payment hereunder or under the Notes by or on behalf of the Borrowers
through an account or branch outside the United States or by or on behalf of the
Borrowers by a payor that is not a United States person, if the Borrowers
determine that no Taxes are payable in respect thereof, the Borrowers shall
furnish, or shall cause such payor to furnish, to the Lender, at such address,
an opinion of counsel acceptable to the Lender stating that such payment is
exempt from Taxes. For purposes of this subsection (d) and subsection (e), the
terms “United States”and “United States person” shall have the meanings
specified in Section 7701 of the Internal Revenue Code.

               (e) The Lender shall, on or prior to the date of its execution
and delivery of this Agreement, and from time to time thereafter as requested in
writing by the Borrowers (but only so long thereafter as the Lender remains
lawfully able to do so), provide the Borrowers with two original Internal
Revenue Service forms 1001 or 4224, as appropriate, or any successor or other
form prescribed by the Internal Revenue Service, certifying that the Lender is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or the Notes. If any form or document
referred to in this subsection (e) requires the disclosure of information, other
than information necessary to compute the tax payable and information required
on the date hereof by Internal Revenue Service form 1001 or 4224 that the Lender
reasonably considers to be confidential, the Lender shall give notice thereof to
the Borrower and shall not be obligated to include in such form or document such
confidential information.

               (f) For any period with respect to which the Lender has failed to
provide the Borrowers with the appropriate form described in subsection (e)
above (other than if such failure is due to a change in law occurring after the
date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e) above), the Lender shall not be
entitled to indemnification under subsection (a) or (c) with respect to Taxes
imposed by

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the United States by reason of such failure; provided, however, that should the
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrowers shall take such steps as the Lender shall reasonably
request to assist the Lender to recover such Taxes.

               SECTION 2.09. Increased Costs. Etc. If, due to either (i) the
introduction of or any change in or in the interpretation by any applicable
Governmental Authority of any law or regulation or (ii) the compliance with any
guideline or requirement from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
amount of capital required by the Lender or any corporation controlling the
Lender as a result of or based upon the existence of the Lender’s commitment to
lend hereunder, then, five (5) days after written demand by the Lender, the
Borrowers shall pay to the Lender, from time to time as specified by the Lender,
additional amounts sufficient to compensate the Lender in the light of such
circumstances, to the extent that the Lender reasonably determines s uch
increase in capital to be allocable to the existence of the Lender’s commitment
to lend hereunder. A certificate as to such amounts submitted to the Borrowers
by the Lender shall be conclusive and binding for all purposes, absent manifest
error. To the extent the Lender delivers such a certificate to any of the
Borrowers, such Borrower shall have the right to prepay its Note in whole, not
in part, without any exit fee or prepayment premium.

               SECTION 2.10. Security for the Loan. The Notes are secured by,
among other things, (a) the Mortgages from Borrowers, as mortgagors, to Lender,
as mortgagee, covering certain real property, consisting of land and the
buildings and improvements thereon as described on Schedule A attached hereto
(the “Mortgaged Properties”) and (b) assignments of leases and rents (the
“Assignments”), from Borrowers to Lender. Reference is made to such documents
for a description of the nature and extent of the security afforded thereby, the
rights of the holder hereof in respect of such security and the terms and
conditions upon which the Notes are secured. The holder of the Notes is entitled
to the benefits of the Mortgages and the Assignments and may enforce the
agreements of Borrowers contained herein and th erein and exercise the remedies
provided herein or therein or otherwise in respect hereof or thereof, all in
accordance with the terms hereof and thereof.

               SECTION2.1l. The Notes. Each Borrower’s obligation to pay the
principal of and interest on its applicable portion of the Loan shall be
evidenced by the related Note, which shall be duly executed and delivered by
such Borrower on the Closing Date. The Notes shall be payable as to principal,
interest and all other amounts due under the Loan Documents, as specified in
this Agreement, the Notes, and the other Loan Documents.

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ARTICLE III

CONDITIONS OF LENDING

               SECTION 3.01. Conditions Precedent to Disbursement of the Loan.
The obligation of the Lender to make the Loan hereunder is subject to the
satisfaction of the following conditions precedent before or concurrently with
the Closing Date:

     (a) The following statements shall be true on the Closing Date and each
Borrower shall have delivered to the Lender a certificate executed by a
Responsible Officer to such effect:

     (i) the representations and warranties contained in each Loan Document are
correct on and as of the Closing Date, before and after giving effect to the
making of the Loan by the Lender and to the application of the proceeds
therefrom, as though made on and as of such date; and

     (ii) no material event has occurred and is continuing, or would result from
the making of the Loan by the Lender or from the application of the proceeds
therefrom, that constitutes a Default.

     (b) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Borrowers or the Properties pending or threatened
before any court, governmental agency or arbitrator that (i) would be reasonably
likely to have a Material Adverse Effect other than the matters described on the
Disclosure Schedule (the “Disclosed Litigation”) or (ii) purports to affect the
legality, validity or enforceability of, this Agreement, the Notes, any other
Loan Document or the consummation of the transactions contemplated hereby.

     (c) The Borrowers shall have paid or caused to be paid all reasonable and
documented accrued fees and expenses of the Lender which the Borrowers are
required to pay under the Loan Documents (including the accrued fees and
expenses of counsel to the Lender).

     (d) The Lender shall have received on or before the Closing Date the
following, each dated such day (unless otherwise specified), in form and
substance satisfactory to the Lender (unless otherwise specified):

     (i) The Notes payable to the order of the Lender.

     (ii) General Partner Resolutions for each Borrower approving this
Agreement, the related Note and each other Loan Document to which such

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Borrower is or is to be a party, and of all documents evidencing other necessary
action and governmental and other third party approvals and consents, if any,
with respect to such Borrower, the Loan, this Agreement, the related Note and
each other Loan Document.

     (iii) A copy of the Organizational Documents of each Borrower, in each case
together with each amendment thereto, and, in the case of the by-laws of each
Borrower, certified (as of the Closing Date) by the Secretary of State of the
jurisdiction of its formation or incorporation as being a true and correct copy
thereof.

     (iv) For each Borrower, a copy of a certificate of the Texas Secretary of
State, dated reasonably near the Closing Date, certifying that (A) such Borrower
has paid all applicable franchise taxes to the date of such certificate and (B)
such Borrower is duly formed and in good standing under the laws of the State of
Texas.

