EXHIBIT
      10.18












**LOAN
      AND SECURITY AGREEMENT**







**Dated
      as of June 30, 2006**




**between**




**SCOTSDALE
      MI LLC,**


**CARRIAGE
      PARK MI LLC,**


**MACOMB
      MANOR MI LLC AND**


**CARRIAGE
      HILL MI LLC,**


**collectively,
      as Borrowers**




**and**




**CITIGROUP
      GLOBAL MARKETS REALTY CORP.**




**as
      Lender**













Table
        of
        Contents


PageARTICLE
                I
            DEFINITIONS
            1Section
            1.1
            Certain
                Defined Terms
            1Section
            1.2
            Accounting
                Terms
            20Section
            1.3
            Other
                Definitional Provisions
            20ARTICLE
                II
            TERMS
                OF THE LOAN
            21Section
            2.1
            Loan
            
            21(A)
            Loan
            21(B)
            Note
            21(C)
            Use
                of Proceeds
            21Section
            2.2
            Interest
            
            21(A)
            Rate
                of Interest
            21(B)
            Default
                Rate
            21(C)
            Computation
                of Interest
            21(D)
            Interest
                Laws
            22(E)
            Late
                Charges
            22(F)
            Additional
                Administrative Fee
            22Section
            2.3
            Defeasance
            23(A)
            Total
                Defeasance
            23(B)
            Partial
                Defeasance
            24(C)
            Defeasance
                Collateral Account
            26(D)
            Successor
                Borrower
            26Section
            2.4
            Payments
            26(A)
            Payments
                of Interest and Principal
            26(B)
            Date
                and Time of Payment
            27(C)
            Manner
                of Payment
            27Section
            2.5
            Maturity
            27Section
            2.6
            Prepayment
            27(A)
            Limitation
                on Prepayment; Prepayment Consideration Dueon
                Acceleration
            27(B)
            Prepayment
                Consideration Due
            28(C)
            Definitions
            28Section
            2.7
            Outstanding
                Balance
            29Section
            2.8
            Taxes
            
            29Section
            2.9
            Reasonableness
                of Charges
            29Section
            2.10
            Partial
                Releases
            30ARTICLE
                III
            CONDITIONS
                TO LOAN
            32Section
            3.1
            Conditions
                to Funding of the Loan on the Closing Date
            32(A)
            Loan
                Documents
            32(B)
            Origination
                Fees and Deposits
            32(C)
            Performance
                of Agreements, Truth of Representations andWarranties
            32(D)
            Closing
                Certificate
            32(E)
            Opinions
                of Counsel
            32(F)
            Title
                Policy
            33





i


(G)
            Survey
            33(H)
            Zoning
            33(I)
            Certificates
                of Formation and Good Standing
            33(J)
            Certificates
                of Incumbency and Resolutions
            34(K)
            Financial
                Statements
            34(L)
            Agreements
            34(M)
            Management
                Agreement
            34(N)
            Operating
                and Capital Expenditure Budgets
            34(O)
            Rent
                Rolls, Leases, Estoppels
            34(P)
            Licenses,
                Permits and Approvals
            34(Q)
            Insurance
                Policies and Endorsements
            34(R)
            Environmental
                Assessment
            35(S)
            Property
                Condition Reports
            35(T)
            Appraisals
            35(U)
            Searches
            35(V)
            Documentation
                Regarding Application of Proceeds
            35(W)
            Legal
                Fees; Closing Expenses
            35(X)
            Other
                Review
            3636ARTICLE
                IV
            REPRESENTATIONS
              AND WARRANTIESSection
            4.1
            Organization,
                Powers, Capitalization, Good Standing, Business
            36(A)
            Organization
                and Powers
            36(B)
            Qualification
            36(C)
            Organization
            36Section
            4.2
            Authorization
                of Borrowing, etc
            36(A)
            Authorization
                of Borrowing
            36(B)
            No
                Conflict
            36(C)
            Governmental
                Consents
            37(D)
            Binding
                Obligations
            37Section
            4.3
            Financial
                Statements
            37Section
            4.4
            Indebtedness
                and Contingent Obligations
            37Section
            4.5
            Title
                to Properties
            37Section
            4.6
            Zoning;
                Compliance with Laws
            38Section
            4.7
            Leases;
                Agreements
            38(A)
            Leases;
                Agreements
            38(B)
            Rent
                Roll; Disclosure
            38(C)
            Lease
                Issues
            39Section
            4.8
            Condition
                of Properties
            39Section
            4.9
            Litigation;
                Adverse Facts
            40Section
            4.10
            Payment
                of Taxes
            40Section
            4.11
            Adverse
                Contracts
            40Section
            4.12
            Performance
                of Agreements
            40Section
            4.13
            Governmental
                Regulation
            40Section
            4.14
            Employee
                Benefit Plans
            40Section
            4.15
            Broker’s
                Fees
            40Section
            4.16
            Environmental
                Compliance
            41(A)
            No
                Environmental Claims
            41




ii


(B)
            Storage
                of Hazardous Materials
            41(C)
            Compliance
                with Environmental Laws
            41Section
            4.17
            Solvency
            41Section
            4.18
            Disclosure
            42Section
            4.19
            Use
                of Proceeds and Margin Security
            42Section
            4.20
            Insurance
            42Section
            4.21
            Separate
                Tax Lots
            42Section
            4.22
            Investments
            42Section
            4.23
            Bankruptcy
            42Section
            4.24
            Defaults
            43Section
            4.25
            No
                Plan Assets
            43Section
            4.26
            No
                Prohibited Transaction
            43Section
            4.27
            Not
                Foreign Person
            43Section
            4.28
            No
                Collective Bargaining Agreements
            43Section
            4.29
            Compliance
            43Section
            4.30
            Intellectual
                Property
            43Section
            4.31
            Pre-Closing
                Date Activities
            44Section
            4.32
            Mortgage
                and Other Liens
            44Section
            4.33
            Management
                Agreement
            44Section
            4.34
            No
                Prohibited Persons
            44ARTICLE
                V
            COVENANTS
                OF BORROWER PARTIES
            44Section
            5.1
            Financial
                Statements and Other Reports
            45(A)
            Financial
                Statements
            45(B)
            Accountants’
                Reports
            47(C)
            Tax
                Returns
            47(D)
            Material
                Notices
            47(E)
            Events
                of Default, etc
            47(F)
            Litigation
            47(G)
            Insurance
            47(H)
            Other
                Information
            48Section
            5.2
            Existence;
                Qualification
            48Section
            5.3
            Payment
                of Impositions and Claims
            48Section
            5.4
            Maintenance
                of Insurance
            49Section
            5.5
            Maintenance
                of the Properties; Alterations; Casualty or Taking
            51(A)
            Maintenance
                of the Properties; Alterations
            51(B)
            Casualty
                or Taking
            52(C)
            Proceeds
                Application to Restoration
            53(D)
            Disbursement
                for Restoration
            54(E)
            Disbursement
                Conditions
            54(F)
            Retainage
            54Section
            5.6
            Inspection
            55Section
            5.7
            Environmental
                Compliance
            55(A)
            Environmental
                Laws
            55(B)
            Remedial
                Action
            55(C)
            Further
                Assurance
            56(D)
            O
                & M Program
            56





iii




Section
            5.8
            Environmental
                Disclosure
            56Section
            5.9
            Compliance
                with Laws and Contractual Obligations
            57Section
            5.10
            Further
                Assurances
            57Section
            5.11
            Performance
                of Agreements and Leases
            57Section
            5.12
            Leases
            
            58Section
            5.13
            Management
                and Leasing
            59Section
            5.14
            Material
                Agreements
            59Section
            5.15
            Certain
                VCOC Provisions
            60Section
            5.16
            Estoppel
                Certificates
            60Section
            5.17
            Indebtedness
            60Section
            5.18
            Liens
                and Related Matters
            61(A)
            No
                Liens
            61(B)
            No
                Negative Pledges
            61Section
            5.19
            Contingent
                Obligations
            61Section
            5.20
            Restriction
                on Fundamental Changes
            61Section
            5.21
            Transactions
                with Related Persons
            62Section
            5.22
            ERISA
            