     (v) A copy of a certificate of the Secretary of State of each state in
which any of the Properties is located, dated reasonably near the Closing Date,
stating that the related Borrower is duly qualified and in good standing in such
State and has filed all annual reports required to be filed to the date of such
certificate.

     (vi) A certificate of an authorized member of each Borrower certifying the
names and true signatures of the officers of such authorized member, authorized
to sign this Agreement, the related Note and each other Loan Document to which
it is or is to be a party and the other documents to be delivered hereunder and
thereunder.

     (vii) Deeds of trust, trust deeds, mortgages, deeds to secure debt,
leasehold mortgages and leasehold deeds of trust in form and substance
satisfactory to the Lender and covering the Properties (as amended, supplemented
or otherwise modified from time to time in accordance with their terms, the
“Mortgages”), duly executed by the related Borrower, together with:

     (A) evidence that counterparts of the Mortgages have been duly executed and
delivered for recording to the Title Company on or before the Closing Date in
such form as Lender may deem necessary or desirable in order to create a valid
first and subsisting Lien on the properties described therein in favor of the
Lender and that provision has been made for the payment of all filing and
recording taxes and fees,

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     (B) fully paid mortgagee title insurance policies (the “Mortgage Policies”)
in form and substance, with endorsements and in amounts acceptable to, the
Lender, issued by the Title Company, insuring the Mortgages to be valid first
and subsisting Liens on the properties described therein, free and clear of all
defects (including, but not limited to, mechanics’ and materialmen’s Liens) and
encumbrances, excepting only Permitted Encumbrances (as defined in the
Mortgages), and providing for such other affirmative insurance (including
endorsements for mechanics’ and materialmen’s Liens) available under applicable
law and such coinsurance and direct access reinsurance as the Lender may deem
necessary or desirable,

     (C) American Land Title Association form surveys, certified to the Lender
and the issuer of the Mortgage Policies in a manner satisfactory to the Lender
by a land surveyor duly registered and licensed in the States in which the
Properties described in such surveys are located and acceptable to the Lender,
showing all buildings and other improvements, any off-site improvements, the
location of any easements, parking spaces, rights of way, building set-back
lines and other dimensional regulations and the absence of encroachments, either
by such improvements onto other property or by improvements of others onto such
property, and other defects, other than encroachments and other defects
acceptable to the Lender,

     (D) Appraisals of each of the Properties indicating an aggregate
Loan-to-Value Ratio (the “Loan to Value Ratio”) for the Properties not in excess
of eighty percent (80%) and otherwise in form and substance satisfactory to the
Lender,

     (E) engineering reports as to the Properties, in form and substance and
from professional firms acceptable to the Lender,

     (F) evidence of the insurance required by the terms of the Mortgages, and

     (G) evidence that all other action that the Lender may deem reasonably
necessary or desirable in order to create valid first and subsisting Liens on
the Properties has been taken.

     (viii) An Indemnity Agreement in the form attached hereto as Exhibit A (as
amended, supplemented or otherwise modified from time to time in accordance

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with its terms, (the “Limited Indemnity”), duly executed by JPI Investment
Company, L.P.

     (ix) Such financial, business and other information regarding the
Properties, the Borrowers and JPI Investment Company, L.P. as the Lender shall
have reasonably requested, including, without limitation, information as to
possible contingent liabilities, environmental matters, collective bargaining
agreements, interim financial statements dated the end of the most recent fiscal
quarter for which financial statements are available (or, in the event the
Lender’s due diligence review reveals material changes since such financial
statements, as of a later date within forty-five (45) days of the Closing Date).

     (x) The Phase I Reports for each of the Properties.

     (xi) A favorable opinion of Fulbright & Jaworski, counsel for each of the
Borrowers, in form satisfactory to the Lender, as to:

     (a) the organization, existence, formation and good standing of the
Borrowers; and

     (b) the authorization by the Borrowers of the Loan Documents.

     (xii) A favorable opinion of New York counsel to the Borrowers, in form
satisfactory to the Lender, as to:

     (a) the enforceability of the Credit Agreement, the Notes, and the Limited
Indemnity.

     (xiv) A favorable opinion of local counsel to each of the Borrowers in each
jurisdiction in which any of the Properties are located, in form satisfactory to
the Lender, as to:

     (a) the good standing and qualification to do business of the related
Borrower in such jurisdiction; and

     (b) the enforceability of the Loan Documents that, by their terms, are
governed by the law of such jurisdiction.

     (xv) A favorable opinion of Fulbright & Jaworski, as to the likelihood of
the assets of each of the Borrowers being substantively consolidated with those
of JPI Investment Company, L.P. or any owner of greater than forty-nine percent

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(49%) interest in the related Borrower or any general partner or managing member
of the related Borrower in an insolvency proceeding, with respect to such owner.

     (xvi) On the Closing Date, the Lender shall disburse a portion of the Loan
proceeds equal to the amount needed to complete the Specified Repairs into a
separate escrow account of the Lender. Such escrow account shall be an interest
bearing account and the applicable Borrower shall have the right to have an
amount released from such escrow account equal to the amount allocated for a
Specified Repair upon a written request to the Lender accompanied by reasonable
evidence of completion of such Specified Repair. Until the funds in such escrow
account are released, they shall constitute additional security for the Loan.
When reasonable evidence has been provided that the Specified Repairs are
complete with respect to a particular Borrower, the remaining funds in escrow
with respect to such Borrower shall be released to such Borrower.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

               SECTION 4.01. Representations and Warranties of the Borrowers.
Each of the Borrowers represents and warrants as follows: (a) No bankruptcy,
reorganization or insolvency proceedings are pending or contemplated either by
such Borrower or, to the best knowledge of such Borrower, against Borrower (or,
if any Borrower is a partnership or a limited liability company, any of its
general partners or members) or by or against any endorser or cosigner of the
Notes or of any portion of the Loan, or any guarantor or indemnitor under any
guaranty or indemnity agreement executed in connection with the Notes or the
Loan evidenced thereby and secured hereby or by the Mortgages (an “Indemnitor”);

               (b) To the best of Borrower’s knowledge, all reports,
certificates, affidavits, statements and other data furnished by or on behalf of
such Borrower or JPI Investment Company, L.P. to Lender in connection with the
Loan are true and correct in all material respects and do not omit to state any
fact or circumstance necessary to make the statements contained therein not
misleading;

               (c) The execution, delivery and performance of the Mortgages, the
Notes and all of the other Loan Documents have been duly authorized by all
necessary action to be, and are, binding and enforceable against Borrowers in
accordance with the respective terms thereof and do not (i) contravene, result
in a breach of or constitute a default (nor upon the giving of notice or the
passage of time or both will the same constitute a default) under the
organizational documents of Borrowers or any contract or agreement of any nature
to which any Borrower is a party or by which any Borrower or any of its property
may be bound or (ii) violate or contravene any law, order, decree, rule or
regulation to which Borrowers are subject;

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               (d) Except as otherwise set forth in the Disclosure Schedule,
there are no judicial, administrative, mediation or arbitration actions, suits
or proceedings pending or, to the best of Borrowers’ knowledge, threatened
against or affecting Borrowers (or, if any Borrower is a partnership or a
limited liability company, any of its general partners or members) or the
Mortgaged Properties which, if adversely determined, would materially impair
either the Mortgaged Properties or Borrowers’ ability to perform the covenants
or obligations required to be performed under the Loan Documents;

               (e) No Borrower is a “foreign person” within the meaning of
§1445(f)(3) of the Internal Revenue Code of 1986, as amended, and the related
Treasury Department regulations, including temporary regulations;

               (f) Borrowers are not engaged, either directly or indirectly, in
any business other than the ownership, management and operation of the Mortgaged
Properties;

               (g) Borrowers are solvent; and

               (h) Borrowers have done or caused to be done all things necessary
to preserve their existence, and have observed all formalities applicable to it.

ARTICLE V

COVENANTS

               SECTION 5.01. Covenants of the Borrowers. Each of the Borrowers
covenants as follows:

     (a) Borrowers will not, nor will any partner, limited or general, member or
shareholder thereof, as applicable, amend, modify or otherwise change its
partnership certificate, partnership agreement, articles of incorporation,
by-laws, operating agreement, articles of organization or other formation
agreement or document, as applicable, in any material term or manner, or in a
manner which adversely affects such Borrower’s existence as a single purpose
entity;

     (b) Borrowers will not liquidate or dissolve (or suffer any liquidation or
dissolution), or enter into any transaction of merger or consolidation, or
acquire by purchase or otherwise all or substantially all or any part of the
business or assets of, or any stock or other evidence of beneficial ownership
of, or make any investment in, any entity;

     (c) Other than the obligations pursuant to that certain Mezzanine Loan
Agreement between Borrowers and Capital Trust Company dated of even date hereof,

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Borrowers will not guarantee, pledge its assets for the benefit of, or otherwise
become liable on or in connection with, any obligation of any other person or
entity;

     (d) Borrowers will not enter into any contract or agreement with any
general partner, principal, affiliate or member of any Borrower, as applicable,
or any affiliate of any general partner, principal or member of any Borrower,
except upon terms and conditions that are intrinsically fair and substantially
similar to those that would be available on an arms-length basis with unrelated
third parties;

     (e) Borrowers have not incurred and will not incur any additional Debt
other than (i) the Loan, (ii) advances from affiliates, partners or members, as
applicable, of any Borrower not to exceed $100,000 per Mortgaged Property to
fund capital improvements or operating cash flow deficits, provided the same are
fully subordinated to the payment in full of the Loan in a manner acceptable to
Lender and are payable solely out of excess cash flow provided that Lender is
current on all obligations under the Loan Documents and (iii) trade payables or
accrued expenses incurred in the ordinary course of the business of operating
the Mortgaged Properties, and no debt other than the Debt will be secured
(senior, subordinate or pari passu) by the Mortgaged Properties;

     (f) Borrowers will not make any loans or advances to any third party
(including any affiliate);

     (g) Borrowers will be solvent and pay their debts from their assets as the
same shall become due;

     (h) Borrowers will do all things necessary to preserve their existence, and
will observe all formalities applicable to it;

     (i) Borrowers will conduct and operate their business in their own name and
as presently conducted and operated;

     (j) Borrowers will maintain financial statements, books and records and
bank accounts separate from those of its affiliates, including, without
limitation, their general partners or members, as applicable;

     (k) Borrowers will be, and at all times will hold themselves out to the
public as, legal entities separate and distinct from any other entity
(including, without limitation, any affiliate, general partner, or member, as
applicable, or any affiliate of any general partner or member of any Borrower,
as applicable);

     (l) Borrowers will file their own tax returns;

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     (m) Borrowers will maintain adequate capital for the normal obligations
reasonably foreseeable in a business of their size and character and in light of
its contemplated business operations;

     (n) Borrowers will establish and maintain an office through which their
business will be conducted separate and apart from those of its affiliates or,
if it shares office space with its affiliates, shall allocate fairly and
reasonably any overhead and expense for shared office space;

     (o) Borrowers will not commingle the funds and other assets of Borrowers
with those of any general partner, member, affiliate, principal or any other
person;

     (p) Borrowers will maintain their assets in such a manner that it is not
costly or difficult to segregate, ascertain or identify its individual assets
from those of any affiliate or any other person;

     (q) Borrowers will not hold themselves out to be responsible for the debts
or obligations of any other person;

     (r) Borrowers will not engage, either directly or indirectly, in any
business other than the ownership, management and operation of the Mortgaged
Properties;

     (s) Borrowers will not guarantee, pledge its assets for the benefit of, or
otherwise become liable on or in connection with, any obligation of any other
person or entity;

     (t) Borrowers will not own any asset other than (i) the Mortgaged
Properties, and (ii) incidental personal property necessary for the operation of
the Mortgaged Properties;

     (u) Borrowers will pay any liabilities including salaries of their
employees, out of their own funds and not funds of any affiliate; and

     (v) Borrowers will at all times during which any portion of the Loan
remains outstanding, cause the general partner of each Borrower to maintain at
least one Independent Director as set forth in the charter documents of
Borrowers.

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ARTICLE VI

DEFAULT

               SECTION 6.01. Events of Default. The occurrence of any of the
following events shall be an “Event of Default” hereunder:

     (a) Any Borrower shall fail to timely make payments of principal or
interest as stipulated in its related Note and any such payment is not made
within seven (7) days of the date such payment is due (provided that no grace
period is provided for the payment of principal and interest due on the Maturity
Date).