            62(A)
            No
                ERISA Plans
            62(B)
            Compliance
                with ERISA
            62(C)
            No
                Plan Assets. No Plan Assets
            63(D)
            Indemnification
            63Section
            5.23
            Lender’s
                Expenses
            63Section
            5.24
            Environmental
                Matters; Inspection
            63Section
            5.25
            Environmental
                Claims
            64Section
            5.26
            Environmental
                Indemnification
            65Section
            5.27
            Operation
                of Properties
            65Section
            5.28
            Taxes
                on Security
            66Section
            5.29
            Cooperate
                in Legal Proceedings
            66Section
            5.30
            Insurance
                Benefits
            66Section
            5.31
            Prohibited
                Persons
            66ARTICLE
                VI
            RESERVESSection
            6.1
            Security
                Interest in Reserves; Other Matters Pertaining toReserves
            67Section
            6.2
            Funds
                Deposited with Lender
            67(A)
            Interest,
                Offsets
            67(B)
            Funding
                at Closing
            68Section
            6.3
            Impositions
                and Insurance Reserve
            68Section
            6.4
            Replacement
                Reserve
            68Section
            6.5
            Security
                Deposits
            68Section
            6.6
            Conditions
                to Disbursements from the Replacement Reserve;Performance
                of Work
            69(A)
            Disbursements
                from the Replacement Reserve
            69(B)
            Performance
                of Work
            71(C)
            Indemnification
            72Section
            6.7
            Completion/Repair
                Reserve
            73





iv


ARTICLE
                VII
            DEPOSIT
              ACCOUNT; CASH MANAGEMENTSection
                7.1
            Establishment
                of Accounts
            73(A)
            Clearing
                Account/Deposit Account
            73(B)
            Account
                Name
            74(C)
            Eligible
                Accounts/Characterization of Accounts
            74(D)
            Permitted
                Investments
            75Section
                7.2
            Deposit
                of Receipts into the Clearing Account and the DepositAccount
            75Section
                7.3
            Application
                of Funds in Accounts
            75(A)
            Allocations
            75(B)
            Cure
                of Cash Trap Condition
            76(C)
            Required
                Payments
            76(D)
            Operating
                Expenses Disbursements
            77(E)
            Event
                of Default
            77Section
                7.4
            Budget
                Approvals
            78Section
                7.5
            Sole
                Dominion and Control
            78Section
                7.6
            Pledge
                of Accounts
            79(A)
            Security
                for Obligations
            79(B)
            Rights
                on Default
            79(C)
            Financing
                Statement; Further Assurances
            79(D)
            Termination
                of Agreement
            80Section
                7.7
            Lender
                Appointed Attorney-In-Fact
            80ARTICLE
                VIII
            DEFAULT,
              RIGHTS AND REMEDIESSection
                8.1
            Event
                of Default
            81(A)
            Scheduled
                Payments
            81(B)
            Other
                Payments
            81(C)
            Breach
                of Reporting Provisions
            81(D)
            Breach
                of Provisions Regarding Insurance, Transfers,Liens,
                Single Purpose
            81(E)
            Breach
                of Warranty
            81(F)
            Other
                Defaults Under Loan Documents
            81(G)
            Involuntary
                Bankruptcy; Appointment of Receiver, etc
            82(H)
            Voluntary
                Bankruptcy; Appointment of Receiver, etc
            82(I)
            Bankruptcy
                Involving Ownership Interests or Property
            82(J)
            Solvency
            82(K)
            Injunction
            82(L)
            Invalidity
                of Loan Documents
            82(M)
            Cross-Default
                with Other Loan Documents
            83(N)
            Default
                under Management Agreement
            83Section
                8.2
            Acceleration
                and Remedies
            83Section
                8.3
            Performance
                by Lender
            84ARTICLE
                IX
            SINGLE-PURPOSE,
              BANKRUPTCY-REMOTE REPRESENTATIONS,WARRANTIES
              AND COVENANTSSection
                9.1
            Applicable
                to Borrowers
            85





v


ARTICLE
                X
            RESTRUCTURING
                LOAN, SECONDARY MARKETTRANSACTIONS
            88Section
            10.1
            Secondary
                Market Transactions Generally
            88Section
            10.2
            Cooperation;
                Limitations
            89Section
            10.3
            Information
            89Section
            10.4
            Additional
                Provisions
            90ARTICLE
                XI
            RESTRICTIONS
                ON LIENS, TRANSFERS; RELEASE OFPROPERTIES
            91Section
            11.1
            Restrictions
                on Transfer and Encumbrance
            91Section
            11.2
            Permitted
                Transfers of Beneficial Interests in Sole Member
            91Section
            11.3
            Assumability
            9293ARTICLE
                XII
            RECOURSE;
              LIMITATIONS ON RECOURSESection
            12.1
            Limitations
                on Recourse
            93Section
            12.2
            Recourse
                to Borrowers and Guarantor
            94Section
            12.3
            Miscellaneous
            9596ARTICLE
                XIII
            MISCELLANEOUSSection
            13.1
            Expenses
                and Attorneys’ Fees
            96Section
            13.2
            Indemnity
            96Section
            13.3
            Amendments
                and Waivers
            97Section
            13.4
            Retention
                of Borrowers’ Documents
            97Section
            13.5
            Notices
            97Section
            13.6
            Survival
                of Warranties and Certain Agreements
            99Section
            13.7
            Failure
                or Indulgence Not Waiver; Remedies Cumulative
            99Section
            13.8
            Marshaling;
                Payments Set Aside
            99Section
            13.9
            Severability
            99Section
            13.10
            Headings
            99Section
            13.11
            APPLICABLE
                LAW
            99Section
            13.12
            Successors
                and Assigns
            100Section
            13.13
            Sophisticated
                Parties, Reasonable Terms, No FiduciaryRelationship
            100Section
            13.14
            Reasonableness
                of Determinations
            100Section
            13.15
            No
                Duty
            101Section
            13.16
            Entire
                Agreement
            101Section
            13.17
            Construction;
                Supremacy of Loan Agreement
            101Section
            13.18
            Consent
                to Jurisdiction
            101Section
            13.19
            Waiver
                of Jury Trial
            101Section
            13.20
            Counterparts;
                Effectiveness
            102Section
            13.21
            Servicer
            102Section
            13.22
            Waiver
                of Notice
            102Section
            13.23
            Offsets,
                Counterclaims and Defenses
            103Section
            13.24
            Waiver
                of Counterclaim
            103Section
            13.25
            Brokers
                and Financial Advisors
            103Section
            13.26
            Joint
                and Several Liability
            103






vi






**LOAN
      AND SECURITY AGREEMENT**




This
      LOAN
      AND SECURITY AGREEMENT (this “ Loan
      Agreement ”)
      is
      dated as of June 30, 2006, and entered into by and among SCOTSDALE MI LLC,
      a
      Delaware limited liability company; CARRIAGE PARK MI LLC, a Delaware limited
      liability company, MACOMB MANOR MI LLC, a Delaware limited liability company;
      and CARRIAGE HILL MI LLC, a Delaware limited liability company (individually,
      each a “ Borrower ”
and
      collectively the “ Borrowers ”);
      and
      CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation (together with
      its
      successors and assigns, whether one or more, “ Lender ”).




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




**ARTICLE
      I**


**DEFINITIONS**




**Section
      1.1**  **Certain
      Defined Terms** **.** The
      terms defined below are used in this Loan Agreement as so defined. Terms defined
      in the preamble to this Loan Agreement are used in this Loan Agreement as so
      defined.




“ Accounts ”
means,
      collectively, the Clearing Account, the Deposit Account, the Sub-Accounts
      thereof, and any other accounts pledged to Lender pursuant to this Loan
      Agreement or any other Loan Document.




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




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




“ Adjusted
      Net Cash Flow ”
for
      any
      twelve month calculation period means, as of the date of such calculation,
      the
      excess of (a) all Receipts, including, without limitation, base rents and
      monthly recoveries under bona fide Leases at the Properties, received by or
      on
      behalf of Borrowers and attributable to such twelve month period, over (b)
      Operating Expenses attributable to such twelve month calculation period
      (determined on an accrual basis), in each case adjusted to reflect the
      following, all as determined by Lender: (i) a vacancy factor for each Individual
      Property equal to the greatest of (A) the market vacancy rate (as determined
      by
      Lender) for similar properties in the commercial business district or market
      area in which the applicable Individual Property is located, (B) the actual
      vacancy rate at the applicable Individual Property, and (C) 5% of the rentable
      area of the applicable Individual Property, (ii) inclusion in Operating Expenses
      of a base management fee equal to the greater of (A) the actual base management
      for such period and (B) 4% of gross revenues for such period; (iii) subtraction
      of a reserve for Capital Expenditures equal to $300 per Unit per annum, (iv)
      exclusion from Receipts of (W) Prepaid Rents not attributable and actually
      applied in such twelve month period, (X) amounts other than rents and other
      payments under Leases at the Properties, (Y) amounts representing non-recurring
      items as reasonably determined by Lender, and (Z) amounts received from tenants
      affiliated with any Borrower Parties; (v) adjustment of Operating Expenses
      to
      reflect the higher of actual Operating Expenses for such period and historical
      annualized Operating Expenses and historical operating levels at the Properties;
      and (vi) adjustments deemed necessary by Lender based upon Lender’s underwriting
      criteria and Lender’s sole good faith determination of Rating Agency
      underwriting and evaluation criteria. Lender’s calculation of Adjusted Net Cash
      Flow shall be final absent manifest error.









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




“ Allocated
      Loan Amount ”
means,
      for each Individual Property, the amount for such Individual Property as set
      forth in the table below:





Individual
                Property
            
            Allocated
              Loan
                Amounts for
              Individual
                Property1.Carriage
                Hill Property
            
            $
            7,050,0002.Carriage
                Park Property
            
            $
            10,950,0003.Macomb
                Manner Property
            
            $
            8,175,0004.Scotsdale
                Property
            
            $
            14,550,000




“ Applicable
      Individual Property ”
means
      the following:




(1)
            as
                to the Borrower known as Carriage Hill MI LLC, the Carriage Hill
                Property;




(2)
            as
                to the Borrower known as Carriage Park MI LLC the Carriage Park
                Property;




(3)
            as
                to the Borrower known as Macomb Manner MI LLC, the Macomb Manner
                Property;
                and




(4)
            as
                to the Borrower known as Scotsdale MI LLC, the Scotsdale
                Property.




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


2






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




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




“ Approved
      Capital Expenditures ”
has
      the
      meaning set forth in Section 6.4.




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




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




“ Assignment
      of Management Agreement ”
means
      that certain Conditional Assignment of Management Agreement of even date
      herewith executed by Borrowers and current Manager, constituting an assignment
      of the Management Agreement as Collateral for the Loan, as same may be amended
      or modified from time to time.