     (b) Any Borrower fails to maintain insurance against the risks or in the
amounts required by its related Mortgage or fails to perform any covenant,
agreement, obligation, term or condition set forth in Section 4.1 or 6.3 of its
related Mortgage or Section 5.01 of this Agreement.

     (c) Any Borrower shall fail to perform any other covenant, agreement,
obligation, term or condition set forth herein, other than those otherwise
described in this Section 6.01, and, to the extent such failure or default is
susceptible of being cured, the continuance of such failure or default for
thirty (30) days after written notice thereof from Lender to such Borrower;
provided, however, that if such default is susceptible of cure but such cure
cannot be accomplished with reasonable diligence within said period of time, and
if Borrowers commence to cure such default promptly after receipt of notice
thereof from Lender, and thereafter prosecutes the curing of such default with
reasonable diligence, such period of time shall be extended for such period of
time as may be necessary to cure such default with reasonable diligence, but not
to exceed an additional sixty (60) days.

     (d) Any representation or warranty made herein, in or in connection with
any application or commitment relating to the Loan or in any of the other Loan
Documents to Lender by any Loan Party, by any principal, general partner,
manager or member in any Borrower, or by any Indemnitor was false or misleading
in any material respect at the time made.

     (e) A default occurs under any of the other Loan Documents which has not
been cured within any applicable grace or cure period therein provided or if no
such grace period is provided under the applicable Loan Document, within the
grace period provided in subsection (c) above.

     (f) Any Loan Party, any general partner or managing member of any Loan
Party or any Indemnitor becomes insolvent, or makes a transfer in fraud of
creditors, or

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makes an assignment for the benefit of creditors, or files a petition in
bankruptcy, or is voluntarily adjudicated insolvent or bankrupt or admits in
writing the inability to pay its debts as they mature, or petitions or applies
to any tribunal for or consents to or fails to contest the appointment of a
receiver, trustee, custodian or similar officer for such Loan Party, for any
such general partner or managing member of any Loan Party or for a substantial
part of the assets of any Loan Party, of any such general partner or managing
member of any Loan Party, or commences any case, proceeding or other action
under any bankruptcy, insolvency, reorganization, arrangement, receivership or
other debtor relief under any law or statute of any jurisdiction, whether now or
hereafter in effect.

     (g) A petition is filed or any case, proceeding or other action is
commenced against Borrowers, against any general partner or managing member of
any Loan Party seeking to have an order for relief entered against it as debtor
or seeking reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts or other relief under any law relating to
bankruptcy, insolvency, arrangement, reorganization, receivership or other
debtor relief under any law or statute of any jurisdiction, whether now or
hereafter in effect, or a court of competent jurisdiction enters an order for
relief against any Loan Party, against any general partner or managing member of
any Loan Party, as debtor, or an order, judgment or decree is entered
appointing, with or without the consent of such Loan Party, of any such general
partner or managing member of such Loan Party, a receiver, trustee, custodian or
similar officer for any Loan Party, for any such general partner or managing
member of such Loan Party, or for any substantial part of any of the properties
of any Loan Party, of any such general partner or managing member of any Loan
Party, and if any such event shall occur, such petition, case, proceeding,
action, order, judgment or decree is not dismissed within sixty (60) days after
being commenced.

     (h) The Mortgaged Properties or any part thereof is taken on execution or
other process of law in any action against Borrowers other than in connection
with a condemnation as to which Section 3.1 of the applicable Mortgage shall
apply.

     (i) Borrowers abandon all or a portion of the Mortgaged Properties.

     (j) The holder of any Lien on the Mortgaged Properties (without implying
the consent of Lender to the existence or creation of any such lien or security
interest), whether superior or subordinate to the Mortgages or any of the other
Loan Documents, declares a default and such default is not cured within any
applicable grace or cure period set forth in the applicable document or such
holder institutes foreclosure or other proceedings for the enforcement of its
remedies thereunder.

     (k) The Mortgaged Properties, or any part thereof, is subjected to waste or
to removal, demolition or material alteration so that the value of the Mortgaged
Properties is

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materially diminished thereby and Lender determines that it is not adequately
protected from any loss, damage or risk associated therewith.

     (1) Any dissolution, termination, partial or complete liquidation, merger
or consolidation of any Loan Party, any of its principals, any general partner
or any managing member.

ARTICLE VII

SECONDARY MARKET SERVICING

               SECTION 7.01. Assignments and Participations. (a) The Lender may
assign to one or more Persons all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of the
Notes) (each, an “Assignee”); provided that the parties to each such assignment
shall execute and deliver to the Lender, for its acceptance and recording in the
Register, an Assignment and Acceptance. In the event of the foregoing, Lender
shall appoint one (1) agent to act, collectively, on behalf of each such
Assignee.

               (b) Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance, (x)
the Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender, as the case may be,
hereunder and (y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto).

               (c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the Assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, this Agreement or any other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrowers or any other Loan Party or the performance
or observance by any Loan Party of any of its obligations under any Loan
Documents or any other instrument or document furnished pursuant thereto; (iii)
such assignee confirms that it has

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received a copy of this Agreement, together with copies of the financial
statements referred to in this Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Lender, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes the Lender to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to the
Lender by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender, as the case
may be.

               (d) The Lender shall maintain at its address referred to in
Section 10.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of the
Lender Parties and the principal amount of the Loan owing to each Lender from
time to time (the “Register”). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrowers, the
Lender and the Lender Parties shall treat each Person whose name is recorded in
the Register as a Lender Party hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrowers or any Lender Party
at any reasonable time and from time to time upon reasonable prior notice.

               (e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender Party and an assignee, together with any Note or Notes
subject to such assignment, the Lender shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit B hereto, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrowers.
In the case of any assignment by a Lender, within five (5) Business Days after
its receipt of such notice, the Borrowers, at the sole cost and expense of such
Lender, shall execute and deliver to the Lender in exchange for the surrendered
Note or Notes a new Note to the order of such Assignee in an amount equal to the
outstanding and unpaid portion of the Loan assigned to it and a new Note to the
order of the assigning Lender in an amount equal to the outstanding and unpaid
portion of the Loan retained by it hereunder. Such new Note or Notes shall be in
an aggregate outstanding and unpaid principal amount equal to the aggregate
outstanding and unpaid principal amount of such surrendered Note or Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in the for m of the Note.

               (f) Each Lender Party may sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Note held by it); provided, however, that
(i) such Lender Party’s obligations under this Agreement shall remain

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unchanged, (ii) such Lender Party shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender Party
shall remain the holder of any such Note for all purposes of this Agreement, and
(iv) the Borrowers, the Lender and the other Lender Parties shall continue to
deal solely and directly with such Lender Party in connection with such Lender
Party’s rights and obligations under this Agreement.

               (g) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
7.01, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the related Borrower furnished to such
Lender Party by or on behalf of the related Borrower; provided, however, that,
prior to any such disclosure, the assignee or participant or proposed assignee
or participant shall agree to preserve the confidentiality of any Confidential
Information received by it from such Lender Party.

               (h) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.

               SECTION 7.02. Securitization. Lender, at its option, may elect to
effect a securitization of the Loan by means of the issuance of certificates of
interest therein or notes secured thereby (the “Securities”) rated by one or
more rating Agencies (the “Securitization”). In such event and upon request by
Lender, the Borrowers and JPI Investment Company, L.P. shall cooperate (in each
case, at the Lender’s sole cost and expense) in all reasonable respects with
Lender in the Securitization, including, but not limited to, (i) amending this
Agreement and the other Loan Documents in order to bifurcate the Loan into two
or more constituent loans on the same terms as set forth herein and therein,
(ii) providing information in connection with obtaining preliminary ratings from
two or more Ratings Agencies in preparation of a private placement memorandum or
registration statement required to privately place or publicly distribute the
Securities in a manner which does not conflict with federal or state securities
laws, (iii) delivery of interim audited financials and updated information, to
the extent same are in the possession of Borrowers; or (iv) delivery of updated
information with respect to the Borrowers or JPI Investment Company, L.P.

               SECTION 7.03. Servicing. At any time after the Closing Date, the
Lender shall have the right to transfer the servicing of the Loan and the
administration of the Loan Documents to such party as shall be designated by the
Lender in its sole discretion (together with any successor service appointed by
the Lender, the “Loan Servicer”). The Loan Servicer shall have such right to
exercise all rights of the Lender and enforce all obligations of the Borrowers
pursuant to the provisions of this Agreement, the Notes and the other Loan
Documents, and (provided that Borrowers are sent written notice of the name and
address of the Loan Servicer)

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Borrowers shall deliver to Loan Servicer duplicate originals of all notices and
other instruments which the Borrowers may deliver pursuant to this Agreement,
the Notes and the other Loan Documents (and no delivery of such notices or other
instruments by the Borrowers shall be of any force or effect unless delivered to
Lender and Loan Servicer as provided above).

ARTICLE VIII

CROSS-GUARANTY

               SECTION 8.01. Cross-Guaranty of Payment. Subject to Section 8.07
below, each Cross-Guarantor hereby, jointly and severally, unconditionally
guarantees to the Lender the prompt payment of all Guaranteed Obligations of the
other Borrowers in full when due (whether at stated maturity, as a mandatory
prepayment, by acceleration or otherwise) (the “Cross-Guaranty”). The
Cross-Guarantors additionally, jointly and severally, unconditionally guarantee
to the Lender the timely performance of all other obligations of the other
Borrowers under the Loan Documents. This Cross-Guaranty is a guaranty of payment
and not of collection and is a continuing guaranty and shall apply to Guaranteed
Obligations whenever arising.

               SECTION 8.02. Obligations Unconditional. The obligations of the
Cross-Guarantors hereunder are absolute and unconditional, irrespective of the
value, genuineness, validity, regularity or enforceability of any of the Loan
Documents, or any other agreement or instrument referred to therein, to the
fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor. Each Cross-Guarantor agrees that
this Cross-Guaranty may be enforced by the Lender without necessity at any time
of resorting to or exhausting any other security or collateral and without the
necessity at any time of having recourse to the Notes, any other of the Loan
Documents or any collateral, if any, hereafter securing the Guaranteed Obli
gations or otherwise, and each Cross-Guarantor hereby waives the right to
require the Lender to proceed against the other Cross-Guarantors, Indemnitor or
any other Person (including a co-guarantor) or to require the Lender to pursue
any other remedy or enforce any other right. Each Cross-Guarantor further agrees
that it shall have no right of subrogation, indemnity, reimbursement or
contribution against the other Cross-Guarantors of the Guaranteed Obligations
for amounts paid under this Cross-Guaranty until such time as the Lender has
been paid in full, and no Person or Governmental Authority shall have any right
to request any return or reimbursement of funds from the Lender in connection
with monies received under the Loan Documents. Each Cross-Guarantor further
agrees that nothing contained herein shall prevent the Lender from suing on the
Notes or any of the other Loan Documents or foreclosing its security interest in
or Lien on any collateral, if any, securing Guaranteed Obligations or from
exercising a ny other rights available to them under this Agreement, the Notes,
any other of the Loan Documents, or other instrument of security, if any, and
the exercise of any of the aforesaid rights and the completion of any
foreclosure proceedings shall not constitute a discharge of any of any

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Cross-Guarantor’s obligations hereunder; it being the purpose and intent of each
Cross-Guarantor that its obligations hereunder shall be absolute, independent
and unconditional under any and all circumstances. Neither any of the
Cross-Guarantors’ obligations under this Cross-Guaranty nor any remedy for the
enforcement thereof shall be impaired, modified, changed or released in any
manner whatsoever by an impairment, modification, change, release or limitation
of the liability of the Borrowers or by reason of the bankruptcy or insolvency
of any of the Borrowers. Each Cross-Guarantor waives any and all notice of the
creation, renewal, extension or accrual of any of the Guaranteed Obligations and
notice of or proof of reliance by the Lender upon this Cross-Guaranty or
acceptance of this Cross-Guaranty. The Guaranteed Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon this Cross-Guaranty. All
dealings between the Borrowers and the Lender shall be conclusively presumed to
have been had or consummated in reliance upon this Cross-Guaranty.
Notwithstanding anything to the contrary herein, the Cross-Guarantors shall have
the right to assert any valid defenses of the Borrowers to any claim by the
Lender for payment under the Cross-Guaranty.