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




“ Borrower ”
and
      “ Borrowers ”
have
      the meaning set forth in the preamble.




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




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




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




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




“ Capital
      Expenditure Budget ”
means
      Borrowers’ budget for Capital Expenditures for the Properties, the costs of
      which are to be paid from the Replacement Reserve, which budget has been
      approved by Lender as and to the extent required hereunder.


3




“ Carriage
      Hill Property ”
means
      that certain Individual Property commonly known as Carriage Hill, 26322 Westphal
      Drive, Dearborn, Michigan, the legal description of which is set forth on
      Schedule A-1.




“ Carriage
      Park Property ”
means
      that certain Individual Property commonly known as Carriage Park, 27201 Canfield
      Drive, Dearborn Heights, Michigan, the legal description of which is set forth
      on Schedule A-2.




“ Cash
      Trap Condition ”
shall
      exist (1) upon the occurrence of an Event of Default, or (2) in the event a
      Debt
      Service Coverage Ratio, as measured by Lender as of the end of any Calendar
      Quarter based upon Adjusted Net Cash Flow for the twelve (12) month period
      ended
      as of the end of such Calendar Quarter, is less than the Minimum DSCR Threshold; provided ,
      that in
      the event of a failure of the Borrowers to deliver the certification and
      documentation required under Section 5.1(A)(iv) by the required delivery date
      hereunder, at Lender’s option the Debt Service Coverage Ratio will be presumed
      to be less than the Minimum DSCR Threshold unless and until such certification
      and documentation are provided to Lender and demonstrate that the Debt Service
      Coverage Ratio is at least equal to the Minimum DSCR Threshold.




“ Cash
      Trap Cure ”
has
      the
      meaning set forth in Section 7.1.




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




“ Clearing
      Account ”
has
      the
      meanings set forth in Section 7.1.




“ Clearing
      Account Agreement ”
means
      the written agreement among Borrowers, Lender and the holder of the Clearing
      Account with respect to the maintenance and control thereof.




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




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




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




“ Collateral ”
means
      rights, interests, and property of every kind, real and personal, tangible
      and
      intangible, which is granted, pledged, liened, or encumbered as security for
      the
      Loan or any of the other Obligations under this Loan Agreement, the Mortgage
      or
      other Loan Documents, including the Properties (including all land and
      Improvements), the Rents and the Accounts.




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




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




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


4






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




“ Debt
      Service Coverage Ratio ”
shall
      mean, for any trailing twelve (12) month period measured as of the end of any
      Calendar Quarter, the ratio of (i) Adjusted Net Cash Flow for such twelve (12)
      month period to (ii) an adjusted annualized debt service base amount equal
      to
      the greater of (1) the product of (A) the Monthly Debt Service Payment Amount,
      multiplied by (B) 12 or (2) the product of the original principal balance of
      the
      Loan multiplied by .0727.




“ Debt
      Service Sub-Account ”
has
      the
      meaning set forth in Section 7.1.




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




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




“ Defeasance
      Collateral ”
shall
      mean the Total Defeasance Collateral or Partial Defeasance Collateral, as
      applicable.




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




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


5




“ Defeased
      Note ”
has
      the
      meaning set forth in Section 2.3.




“ Deposit
      Account ”
has
      the
      meaning set forth in Section 7.1




“ Deposit
      Account Agreement ”
means
      the written agreement among Borrowers, Lender and the holder of the Deposit
      Account with respect to the maintenance and control thereof.




“ Deposit
      Account Bank ”
means
      Wachovia Bank, National Association, a national banking association, or any
      successor financial institution appointed by Lender pursuant hereto or pursuant
      to the Deposit Account Agreement.




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




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




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




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




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




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




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




“ Environmental
      Laws ”
means
      any federal, state, or local law, ordinance or regulation or any court judgment
      or order of any federal, state or local agency or regulatory body applicable
      to
      any of the Borrowers or to any of the Properties relating to industrial hygiene
      or to environmental or unsafe conditions including, but not limited to, those
      relating to the generation, manufacture, storage, handling, transportation,
      disposal, release, emission or discharge of Hazardous Material, those in
      connection with the construction, fuel supply, power generation and
      transmission, waste disposal or any other operations or processes relating
      to
      any of the Properties, and those relating to the atmosphere, soil, surface
      and
      ground water, wetlands, stream sediments and vegetation on, under, in or about
      any of the Properties. “ Environmental
      Laws ”
also
      shall include the Comprehensive Environmental Response, Compensation and
      Liability Act, the Hazardous Materials Transportation Act, the Resource
      Conservation and Recovery Act, the Solid Waste Disposal Act, the Clean Water
      Act, the Clean Air Act, the Toxic Substance Control Act, the Safe Drinking
      Water
      Act and the Occupational Safety and Health Act, and all regulations adopted
      in
      respect to the foregoing laws.


6




“ Environmental
      Report ”
means,
      collectively, the Phase I Environmental Site Assessment dated March 24, 2006
      prepared by EMG for the Carriage Hill Property, the Phase I Environmental Site
      Assessment dated March 24, 2006 prepared by EMG for the Carriage Park Property,
      the Phase I Environmental Site Assessment dated January 30, 2006 prepared by
      ATC
      Associates, Inc. for the Macomb Manor Property, the Limited Phase II
      Environmental Site Assessment dated April 10, 2006 prepared by ATC Associates,
      Inc. for the Macomb Manor Property, the Phase I Environmental Site Assessment
      dated January 25, 2006 prepared by ATC Associates, Inc. for the Scotsdale
      Property, true, correct and complete copies of each which have been delivered
      to
      Lender.




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




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




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




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




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




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




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




“ First
      Open Payment Date ”
is
      the
      Payment Date which is in the third month preceding the month in which the
      Scheduled Maturity Date occurs. For example, if the Scheduled Maturity Date
      is
      April 11, 2010, the First Open Payment Date is the Payment Date in the month
      of
      January, 2010.


7




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




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




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




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




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




“ Guarantor ”
means
      Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland corporation
      and Lightstone Value Plus REIT LP, a Delaware limited partnership.




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




“ Immediate
      Repairs ”
has
      the
      meaning set forth in Section 6.7.




“ Impositions ”
means
      all taxes (including, without limitation, all real estate, ad valorem, excise
      and sales (including those imposed on lease rentals), use, single business,
      gross receipts, value added, intangible transaction privilege, privilege,
      license or similar taxes), assessments, ground rents, water, sewer or other
      rents and charges, excises, levies, fees (including, without limitation,
      license, permit, inspection, authorization and similar fees), and all other
      governmental charges, in each case whether general or special, ordinary or
      extraordinary, foreseen or unforeseen, of every character in respect of any
      or
      all of the Borrowers, the Collateral, and any or all of the Properties
      (including all interest and penalties thereon), which at any time prior to,
      during or in respect of the term hereof may be assessed or imposed on or in
      respect of or be a lien upon (i) any or all of the Borrowers (including, without
      limitation, all income, franchise, single business, excise or other taxes
      imposed on any or all of the Borrowers, for the privilege of doing business
      in
      any jurisdiction) or Lender or (ii) any or all of the Properties, or any other
      Collateral or any part thereof. Nothing contained in this Agreement shall be
      construed to require any Borrower to pay (and Impositions shall not include)
      any
      tax, assessment, levy or charge imposed on Lender, in the nature of a franchise,
      capital levy, estate, inheritance, succession, income or net revenue
      tax.







8




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




“ Impositions
      and Insurance Reserve Sub-Account ”
has
      the
      meaning set forth in Section 7.1.




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




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




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




“ Indemnified
      Parties ”
has
      the
      meaning set forth in Section 5.26.




“ Indemnitees ”
has
      the
      meaning set forth in Section 13.2.




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




“ Individual
      Property ”
means,
      individually, each of the four (4) parcels of real estate (including land and
      Improvements) identified on Schedules A-1 through A-4 hereto (sometimes
      collectively referred to as the “ Individual
      Properties ”).




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




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






9




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




“ Interest
      Rate ”
shall
      mean a rate per annum of 5.96%.




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




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




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




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




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




“ Lender ”
is
      defined in the preamble.




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




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




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




10




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




“ Macomb
      Manor Property ”
means
      that certain Individual Property commonly known as Macomb Manor Apartments,
      19700 Masonic Boulevard, Roseville, Michigan, the legal description of which
      is
      set forth on Schedule A-3.




“ Management
      Agreement ”
means,
      individually and collectively, as the context requires, the management agreement
      for the Properties in effect on the date hereof between the Borrowers and the
      current Manager and any management agreement(s) which may hereafter be entered
      into in accordance with the terms and conditions hereof, pursuant to which
      any
      subsequent Manager may hereafter manage any or all of the
      Properties.




“ Manager ”
means,
      collectively or individually as the context may require, the Person or Persons
      (approved by Lender in accordance with the terms and conditions hereof) that
      may
      hereafter be charged with management of any Individual Property pursuant to
      a
      Management Agreement.




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




“ Material
      Alteration ”
means
      any improvement or alteration affecting structural elements of any Individual
      Property the cost of which exceeds $200,000; provided , however ,
      that in
      no event shall alterations performed as part of a Restoration constitute a
      Material Alteration.




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




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




“ Minimum
      DSCR Threshold ”
means
      a
      Debt Service Coverage Ratio of 1.05 to 1.00 for measurement made at the end
      of
      any Calendar Quarter.