               SECTION 8.03. Modifications. Each Cross-Guarantor agrees that:
(a) all or any part of the security now or hereafter held for the Guaranteed
Obligations, if any, may be exchanged, compromised or surrendered from time to
time; (b) the Lender shall not have any obligation to protect, perfect, secure
or insure any such security interests, Liens or encumbrances now or hereafter
held, if any, for the Guaranteed Obligations or the properties subject thereto;
(c) the time or place of payment of the Guaranteed Obligations may be changed or
extended, in whole or in part, to a time certain or otherwise, and may be
renewed or accelerated, in whole or in part; (d) the Borrowers and any other
party liable for payment under the Loan Documents may be granted indulgences
generally; (e) any of the provisions of the Notes or any of the other L oan
Documents may be modified, amended or waived; (f) any party (including any
co-guarantor) liable for the payment thereof may be granted indulgences or be
released; and (g) any deposit balance for the credit of the Borrowers or any
other party liable for the payment of the Guaranteed Obligations or liable upon
any security therefor may be released, in whole or in part, at, before or after
the stated, extended or accelerated maturity of the Guaranteed Obligations, all
without notice to or further assent by such Cross-Guarantor, which shall remain
bound thereon, notwithstanding any such exchange, compromise, surrender,
extension, renewal, acceleration, modification, indulgence or release.

               SECTION 8.04. Waiver of Rights. Each Cross-Guarantor expressly
waives, to the fullest extent permitted by applicable law: (a) notice of
acceptance of this Cross-Guaranty by the Lender and of all extensions of credit
to the Borrowers by the Lender; (b) presentment and demand for payment or
performance of any of the Guaranteed Obligations; (c) protest and notice of
dishonor or of default (except as specifically required in this Agreement) with
respect to the Guaranteed Obligations or with respect to any security therefor;
(d) notice of the Lender obtaining, amending, substituting for, releasing,
waiving or modifying any security interest, Lien or encumbrance, if any,
hereafter securing the Guaranteed Obligations, or the Lender

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subordinating, compromising, discharging or releasing such security interests,
Liens or encumbrances, if any; (e) all other notices to which such
Cross-Guarantor might otherwise be entitled; and (f) demand for payment under
this Cross-Guaranty. In addition, each Cross-Guarantor agrees to the waivers set
forth in Addendum A hereto, which is incorporated herein by reference, mutatis
mutandis, with the same force and effect as if herein fully set forth.

               SECTION 8.05. Reinstatement. The obligations of the
Cross-Guarantors under this Article VIII shall be automatically reinstated if
and to the extent that, for any reason, any payment by or on behalf of any
Person in respect of the Guaranteed Obligations is rescinded or must be
otherwise restored by any holder of any of the Guaranteed Obligations, whether
as a result of any proceedings in bankruptcy or reorganization or otherwise, and
each Cross-Guarantor agrees that it will indemnify the Lender on demand for all
reasonable costs and expenses (including, without limitation, reasonable fees of
counsel) incurred by the Lender in connection with such rescission or
restoration, including any such costs and expenses incurred in defending against
any claim alleging that such payment constituted a preference, fraudulent
transfer or similar payment under any bankruptcy, insolvency or similar law.

               SECTION 8.06. Remedies. The Cross-Guarantors agree that, as
between the Cross-Guarantors, on the one hand, and the Lender, on the other
hand, the Guaranteed Obligations may be declared to be forthwith due and payable
as provided in Article VI (and shall be deemed to have become automatically due
and payable in the circumstances provided in Article VI) notwithstanding any
stay, injunction or other prohibition preventing such declaration (or preventing
such Guaranteed Obligations from becoming automatically due and payable) as
against any other Person and that, in the event of such declaration (or such
Guaranteed Obligations being deemed to have become automatically due and
payable), such Guaranteed Obligations (whether or not due and payable by any
other Person) shall forthwith become due and payable by the Cross-Guarantors.

               SECTION 8.07. Limitation of Cross-Guaranty. Notwithstanding any
provision to the contrary contained herein or in any of the other Loan
Documents, to the extent the obligations of any Cross-Guarantor shall be
adjudicated to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), then the obligations of such
Cross-Guarantor hereunder shall be limited to the maximum amount that is
permissible under appilicable law (whether federal or state and including,
without limitation, the Bankruptcy Code).

ARTICLE IX

PARTIAL RELEASE OF COLLATERAL; ASSUMPTION OF MORTGAGE

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               SECTION 9.01. Partial Release of Collateral. (a) From and after
the third (3rd) anniversary of the Closing Date, upon the payment, in cash, by
the applicable Borrower to the Lender of an amount equal to the Release Price
for the applicable Property, such Borrower shall be entitled to a partial
release of the applicable Property and release of the Lender’s security
interests and liens thereon (a “Partial Release”) subject to the following terms
and conditions:

     (i) the applicable Borrower shall have delivered to the Lender a written
request for a Partial Release in connection with a proposed sale in the form of
Exhibit C attached hereto, which request shall include (A) the time and place of
closing of the sale and (B) documents effecting the Partial Release in form and
substance satisfactory to the Lender;

     (ii) no Event of Default has occurred and in continuing (and would continue
after the requested Partial Release);

     (iii) the pro forma Debt Service Coverage Ratio for the immediately
preceding reporting period (as determined by Lender, exclusive of the Property
or Properties subject to the request for Partial Release) shall be equal to or
greater than (1) 1.30 to 1.0 when determined solely with respect to the Loan and
(2) 1.15 to 1.0 when determined with respect to the Loan and the Mezzanine Loan;

     (iv) the Lender shall have received same day funds in the amount payable by
the Borrowers under this Section 9.01 with respect to such Partial Release;

     (v) the Lender shall have received, simultaneously with the Partial
Release, payment of all reasonable and documented costs and expenses, including,
without limitation, legal fees and disbursements, incurred by the Lender in
effecting the Partial Release; and

     (vi) the Lender shall have received, simultaneously with the Partial
Release, a certificate signed by a duly authorized officer of the several
parties of the applicable Borrower, dated the date of the Partial Release,
stating that (A) all of the conditions set forth in this Section 9.01 have been
satisfied and (B) the Partial Release of the applicable Property complies with
all of the terms and provisions of this Agreement; and

     (vii) the Lender shall, within five (5) Business Days; after receipt by the
Lender of the Borrowers’ request, deliver to Borrower all documents required to
effect the Partial Release.

               SECTION 9.02. Application of the Release Payment. Upon receipt by
the Lender of the amounts payable with respect to any Partial Release pursuant
to Section 9.01, such amounts shall be applied as a reduction in the outstanding
principal amount of the Loan in the

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manner set forth in, and upon the payment of any additional amounts due under,
Sections 2.03, 2.05 and 2.06.

ARTICLE X

MISCELLANEOUS

               SECTION 10.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by the Borrowers therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Lender, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

               SECTION 10.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered,
if to any Borrower, at its address at 600 East Las Colinas Boulevard, Suite
1800, Irving, Texas 75039, Attention Mr. Frank B. Schubert, Jr.; and if to the
Lender, at its address at 31 West 52nd Street, New York, New York 10019,
Attention: General Counsel with a copy to the Loan Servicer at an address
specified by the Loan Servicer; or as to each other party, at such other address
as shall be designated by such party in a written notice to the Borrowers and
the Lender. All such notices and communications shall, when mailed, telecopied
or sent via overnight courier, be effective when deposited in the mails,
confirmed by telex answerback or delivered to an overnight courier,
respectively, except that notices and communications to the Lender pursuant to
Article II, III or VII shall not be effective until received by the Lender.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or the Notes or of any Exhibit hereto to be
executed and delivered hereunder shall be effective as delivery of a manually
executed counterpart thereof.

               SECTION 10.03. No Waiver; Remedies. No failure on the part of any
Lender Party or the Lender to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

               SECTION 10.04. Costs, Expenses. (a) The Borrowers jointly and
severally agree to indemnify and hold harmless the Lender, the Loan Servicer and
each of their respective Affiliates and their officers, directors, employees,
agents and advisors (each, an “Indemnified Party”) from and against any and all
claims, damages, losses, liabilities and expenses (including, without
limitation, reasonable fees and expenses of counsel) that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out of
or in connection with or by

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reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of a defense in connection therewith)
(i) the Loan, the actual or proposed use of the proceeds of the Loan, the Loan
Documents or any of the transactions contemplated thereby, including, without
limitation, any acquisition or proposed acquisition (including, without
limitation, the acquisition and any of the other transactions contemplated
hereby) or (ii) the actual or alleged presence of Hazardous Materials on any
Property or any Environmental Action relating in any way to any Property, except
to the extent such claim, damage, loss, liability or expense is found in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party’s gross negligence or willful misconduct.
In the case of an investigation, litigation or other proceeding to which the
indemnit y in this Section 10.04(a) applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by any
Loan Party, its directors, shareholders or creditors or an Indemnified Party or
any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. Each Borrower also agrees not
to assert any claim against the Lender or any of its Affiliates, or any of their
respective officers, directors, employees, attorneys and agents, on any theory
of liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to the Loan, the actual or proposed use of the
proceeds of the Loan, the Loan Documents or any of the transactions contemplated
thereby. THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY
APPLIES, WITHOUT LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTIES.

               (b) Except as expressly provided to the contrary herein, the
Borrowers agree to pay on demand (i) all reasonable costs and expenses of the
Lender or Loan Servicer in connection with the preparation, execution, delivery,
administration, and when requested by the Borrowers, the modification and
amendment of the Loan Documents (including, without limitation, (A) all due
diligence, collateral review, appraisal as expressly provided for herein, audit,
insurance, consultant, search, filing and recording fees and expenses and (B)
the reasonable fees and expenses of counsel for the Lender or Loan Servicer with
respect thereto, with respect to advising the Lender or Loan Servicer as to its
rights and responsibilities, or the perfection, protection or preservation of
rights or interests, under the Loan Documents, with respect to negotiations with
a ny Loan Party or with other creditors of any Loan Party or any of its
subsidiaries arising out of any Default or any events or circumstances that may
give rise to a Default and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or other similar
proceeding involving creditors’ rights generally and any proceeding ancillary
thereto) and (ii) all costs and expenses of the Lender or Loan Servicer in
connection with the enforcement of the Loan Documents, whether in any action,
suit or litigation, any bankruptcy, insolvency or other similar proceeding
affecting creditors’ rights generally (including, without limitation, the
reasonable fees and expenses of counsel for the Lender and with respect
thereto).

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               (c) The Borrowers jointly and severally shall indemnify, defend
and hold the Lender and Loan Servicer harmless from and against: (i) any and all
claims for brokerage (other than brokerage claims in connection with the
transactions contemplated by the Loan Documents by parties actually retained by
the Lender or Loan Servicer), leasing, finders or similar fees which may be made
relating to the Mortgaged Property or the Loan and (ii) any and all liability,
obligations, losses, damages, penalties, claims, actions, suits, costs and
expenses (including Lender’s or Loan Servicer’s reasonable attorneys’ fees and
expenses) of whatever kind or nature which may be asserted against, imposed on
or incurred by Lender or Loan Servicer in connection with the Loan and any Loan
Document, the Mortgaged Properties, or any part thereof, or the exercise by
Lender or Loan Servicer of any rights or remedies granted to it under this
Agreement or any other Loan Document; provided, however, that nothing herein
shall be construed to obligate Borrowers to indemnify, defend and hold harmless
Lender or Loan Servicer from and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, suits, costs and expenses to the
extent enacted against, imposed on or incurred by Lender or Loan Servicer by
reason of Lender’s or Loan Servicer’s gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.

               (d) Borrowers jointly and severally hereby indemnify and hold
Lender and Loan Servicer harmless from and against all loss, cost and expenses
with respect to any Event of Default hereof, any liens (i.e., judgments,
mechanics’ and materialmen’s liens, or otherwise), charges and encumbrances
filed against the Mortgaged Properties, and from any claims and demands for
damages or injury, including claims for property damage, personal injury or
wrongful death, arising out of or in connection with any accident or fire or
other casualty on the Premises or the Improvements or any nuisance made or
suffered thereon, except to the extent due to Lender’s or Loan Servicer’s gross
negligence or willful misconduct as finally determined by a court of competent
jurisdiction, including, without limitation, in any case, reasonable attorney s’
fees, costs and expenses as aforesaid, whether at pretrial, trial or appellate
level, and such indemnity shall survive payment in full of the Loan. This
Section shall not be construed to require Lender or Loan Servicer to incur any
expenses, make any appearances or take any actions.