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




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




11




“ Monthly
      Debt Service Payment Amount ”
means
      $243,120.62.




“ Mortgages ”
means,
      collectively, those certain Mortgages of even date herewith from each Borrower
      to Lender, constituting a Lien on the Improvements and the Properties as
      Collateral for the Loan as same may be modified or amended from time to time.
      “ Mortgage ”
means
      any one of the Mortgages.




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




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




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




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




“ Operating
      Account ”
means
      Borrowers’ operating account(s) established for the purposes of holding and
      managing Borrowers’ funds from time to time, but not the Clearing Account,
      Deposit Account or any Sub-Accounts thereof.




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




“ Operating
      Expenses ”
means
      all costs and expenses accrued in accordance with GAAP relating to the
      operation, maintenance, repair, use and management of the Properties, including,
      without limitation, utilities, repairs and maintenance, insurance, property
      taxes and assessments, advertising expenses, payroll and related taxes,
      equipment lease payments, actual management fees and all amounts paid into
      Reserves, provided , however ,
      such
      costs and expenses shall be subject to reasonable adjustment by Lender to
      normalize such costs and expenses, but excluding (i) principal, interest and
      other payments made by Borrowers under the Loan Documents, and (ii) depreciation
      and amortization.




“ Operating
      Expenses Sub-Account ”
has
      the
      meaning set forth in Section 7.1.




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




12






“ Partial
      Defeasance Amount ”
has
      the
      meaning set forth in Section 2.10.




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




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




“ Partial
      Release ”
has
      the
      meaning set forth in Section 2.10.




“ Partial
      Release Date ”
has
      the
      meaning set forth in Section 2.10.




“ Partial
      Release Parcel ”
has
      the
      meaning set forth in Section 2.10.




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




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




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




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




13






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




(ii)   Federal
      Housing Administration debentures;




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




(iv)   federal
      funds, unsecured certificates of deposit, time deposits, bankers’ acceptances
      and repurchase agreements with maturities of not more than 365 days of any
      bank,
      the short term obligations of which at all times are rated in the highest short
      term rating category by each Rating Agency (or, if not rated by all Rating
      Agencies, rated by at least one Rating Agency in the highest short term rating
      category and otherwise acceptable to each other Rating Agency, as confirmed
      in
      writing that such investment would not, in and of itself, result in a downgrade,
      qualification or withdrawal of the initial or, if higher, then current ratings
      assigned to any class of certificates or other securities issued in connection
      with any Securitization backed in whole or in part by the Loan (collectively
      the
“ Certificates ”) *provided* , *however* ,
      that
      the investments described in this clause (iv) must (A) have a predetermined
      fixed dollar amount of principal due at maturity that cannot vary or change,
      (B)
      if rated by S&P, not have an “r” highlighter affixed to their rating, (C) if
      such investments have a variable rate of interest, have an interest rate tied
      to
      a single interest rate index plus a fixed spread (if any) and must move
      proportionately with that index, and (D) not be subject to liquidation prior
      to
      their maturity;




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







14




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




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




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




15




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




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




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




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




“ Prepaid
      Rent ”
means
      any base rents and other monthly recoveries under bona fide Leases at the
      Properties actually received by Borrowers (including, any nonrefundable
      reservation deposits) which are not currently due and owing by such tenant
      under
      such Lease but are attributable to a future obligation under such
      Lease.




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




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




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




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




“ Properties ”
means,
      collectively, each Individual Property listed on Schedule A-1 through A-4 hereto
      (including land and Improvements), which serves as Collateral for the Loan
      and
      which shall be encumbered by and are more particularly described in each of
      the
      Mortgages as the “Mortgaged Property” (as defined in the
      Mortgages).




16





“ Property
      Condition Report ”
and
      “ Property
      Condition Reports ”
have
      the meanings set forth in Section 3.1(S).




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




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




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




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




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




17




“ Release
      Date ”
shall
      mean the earlier of (i) the Payment Date in July, 2009, or (ii) the date that
      is
      two (2) years from the “start up day” (within the meaning of Section 860G(a)(9)
      of the IRC) of the REMIC Trust established in connection with the final
      Securitization involving the Loan.




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




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




“ Replacement
      Reserve ”
means
      the reserve established pursuant to Section 6.4.




“ Replacement
      Reserve Sub-Account ”
has
      the
      meaning set forth in Section 7.1.




“ Reserves ”
means
      the reserves held by or on behalf of Lender pursuant to this Loan Agreement
      or
      other Loan Documents, including the reserves established pursuant to Article
      VI.




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




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




“ Restoration
      Threshold ”
means
      an amount equal to $1,000,000.




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




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




“ Scheduled
      Maturity Date ”
shall
      mean July 11, 2016.




“ Scotsdale
      Property ”
means
      that certain Individual Property commonly known as Scotsdale Apartments, 37650
      Dale Drive, Westland, Michigan, the legal description of which is set forth
      on
      Schedule A-4.




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




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




18






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




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




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




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




“ Sole
      Member ”
shall
      mean Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland
      corporation, the sole member of each of the Borrowers.




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




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




“ Supplemental
      Debt Reserve Sub-Account ”
has
      the
      meaning set forth in Section 7.1.




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




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




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




“ Title
      Company ”
means
      Lawyers Title Insurance Corporation, or such other national title insurance
      company as may be reasonably acceptable to Lender.




“ Title
      Policies ”
means,
      collectively, the mortgagee’s policies of title insurance pertaining to the
      Mortgages issued to Lender in connection with the Closing meeting the
      requirements of Section 3.1(G). “ Title
      Policy ”
means
      any one of the Title Policies.




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




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




19






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




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




“ Undefeased
      Note ”
has
      the
      meaning set forth in Section 2.3.




“ Unit ”
means
      each residential unit at the Properties containing one or more bedrooms for
      occupancy by one or more residents.




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




“ Work ”
has
      the
      meaning set forth in Section 6.6.




**Section
      1.2**  **Accounting
      Terms** **.**




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




**Section
      1.3**  **Other
      Definitional Provisions** **.**




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




20




**ARTICLE
      II**


**TERMS
      OF THE LOAN**




**Section
      2.1**  **Loan** **.**




(A)  **Loan** .
      Subject
      to the terms and conditions of this Loan Agreement and in reliance upon the
      representations and warranties of Borrowers contained herein, Lender agrees
      to
      lend to Borrowers, and Borrowers agrees to borrow from Lender, the Loan, in
      the
      aggregate amount of $40,725,000 (such loan and the obligation of Borrowers
      to
      repay the same together with all interest and other amounts from time to time
      owing hereunder are referred to collectively herein as the “ Loan ”).
      Borrowers’ obligation to pay the principal and interest on the Loan (including
      late charges, Default Rate interest, and the Prepayment Consideration, if any)
      shall be evidenced by this Loan Agreement and by the Note, duly executed and
      delivered by Borrowers. The Note shall be payable as to principal, interest,
      late charges, Default Rate interest and Prepayment Consideration, if any, as
      specified in this Loan Agreement, with a final maturity on the Maturity Date.
      Borrowers shall pay all outstanding Obligations on the Maturity
      Date.




(B)  **Note** .
      On the
      Closing Date, Borrowers shall execute and deliver to Lender the Note, made
      by
      Borrowers to the order of Lender, in the aggregate original principal amount
      of
      $40,725,000.




(C)  **Use
      of Proceeds** .
      The
      proceeds of the Loan funded at Closing shall be used to (i) repay any existing
      indebtedness secured by any mortgage encumbering all or any part of the
      Properties; (ii) pay all recording fees and taxes, title insurance premiums,
      the
      reasonable costs and expenses incurred by Lender, including the legal fees
      and
      expenses of counsel to Lender, and other costs and expenses approved by Lender
      (which approval will not be unreasonably withheld) related to the Loan and
      (iii)
      establish the Reserves required hereunder. The remaining proceeds of the Loan,
      if any, shall be disbursed to Borrowers; provided , however ,
      that
      any and all such remaining proceeds of the Loan will be used for commercial
      purposes only and will not be used for personal, family, agricultural or
      household use.




**Section
      2.2**  **Interest** **.**




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




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




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




21






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




(E)  **Late
      Charges** .
      If any
      payment of principal, interest or other sums shall not be made to Lender on
      the
      date the same is due hereunder or under any of the other Loan Documents, then
      Borrowers shall pay to Lender, in addition to all sums otherwise due and
      payable, a late fee in an amount equal to five percent (5.0%) of such principal,
      interest or other sums due hereunder or under any other Loan Document (or,
      in
      the case of a partial payment, the unpaid portion thereof), such late charge
      to
      be immediately due and payable without demand by Lender.




(F)  **Additional
      Administrative Fee** .
      In
      addition to the Default Rate provided for above, upon failure of any Borrower
      Party to deliver any of the financial statements, reports or other information
      required to be delivered to Lender as provided in Section 5.1 hereof upon their
      due dates, if any such failure shall continue for five (5) Business Days
      following notice thereof from Lender, Borrowers shall pay to Lender together
      with the scheduled monthly payments of principal and interest on the Loan,
      for
      each month or portion thereof that any such financial statement, report or
      other
      information remains undelivered, an administrative fee in the amount of $7,500.
      Borrowers agree that such administrative fee (i) is a fair and reasonable fee
      necessary to compensate Lender for its additional administrative costs under
      the
      circumstances, (ii) is not a penalty and (iii) is necessary to compensate Lender
      for increased costs and obligations to third parties in connection with the
      planned Securitization of the Loan.