               (e) If Lender or Loan Servicer is made a party defendant to any
litigation or any claim is threatened or brought against Lender or Loan Servicer
concerning the Loan, the Mortgaged Properties, or any part thereof and such
litigation or claim is subject to the indemnification obligation provided in
subsection (c) above, or any interest therein, or the construction, maintenance,
operation or occupancy or use thereof, then Borrowers jointly and severally
shall defend said litigation or claims at their sole cost and expense (including
reasonable attorneys’ fees and expenses incurred by Lender or Loan Servicer in
any such litigation or claim), whether or not any such litigation or claim is
prosecuted to judgment. If Borrowers fail to perform its obligations with
respect to any such litigation or claim in accordance with this Section and Le
nder or Loan Servicer commences an action against any Borrower to enforce any of
the terms hereof or to prosecute any breach by any Borrower of any of the terms
hereof or to recover any sum secured hereby, Borrowers shall pay to Lender or
Loan Servicer the reasonable

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attorneys’ fees and expenses incurred by Lender or Loan Servicer in connection
therewith. The right to such attorneys’ fees and expenses shall be deemed to
have accrued on the commencement of such action, and shall be enforceable
whether or not such action is prosecuted to judgment. If any Loan Party breaches
any term of this Agreement or any other Loan Document, Lender or Loan Servicer
may engage the services of an attorney or attorneys to protect its rights
hereunder, and in the event of such engagement following any breach by any Loan
Party, Borrowers shall pay Lender’s or Loan Servicer’s reasonable attorneys’
fees and expenses incurred by Lender or Loan Servicer, whether or not an action
is actually commenced against Borrowers by reason of such breach. All references
to “attorneys” in this Subsection and elsewhere in this Agreement shall include,
without limitation, any attorney or law firm engaged by Lender or Loan Servicer
and Lender’s or Loan Servicer’s in-house counsel, and all references to “fees
and expenses” in this Subsection and elsewhere in this Agreement shall include,
without limitation, any fees of such attorney or law firm, any appellate counsel
fees, if applicable, and any reasonable allocation charges and reasonable
allocation costs of Lender’s or Loan Servicer’s in-house counsel.

               (f) A waiver of subrogation shall be obtained by Borrowers from
their insurance carrier and, consequently, Borrowers waive any and all right to
claim or recover against Lender or Loan Servicer, their officers, employees,
agents and representatives, for loss of or damage to Borrowers, the Mortgaged
Properties, Borrowers’ property or the property of others under Borrowers’
control from any cause insured against or required to be insured against by the
provisions of the Mortgages or this Agreement.

               (g) If any Loan Party fails to pay when due any costs, expenses
or other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Lender, in its sole discretion.

               (h) Without prejudice to the survival of any other agreement of
any Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrowers contained in Sections 2.08 and 2.09 and this
Section 10.04 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under any of the other Loan Documents.

               SECTION 10.05. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrowers and the Lender and
thereafter shall be binding upon and inure to the benefit of the Borrowers and
the Lender and their respective successors and assigns, except that the
Borrowers shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender.

               SECTION 10.06. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together

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shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Agreement.

               SECTION 10.07. Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action o r proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.

               (b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any New York State or federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

               SECTION 10.08. Governing Law. This Agreement and the Notes shall
be governed by, and construed in accordance with, the laws of the State of New
York.

               SECTION 10.09. Waiver of Jury Trial. To the maximum extent
permitted by law, each of the Borrowers, the Lender and the Lender Parties
irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to any of the Loan Documents, the Advances or the actions of the Lender
or any Lender Party in the negotiation, administration, performance or
enforcement thereof.

               SECTION 10.10. Compliance with Usury Laws. It is expressly
stipulated and agreed to be the intent of the Borrowers and the Lender that the
Loan made hereunder comply with the usury and other laws relating to the Loan
Documents now or hereafter in effect in the state in which the applicable
Property is located, to the extent any of the same are applicable thereto. If
any such applicable laws render usurious any amount called for under any of the
Loan Documents, or contracted for, charged or received with respect to the Loan,
or if the acceleration

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of the maturity of the Loan or if any prepayment by any of the Borrowers results
in such Borrower having paid any interest in excess of that permitted by law,
then it is the express intent of the parties that all excess amounts theretofore
collected the Lender be credited on the principal balance of the related Note
(or, if such Note has been paid in full, refunded to the related Borrower), and
the provisions of the Loan Documents immediately be deemed reformed and the
amounts thereafter collected under the Loan Documents reduced, without the
necessity of the execution of any new document, so as to comply with the then
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for under the Loan Documents.

               SECTION10.11. Limitation on Personal Liability. Notwithstanding
anything contained herein to the contrary, the personal liability of each
Borrower for the Obligations under this Agreement and the other Loan Documents
(including, without limitation, the obligations of each Borrower under Article
VIII of this Agreement) shall be limited as set forth in Section 6 of the Notes.

* * *

[SIGNATURE ON NEXT PAGE]

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               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first above written.

         

  BORROWERS:

       

  JEFFERSON VILLAGE, L.P.,
a Texas limited partnership

       

  By: JPI PORTFOLIO I GP1 LLC, a Texas limited liability
company, its general partner

       

    By: /s/ Scot M. McLaughlin

     

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

      Scot M. McLaughlin

      Vice President

         

  JEFFERSON AT SUNSET VALLEY, L.P.,
a Texas limited partnership

       

  By: JPI PORTFOLIO I GP1 LLC, a Texas limited liability
company, its general partner

       

    By: /s/ Scot M. McLaughlin

     

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

      Scot M. McLaughlin

      Vice President

         

  JPI CORAL SPRINGS, L.P.,
a Texas limited partnership

       

  By: JPI PORTFOLIO I GP1 LLC, a Texas limited liability
company, its general partner

       

    By: /s/ Scot M. McLaughlin

     

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

      Scot M. McLaughlin

      Vice President

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  LENDER:

       

  GERMAN AMERICAN CAPITAL
CORPORATION, a Maryland corporation

       

  By: /s/ MICHAEL OFFIT

   

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

    Name: MICHAEL OFFIT

    Title: VICE PRESIDENT

       

  By: /s/ CHRISTOPHER TOGNOLA

   

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

    Name: CHRISTOPHER TOGNOLA

    Title: AUTHORIZED SIGNATORY