22





**Section
      2.3**  **Defeasance** **.**




(A)  **Total
      Defeasance** .
      Borrowers shall have the right at any time after the Release Date and prior
      to
      the First Open Payment Date to obtain a release of the Lien of the Mortgage
      encumbering all (but not less than all) of the Properties (a “ Total
      Defeasance ”)
      upon
      satisfaction of the following conditions:




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




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




(iii)  Borrowers
      shall irrevocably deposit the Total Defeasance Collateral into the Defeasance
      Collateral Account and otherwise comply with the provisions of Sections 2.3(C)
      and (D) hereof;




(iv)  Borrowers
      shall execute and deliver to Lender a Security Agreement in respect of the
      Defeasance Collateral Account and the Total Defeasance Collateral;




(v)  Borrowers
      shall deliver to Lender an opinion of counsel for Borrowers that is customary
      in
      commercial lending transactions and subject only to normal qualifications,
      assumptions and exceptions opining, among other things, that (v) Lender has
      a
      legal and valid perfected first priority security interest in the Defeasance
      Collateral Account and the Total Defeasance Collateral, (w) if a Securitization
      has occurred, the REMIC Trust formed pursuant to such Securitization will not
      fail to maintain its status as a “real estate mortgage investment conduit”
within the meaning of Section 860D of the Code as a result of the defeasance
      pursuant to this Section 2.3(A), (x) a defeasance pursuant to this Section
      2.3(A) will not result in a deemed exchange for purposes of the Code and will
      not adversely affect the status of the Note as indebtedness for federal income
      tax purposes, (y) delivery of the Total Defeasance Collateral and the grant
      of a
      security interest therein to Lender shall not constitute an avoidable preference
      under Section 547 of the Bankruptcy Code or applicable state law and (z) if
      and
      to the extent required by the Rating Agencies, a non-consolidation opinion
      with
      respect to the Successor Borrower;




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




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


23




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




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




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




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




(B)  **Partial
      Defeasance** .
      Borrower shall, as a condition to and only in connection with a Partial Release
      of an Individual Property after the Release Date and prior to the First Open
      Payment Date as provided in Section 2.10 below, have the right to defease a
      portion of the Loan (a “ Partial
      Defeasance ”)
      equal
      to the Partial Defeasance Amount for such Individual Property (determined as
      provided in Section 2.10 with respect to such Partial Release) upon satisfaction
      of the following conditions:




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




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




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







24




(iv)  Lender
      shall prepare (at Borrower’s expense) all necessary documents to modify this
      Loan Agreement and to amend and restate the Note and issue two substitute notes,
      one note having a principal balance equal to the Partial Defeasance Amount
      (the
“ Defeased
      Note ”),
      and
      the other note having a principal balance equal to the excess of (A) the
      then-outstanding principal amount of the Loan, over (B) the amount of the
      Defeased Note (the “ Undefeased
      Note ”).
      The
      Defeased Note and Undefeased Note shall have identical terms as the Note except
      for the principal balance and monthly payments. The Defeased Note and the
      Undefeased Note shall be cross defaulted and cross collateralized unless the
      Rating Agencies shall require otherwise or unless a Successor Borrower that
      is
      not an Affiliate of Borrower is established pursuant to Section 2.3(D). A
      Defeased Note may not be the subject of any further defeasance.




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




(vi)  Borrower
      shall deliver to Lender an opinion of counsel for Borrower, if required by
      Lender, that is customary in commercial lending transactions and subject only
      to
      normal qualifications, assumptions and exceptions opining, among other things,
      that (v) Lender has a legal and valid perfected first priority security interest
      in the Defeasance Collateral Account and the Partial Defeasance Collateral,
      (w)
      if a Securitization has occurred, the REMIC Trust formed pursuant to such
      Securitization will not fail to maintain its status as a “real estate mortgage
      investment conduit” within the meaning of Section 860D of the Code as a result
      of the defeasance pursuant to this Section 2.3(B), (x) a defeasance pursuant
      to
      this Section 2.3(B) will not result in a deemed exchange for purposes of the
      Code and will not adversely affect the status of the Defeased Note and the
      Undefeased Note as indebtedness for federal income tax purposes, (y) delivery
      of
      the Partial Defeasance Collateral and the grant of a security interest therein
      to Lender shall not constitute an avoidable preference under Section 547 of
      the
      Bankruptcy Code or applicable state law and (z) if and to the extent required
      by
      the Rating Agencies, a non-consolidation opinion with respect to the Successor
      Borrower;




(vii)  Borrower
      shall deliver to Lender a confirmation in writing from the applicable Rating
      Agencies to the effect that the Partial Defeasance and the substitution of
      the
      Partial Defeasance Collateral will not result in a downgrading, withdrawal
      or
      qualification of the respective ratings in effect immediately prior to such
      defeasance for the Certificates issued in connection with the Securitization
      which are then outstanding;




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




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




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






25




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




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




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




**Section
      2.4**  **Payments** **.**




(A)  **Payments
      of Interest and Principal** .
      Borrowers shall make a payment to Lender of interest only on the Closing Date
      for the period from the Closing Date through July 10, 2006. Commencing on August
      11, 2006 (the “ First
      Payment Date ”)
      and on
      the eleventh (11 th )
      day of
      each calendar month thereafter (the First Payment Date and the eleventh
      (11 th )
      day of
      each calendar month thereafter is herein referred to as a “ Payment
      Date ”)
      to and
      including the Payment Date in July, 2011, Borrowers shall make monthly payments
      of interest accrued on the Principal Balance of the Loan, and on the Payment
      Date in August, 2011 and on each Payment Date thereafter, Borrowers shall make
      equal monthly payments of principal and interest in the amount of the Monthly
      Debt Service Payment Amount (such monthly payments of interest and, on and
      after
      the Payment Date in August, 2011, principal and interest are each referred
      to
      herein as a “ Monthly
      Debt Service Payment ”).
      Prior
      to the occurrence of an Event of Default, all Monthly Debt Service Payments
      shall be applied first to accrued and unpaid interest on the Loan and the
      balance to the payment of principal on the Loan. During the continuance of
      an
      Event of Default, Borrowers irrevocably waive the right to direct the
      application of any and all payments at any time hereafter received by Lender
      from or on behalf of Borrowers, and Borrowers irrevocably agree that Lender
      shall have the continuing exclusive right to apply any and all such payments
      against the then due and owing obligations of Borrowers in such order of
      priority as Lender may deem advisable.






26




(B)  **Date
      and Time of Payment** .
      Borrowers shall receive credit for payments on the Loan which are transferred
      to
      the account of Lender as provided below (i) on the day that such funds are
      received by Lender if such receipt occurs by 1:00 p.m. (New York time) on such
      day, or (ii) on the next succeeding Business Day after such funds are received
      by Lender if such receipt occurs after 1:00 p.m. (New York time). Whenever
      any
      payment to be made hereunder shall be stated to be due on a day that is not
      a
      Business Day, the payment may be made on the next succeeding Business
      Day.




(C)  **Manner
      of Payment** .
      Borrowers promise to pay all of the Obligations relating to the Loan as such
      amounts become due or are declared due pursuant to the terms of this Loan
      Agreement. All payments by Borrowers on the Loan shall be made without
      deduction, defense, set off or counterclaim and in immediately available funds
      delivered to Lender by wire transfer to such accounts at such banks as Lender
      may from time to time designate.




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




**Section
      2.6**  **Prepayment** **.**




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






27




(B)  **Prepayment
      Consideration Due** .
      If the
      Maturity Date shall be accelerated to a date prior to the First Open Payment
      Date, or if any prepayment of all or any portion of the Principal Balance
      hereunder occurs, whether in connection with Lender’s acceleration of the unpaid
      Principal Balance of the Loan or in any other circumstances whatsoever (except
      that Borrowers shall not be required to pay any Prepayment Consideration with
      respect to an application of insurance proceeds or condemnation awards by Lender
      pursuant to the Loan Agreement or Mortgages in the absence of an Event of
      Default), or if the Mortgages are satisfied or released by foreclosure (whether
      by power of sale or judicial proceeding), deed in lieu of foreclosure or by
      any
      other means, then the Prepayment Consideration shall become immediately due
      and
      owing and Borrowers shall forthwith pay the Prepayment Consideration to Lender.
      The foregoing shall not create any right of prepayment. Borrowers shall have
      no
      right whatsoever to prepay all or any portion of the principal balance of the
      Note, except as set forth in Section 2.6(A).




(C)  **Definitions** .
      The
“ Prepayment
      Consideration ”
shall
      be the amount equal to the sum of (i) an amount equal to the interest which
      would have accrued on the Principal Balance of the Note for the period from
      and
      including (A) the date (the “ Event
      Date ”)
      which
      is the earlier of (x) the date of prepayment of the Loan or (y) such earlier
      date upon which the entire remaining Principal Balance of the Loan shall become
      due and payable, whether as a result of acceleration of the maturity of the
      Loan
      or otherwise, to but excluding (B) the next Payment Date following the Event
      Date, plus (ii) the greater of (x) two percent of the Loan balance on the Event
      Date, or (y) an amount equal to the “ Present
      Value Yield Differential ”,
      calculated as the excess, if any, of (A) the amount of the monthly interest
      which would otherwise be payable on the principal balance of the Loan from
      (1)
      the date (the “ Yield
      Determination Date ”)
      which
      is the Payment Date following the Event Date through and including (2) the
      Scheduled Maturity Date, over (B) the amount of the monthly interest Lender
      would earn if an amount equal to the Principal Balance of the Loan as of the
      Event Date were invested for the period from the Yield Determination Date
      through the Scheduled Maturity Date at the Yield Rate (as hereinafter defined),
      such difference (the “ Yield
      Differential ”)
      to be
      discounted to present value at the Yield Rate using the following
      formula:





Yield
                Differential x [1-(1+r)-n]Present
                Value Yield Differential =
            r




where:r
                =
            Yield
                Rate, andn
                =
            the
                remaining Weighted Average Life to Maturity (as defined below) from
                the
                Yield Determination Date.






The
      “ Yield
      Rate ”
shall
      be the annualized yield on securities issued by the United States Treasury
      having a maturity corresponding to the then remaining Weighted Average Life
      to
      Maturity (as defined below) of the Loan as determined by Lender, as quoted
      in Federal
      Reserve Statistical Release [H. 15(519)] under
      the heading “U.S. Government Securities - Treasury Constant Maturities” for the
      Yield Rate Determination Date (as defined below), converted to a monthly
      equivalent yield. If yields for such securities of such maturity are not shown
      in such publication, then the Yield Rate shall be determined by Lender by linear
      interpolation between the yields of securities of the next longer and next
      shorter maturities. If said Federal Reserve Statistical Release or any other
      information necessary for determination of the Yield Rate in accordance with
      the
      foregoing is no longer published or is otherwise unavailable, then the Yield
      Rate shall be determined by Lender based on comparable data. The term
“ Yield
      Rate Determination Date ”
shall
      mean the date which is five (5) Business Days prior to the Yield Determination
      Date. The term “ Weighted
      Average Life to Maturity ”
shall
      mean, at any date, the number of years (including fractional years, expressed
      as
      a decimal (e.g., three years and three moths = 3.25 years)) obtained by dividing
      (x) the outstanding Principal Balance of the Loan on the Event Date into (y)
      the
      sum total of the Weighted Amortization Products (as defined below) for each
      Scheduled Principal Payment (as defined below). The “ Scheduled
      Principal Payment(s) ”
shall
      mean each then remaining scheduled principal payment (assuming no prepayment
      or
      Loan acceleration), including payment of the outstanding principal balance
      of
      the Loan on the Scheduled Maturity Date, in respect of the Loan. The
“ Weighted
      Amortization Product ”
for
      each Scheduled Principal Payment shall mean the product of (A) the amount of
      such Scheduled Principal Payment multiplied by (B) the number of years
      (including fractional years, expressed as a decimal) which will elapse between
      the Yield Determination Date and the date on which such Scheduled Principal
      Payment is to be made under this Loan Agreement.




28




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




**Section
      2.8**  **Taxes** **.** Any and
      all payments or reimbursements made hereunder or under the Note shall be made
      free and clear of and without deduction for any and all taxes, levies, imposts,
      deductions, charges or withholdings, and all liabilities with respect thereto
      arising out of or in connection with the transactions contemplated by the Loan
      Documents (all such taxes, levies, imposts, deductions, charges or withholdings
      and all liabilities with respect thereto excluding taxes imposed on net income
      in accordance with the following sentence are referred to herein as
“ Tax
      Liabilities ”).
      Notwithstanding the foregoing, Borrowers shall not be liable for taxes imposed
      on the net income of Lender by the jurisdiction under the laws of which Lender
      is organized or doing business or any political subdivision thereof and taxes
      imposed on its net income by the jurisdiction of Lender’s applicable lending
      office or any political subdivision thereof or federal income taxes imposed
      on
      Lender’s net income. If Borrowers shall be required by law to deduct any such
      Tax Liabilities (or amounts in estimation or reimbursement for the same) from
      or
      in respect of any sum payable hereunder to Lender, then the sum payable
      hereunder shall be increased as may be necessary so that, after making all
      required deductions, Lender receives an amount equal to the sum it would have
      received had no such deductions been made.




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




29





**Section
      2.10**  **Partial
      Releases** **.** After
      the Release Date and prior to the First Open Payment Date, and provided no
      Event
      of Default exists, Borrower may from time to time obtain a partial release
      (a
“ Partial
      Release ”)
      from
      the lien of the Mortgage and the Loan Documents of one or more Individual
      Properties (collectively, the “ Partial
      Release Parcel ”),
      provided that all of the following conditions precedent have been satisfied
      with
      respect to any such Partial Release of any such Partial Release
      Parcel:




(A)   No
      Partial Release will be permitted until after the Release Date or if any Event
      of Default has occurred and is continuing. No Partial Release will be permitted
      on or after the First Open Payment Date.




(B)   No
      Partial Release will be permitted unless Borrower establishes to Lender’s
      reasonable satisfaction that the Debt Service Coverage Ratio, determined using
      Lender’s underwriting standards, for the remainder of the Properties (i.e.,
      exclusive of any income from the Partial Release Parcel) is and shall continue
      to be equal to or greater than the greater of (i) the Debt Service Coverage
      Ratio for the Properties calculated immediately prior to the Partial Release
      (i.e., inclusive of the income from the Partial Release Parcel, and assuming
      no
      partial defeasance of the Loan resulting from the Partial Release), and (ii)
      1.15:1.00.




(C)   No
      Partial Release of the Partial Release Parcel will be permitted unless Borrower
      establishes to Lender’s reasonable satisfaction that the value of the remainder
      of the Properties (as determined by a then-current appraisal prepared by an
      appraiser selected by Lender, the fees and expenses of which shall be paid
      by
      Borrower, which appraiser and appraisal shall conform in all respects to the
      criteria for appraisals set forth in the Financial Institutions Reform and
      Recovery Act of 1989 and the regulations promulgated thereunder (as if Lender
      were an institution under the jurisdiction thereof) and the Uniform Standards
      of
      Professional Appraisal Practices of the Appraisal Foundation; an appraisal
      of
      the Partial Release Parcel confirming with the foregoing standard shall also
      be
      prepared) is sufficient to satisfy a loan-to-value ratio (based on the
      then-outstanding principal balance of the Loan, less the sum of the Allocated
      Loan Amounts for the Individual Property(ies) included in the Partial Release
      Parcel) not in excess of the lesser of (i) the loan-to-value ratio for the
      Properties calculated immediately prior to the Partial Release (i.e., based
      on
      the outstanding principal balance of the Loan inclusive of the Allocated Loan
      Amounts for the Individual Property(ies) included in the Partial Release
      Parcel), and (ii) 80%.




(D)   The
      Partial Release shall be allowed only in connection with a bona fide all-cash
      sale of the Partial Release Parcel to an unaffiliated third party on arms-length
      terms and conditions, and upon closing of such sale (and thereafter) shall
      not
      be owned, purchased or acquired by Borrower or any Affiliate of
      Borrower.




(E)   Borrower
      will on the date of the Partial Release (the “ Partial
      Release Date ”)
      complete a Partial Defeasance, pursuant to Section
      2.3 hereof,
      of a portion of the Loan (the “ Partial
      Defeasance Amount ”
for
      such Partial Release Parcel) equal to 125% of the Allocated Loan Amount for
      the
      Individual Property included in the Partial Release.




30




(F)   Borrower
      will execute (and Guarantor will consent in writing thereto and reaffirm their
      obligations under the Loan Documents to which they are a party notwithstanding
      the Partial Release) and deliver all such amendments to the Loan Documents
      and
      other instruments or documents as may be required by Lender (using commercial
      standards customarily applied with respect to mortgage loans such as the Loan)
      in order to continue to fully protect Lender’s lien and security interest in the
      remainder of the Properties.




(G)   Borrower,
      at its sole cost and expense, shall obtain endorsements to Lender’s loan policy
      of title insurance satisfactory in form and content to Lender, which
      endorsements will (i) affirmatively evidence the continued validity of Lender’s
      first lien position created by the Loan Documents through the date of
      recordation of the partial release of the Partial Release Parcel, and (ii)
      insure that the lien created by the Loan Documents remains a valid first lien
      on
      the remainder of the Properties.




(H)   Borrower
      and Guarantor shall deliver to Lender affidavits representing that no material
      adverse change concerning the Loan or the Properties has occurred.




(I)   Borrower
      shall have provided Lender with a Rating Confirmation with respect to the
      Partial Release.




(J)    Borrower
      shall have paid all reasonable costs and expenses incurred by Lender in
      connection with such request for a Partial Release, including, but not limited
      to, the preparation, negotiation and review of any and all materials required
      to
      be provided in connection therewith, Lender’s reasonable attorneys’ fees and
      costs, survey charges, title insurance fees, appraisal fees, inspection fees,
      environmental consultant’s fees and any fees or charges of the applicable Rating
      Agencies. Borrower shall pay all such costs and expenses incurred by Lender
      in
      connection with each request for a Partial Release, regardless of whether such
      a
      Partial Release ultimately occurs.




For
      the
      avoidance of doubt, any provision in this Section 2.10 which provides for the
      exercise of discretion by Lender (e.g., by requiring delivery of documents
      that
      Lender may request or require or by requiring that documents or other items
      be
      acceptable to Lender, or acceptable to Lender in its reasonable discretion,
      or
      in accordance with Lender’s requirements or through use of words with similar
      import) shall be construed as permitting Lender to reject a document or other
      item only if such document or item fails to satisfy generally-applicable
      underwriting standards for securitized commercial mortgage loans employed at
      the
      time such partial release occurs; and similarly, Lender’s requirement for
      delivery of any document or other item or the taking of any action shall be
      construed as only requiring the delivery of such documents or items or the
      taking of such action as would be required under generally applicable
      underwriting standards for securitized commercial mortgage loans employed at
      the
      time such Partial Release occurs.




31




**ARTICLE
      III**


**CONDITIONS
      TO LOAN**




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




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




(B)    **Origination
      Fees and Deposits** .
      At the
      Closing and retained from the proceeds of the Loan, Lender shall have received
      its origination fee, if any, as set forth on the closing statement for the
      Loan,
      and the deposits required herein, including the initial deposits into the
      Reserves and Accounts, shall have been made (and at the option of Borrowers,
      the
      same may be made from the proceeds of the Loan).




(C)   **Performance
      of Agreements, Truth of Representations and Warranties** .
      Each
      Borrower Party and all other Persons executing any agreement on behalf of any
      Borrower Party shall have performed in all material respects all agreements
      which this Loan Agreement provides shall be performed on or before the Closing
      Date. The representations and warranties contained herein and in the other
      Loan
      Documents shall be true, correct and complete in all material respects on and
      as
      of the Closing Date.




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




(E)   **Opinions
      of Counsel** .
      On or
      before the Closing Date, Lender shall have received from legal counsel for
      each
      Borrower Party reasonably satisfactory to Lender, such counsel’s written opinion
      as to such matters as Lender shall reasonably request, including opinions to
      the
      effect that (i) each of the Borrower Parties is duly formed, validly existing,
      and in good standing in its state of organization and, in the case of Borrowers,
      in the state where the Properties are located, (ii) this Loan Agreement and
      the
      Loan Documents have been duly authorized, executed and delivered and are
      enforceable in accordance with their terms subject to customary qualifications
      for bankruptcy and general equitable principles; and (iii) no Borrower would
      be
      consolidated in bankruptcies of its constituent owners, Manager or certain
      other
      Affiliates of Borrowers specified by Lender. Also on or before the Closing
      Date,
      Lender shall have received an opinion of Borrowers’ local counsel in the state
      where the Properties are located as to the enforceability of the Loan Documents
      and such other matters as Lender may reasonably request.




32




(F)   **Title
      Policy** .
      On or
      before the Closing Date, Lender shall have received and approved *pro
      forma* Title
      Policies for each of the Properties, and as of the Closing, the Title Company
      shall be irrevocably committed and prepared immediately to issue the Title
      Policies. The Title Policies shall be in form and substance satisfactory to
      Lender. Without limitation, Lender may reasonably require that the Title
      Policies be issued on the 1970 ALTA form by the Title Company, together with
      such reinsurance and direct access agreements as Lender may require, insuring
      that each of the Mortgages is a valid first and prior enforceable lien on the
      applicable Individual Property (including any easements appurtenant thereto)
      subject only to such exceptions to coverage as are acceptable to Lender. The
      Title Policy shall contain such endorsements as Lender may require (to the
      extent available in the state where the Properties are located) in form
      reasonably acceptable to Lender, including deletion of the creditors’ rights
      exception and affirmative endorsement coverage for creditors’ rights
      risks.




(G)   **Survey** .
      Lender
      shall have received a survey of each Individual Property, certified to Lender
      and its successors, assigns and designees and to the Title Company by a surveyor
      reasonably satisfactory to Lender (each, a “ Survey ”).
      Each
      Survey shall contain the minimum detail for land surveys as most recently
      adopted by ALTA/ASCM, shall comply with Lender’s survey requirements and shall
      contain Lender’s standard form certification. No Survey shall show any state of
      facts or conditions reasonably objectionable to Lender.




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




(I)   **Certificates
      of Formation and Good Standing** .
      On or
      before the Closing Date, Lender shall have received copies of the organizational
      documents and filings of each Borrower Party, together with good standing
      certificates (or similar documentation) (including verification of tax status
      if
      available) from the state of its formation, from the state in which its
      principal place of business is located, and from all states in which the laws
      thereof require such Person to be qualified and/or licensed to do business
      (including the state in which the Properties are located for Borrowers). Each
      such certificate shall be dated not more than thirty (30) days prior to the
      Closing Date, as applicable, and certified by the applicable Secretary of State
      or other authorized governmental entity. In addition, on or before the Closing
      Date the secretary or corresponding officer of each Borrower Party, or the
      secretary or corresponding officer of the partner, trustee, or other Person
      as
      required by such Borrower Party’s organizational documents (as the case may be,
      the “ Borrower
      Party Secretary ”)
      shall
      have delivered to Lender a certificate stating that the copies of the
      organizational documents as delivered to Lender are true and complete and are
      in
      full force and effect, and that the same have not been amended except by such
      amendments as have been so delivered to Lender.




33




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




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




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




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




(N)   **Operating
      and Capital Expenditure Budgets** .
      On or
      before the Closing Date, Lender shall have received and reasonably approved
      the
      Operating Budget and Capital Expenditure Budget for each of the Properties
      for
      the remainder of the current calendar year, which Operating Budget and Capital
      Expenditure Budget are attached hereto as Schedule 3.1(N).




(O)   **Rent
      Rolls, Leases, Estoppels** .
      Prior
      to the Closing, Lender shall have received from the Borrowers a certified copy
      of the current rent roll (the “ Rent
      Roll ”)
      for
      each Individual Property in form and substance satisfactory to Lender. The
      Rent
      Roll shall constitute a true, correct, and complete list of each and every
      Lease
      for each Individual Property, together with all extensions and amendments
      thereof, and shall accurately and completely disclose all annual and monthly
      rents payable by all tenants, including expiration dates of the Leases, and
      the
      amount of any Security Deposit being held by each Borrower under each Lease, if
      any.




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




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




34




(R)   **Environmental
      Assessment** .
      Lender
      shall have received and approved an Environmental Report relating to each of
      the
      Individual Properties, together with a letter from the preparer thereof
      entitling Lender and its successors and assigns to rely upon said Environmental
      Reports (if any of the same are not addressed to Lender).




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




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




(U)   **Searches** .
      Prior
      to the Closing Date Lender shall have received certified copies of Uniform
      Commercial Code, judgment, tax lien, bankruptcy and litigation search reports
      with respect to all Borrower Parties satisfactory to Lender, all dated not
      more
      than thirty (30) days prior to the Closing Date.




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




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


35




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




**ARTICLE
      IV**


**REPRESENTATIONS
      AND WARRANTIES**




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




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




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




(B)  **Qualification** .
      Each
      Borrower is duly qualified and in good standing in the state of its formation.
      Each of the Borrowers and, if required by applicable law, the Sole Member,
      is
      also duly qualified and in good standing in the state where the Properties
      are
      located. In addition, each Borrower Party is duly qualified and in good standing
      in each state where necessary to carry on its present business and
      operations.




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




**Section
      4.2**  **Authorization
      of Borrowing, etc** **.**




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




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




36




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




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




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




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




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




37






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




**Section
      4.7**  **Leases;
      Agreements** **.**




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




(B)  **Rent
      Roll; Disclosure** .
      A true
      and correct copy of the Rent Roll has been provided to Lender and except for
      the
      Leases described in the Rent Roll none of the Properties is subject to any
      Leases. Except as specified in the Rent Roll: (i) the Leases are in full force
      and effect; (ii) neither any Borrower nor any Affiliate of any Borrower, has
      given any notice of default to any tenant under any Lease which remains uncured;
      (iii) no tenant has asserted in writing any rights of set off, claims or
      defenses under any Lease and no tenant has any such rights of set off, claim
      or
      defense to the enforcement of any Lease except as expressly set forth in the
      Leases; (iv) no tenant is in arrears in the payment of rent, additional rent
      or
      any other material charges due under any Lease, or, to the knowledge of any
      Borrower, is in default in the performance of any other obligations under the
      applicable Lease; (v) Borrowers have completed all work or alterations required
      to be completed by the landlord or lessor under each Lease as of the date
      hereof, and all of the other obligations of landlord or lessor under the Leases
      required to be completed as of the date hereof, have been performed; (vi) there
      are no rent concessions (whether in form of cash contributions, work agreements,
      assumption of an existing tenant’s other obligations, or otherwise) or
      extensions of time whatsoever not reflected in the Rent Roll; and (vii) no
      tenant has an option to terminate its respective Lease. The Security Deposits
      held by Borrowers with respect to each Lease are as set forth on the Rent
      Roll.




38




(C)  **Lease
      Issues** .
      There
      are no legal proceedings commenced (or, to the knowledge of any Borrower,
      threatened) against any Borrower or any Affiliate thereof by any tenant or
      former tenant. No rental in excess of one month’s rent has been prepaid under
      any of the Leases (not including Security Deposits). Each of the Leases is
      valid
      and binding on the parties thereto in accordance with its terms.




**Section
      4.8**  **Condition
      of Properties** **.** Except
      as set forth in the Property Condition Reports, all Improvements at the
      Properties including, without limitation, the roof and all structural
      components, plumbing systems, HVAC systems, fire protection systems, electrical
      systems, equipment, elevators, exterior doors, parking facilities, sidewalks
      and
      landscaping are in good condition and repair. To each Borrower’s knowledge,
      there is no latent or patent structural or other material defect or deficiency
      in any of the Properties. City water supply, storm and sanitary sewers, and
      electrical, gas and telephone facilities are available to each Individual
      Property within the boundary lines of such Individual Property, are fully
      connected to the Improvements thereat and are fully operational, are sufficient
      to meet the reasonable needs of the applicable Individual Property as now used
      or presently contemplated to be used, and no other utility facilities are
      necessary to meet the reasonable needs of such Individual Property as now used
      or presently contemplated. The design and as-built conditions of each Individual
      Property are such that surface and storm water does not accumulate on such
      Individual Property (except in facilities specifically designed for the same)
      and does not drain from such Individual Property across land of adjacent
      property owners except pursuant to easements benefiting the applicable
      Individual Property which are specified in and insured under the Title Policy
      for such Individual Property. No part of any of the Properties is within a
      flood
      plain and, with the exception of Permitted Encumbrances which are insured by
      endorsement to a Title Policy, none of the Improvements at any Individual
      Property create encroachment over, across or upon such Individual Property’s
      boundary lines, rights of way or easements, and no building or other
      improvements on adjoining land create such an encroachment. Access to the each
      Individual Property for the current and contemplated uses thereof is provided
      by
      means of dedicated, all weather public roads and streets which are physically
      and legally open for use by the public. Any liquid or solid waste disposal,
      septic or sewer system located at the Properties is in good and safe condition
      and repair and in compliance with all applicable law. Each of the Properties
      is
      in compliance in all material respects with all laws, governmental regulations
      and requirements including, but not limited to, matters of sanitation, health,
      fire and other hazards.




39




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




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




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




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




**Section
      4.13**  **Governmental
      Regulation** **.** No
      Borrower Party is subject to regulation under the Public Utility Holding Company
      Act of 1935, the Federal Power Act or the Investment Company Act of 1940 or
      to
      any federal or state statute or regulation limiting its ability to incur
      indebtedness for borrowed money.




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




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




40




**Section
      4.16**  **Environmental
      Compliance** **.**




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




(B)  **Storage
      of Hazardous Materials** .
      Except
      as disclosed in the Environmental Report delivered to Lender prior to Closing,
      and except for materials customarily used or stored in connection with operation
      and management of properties similar to the applicable Individual Property,
      which materials at such Individual Property exist only in reasonable quantities
      and are stored, contained, transported, used, released, and disposed of
      reasonably and without violation of any Environmental Laws, to each Borrower’s
      knowledge after due inquiry, no Hazardous Materials are or were stored or
      otherwise located, and no underground storage tanks or surface impoundments
      are
      or were located, on any of the Properties, or to the knowledge of any Borrower
      after due inquiry, on adjacent parcels of real property, and no part of the
      property, or to any Borrower’s knowledge no part of such adjacent parcels of
      real property, including the groundwater located therein or thereunder, is
      presently contaminated by Hazardous Materials. Except as disclosed in the
      Environmental Reports, to the knowledge of each Borrower, none of the Properties
      is listed by any Governmental Authority as containing any Hazardous Materials.
      Without limiting the generality of the foregoing, there is not present at,
      on,
      in or under any of the Properties, PCB-containing equipment, asbestos or
      asbestos containing materials, underground storage tanks or surface impoundments
      for Hazardous Substances, lead in drinking water (except in concentrations
      that
      comply with all Environmental Laws), or lead based paint.




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




**Section
      4.17**  **Solvency** **.** None of
      the Borrowers has entered into the transaction or any Loan Document with the
      actual intent to hinder, delay, or defraud any creditor. Each Borrower has
      received reasonably equivalent value in exchange for its obligations under
      the
      Loan Documents. Giving effect to the Loan, the fair saleable value of Borrowers’
assets exceeds and will, immediately following the making of the Loan, exceed
      Borrowers’ total liabilities, including, without limitation, subordinated,
      unliquidated, disputed and Contingent Obligations. The fair saleable value
      of
      Borrowers’ assets is and will, immediately following the making of the Loan, be
      greater than Borrowers’ probable liabilities, including the maximum amount of
      its Contingent Obligations on its debts as such debts become absolute and
      matured. The assets of Borrowers do not and, immediately following the making
      of
      the Loan will not, constitute unreasonably small capital to carry out Borrowers’
business as conducted or as proposed to be conducted. No Borrower intends to,
      and no Borrower believes that it will, incur Indebtedness and liabilities
      (including Contingent Obligations and other commitments) beyond its ability
      to
      pay such Indebtedness and liabilities as they mature (taking into account the
      timing and amounts of cash to be received by such Borrower and the amounts
      to be
      payable on or in respect of obligations of such Borrower).




41




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




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




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




**Section
      4.21**  **Separate
      Tax Lots** **.** Each of
      the Individual Properties is comprised of one (1) or more parcels which
      constitute separate tax lots. No part of any Individual Property is included
      or
      assessed under or as part of another tax lot or parcel, and no part of any
      other
      property is included or assessed under or as part of the tax lots or parcels
      comprising any Individual Property.




**Section
      4.22**  **Investments** **.** None of
      the Borrowers has any (i) direct or indirect interest in, including stock,
      partnership interest or other securities of, any other Person, or (ii) direct
      or
      indirect loan, advance or capital contribution made to any other Person,
      including all indebtedness and accounts receivable from that other
      Person.




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




42




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




**Section
      4.25**  **No
      Plan Assets** **.** None of
      the Borrowers is and no Borrower will be (i) an employee benefit plan as defined
      in Section 3(3) of ERISA which is subject to ERISA, (ii) a plan as defined
      in
      Section 4975(e)(1) of the IRC which is subject to Section 4975 of the IRC,
      or
      (iii) an entity whose underlying assets constitute “plan assets” of any such
      employee benefit plan or plan for purposes of Title I of ERISA or Section 4975
      of the IRC. None of the Borrowers is and no Borrower will be a “governmental
      plan” within the meaning of Section 3(32) of ERISA and no transactions by or
      with any of the Borrowers are or will be subject to state statutes applicable
      to
      such Borrower regulating investments of and fiduciary obligations with
      obligations with respect to governmental plans. Each of the Borrowers and each
      of the other ERISA Affiliates have made, and shall continue to make, all
      required contributions to all employee benefit plans, if any, that each Borrower
      and each of the other ERISA Affiliates maintain or contribute to, within the
      time periods required by the applicable provisions of ERISA and any other
      federal or state law, and each Borrower and each of the other ERISA Affiliates
      have no knowledge of any material liability which has been incurred by any
      thereof which remains unsatisfied for any taxes or penalties with respect to
      any
      employee benefit plan or any multi-employer plan. Each such employee benefit
      plan (other than any multi-employer plan) has been administered in compliance
      with its terms and the applicable provisions of ERISA and any other federal
      or
      state law.




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




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




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




**Section
      4.29**  **Compliance** **.** Borrowers are in compliance with all applicable Legal Requirements. No Borrower
      is in default or violation of any order, writ, injunction, decree or demand
      of
      any Governmental Authority.




**Section
      4.30**  **Intellectual
      Property** **.** All
      material Intellectual Property that each of the Borrowers owns or has pending,
      or under which it is licensed, are in good standing and uncontested. There
      is no
      right under any Intellectual Property necessary to the business of any of the
      Borrowers as presently conducted or as any of the Borrowers contemplates
      conducting its business. None of the Borrowers has infringed, nor is infringing,
      and none of the Borrowers has received notice of infringement with respect
      to
      asserted Intellectual Property of others. There is no infringement by others
      of
      material Intellectual Property of any of the Borrowers.




43




**Section
      4.31**  **Pre-Closing
      Date Activities** **.** No
      Borrower has conducted any business or other activity on or prior to the Closing
      Date, other than in connection with the acquisition and operation of its
      Applicable Individual Property.




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




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




**Section
      4.34**  **No
      Prohibited Persons** **.** None of
      the Borrowers, nor Guarantor, nor any of their respective offices, directors,
      partners, members, Affiliates or, to the knowledge of any Borrower, shareholders
      in an entity or person: (i) that is listed in the Annex to, or is otherwise
      subject to the provisions of Executive Order 13224 issued on September 24,
      2001
      (“ EO13224 ”);
      (ii)
      whose name appears on the United States Treasury Department’s Office of Foreign
      Assets Control (“ OFAC ”)
      most
      current list of “Specifically Designated National and Blocked Persons” (which
      list may be published from time to time in various mediums including, but not
      limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf); (iii) who
      commits, threatens to commit or supports “terrorism”, as that term is defined in
      EO13224; or (iv) who is otherwise affiliated with any entity or person listed
      above (any and all parties or persons described in clauses (i) through (iv)
      above are herein referred to as a “ Prohibited
      Person ”).




**ARTICLE
      V**


**COVENANTS
      OF BORROWER PARTIES**




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


44




**Section
      5.1**  **Financial
      Statements and Other Reports** **.**




(A)  **Financial
      Statements** .




(i)  **Annual
      Reporting** .
      Within
      one hundred twenty (120) days after the end of each calendar year, Borrowers
      shall provide true and complete copies of Borrowers’ and Guarantor’s Financial
      Statements for such year to Lender. All such annual Financial Statements shall
      be certified by a certified public accountant reasonably acceptable to Lender
      which is employed by Borrowers or Guarantor (or an Affiliate of Borrowers or
      Guarantor) and is responsible for reviewing and auditing the Financial
      Statements of Borrowers and Guarantor, and shall be accompanied by a certificate
      of such audit executed by such accounting firm or certified public accountant
      in
      customary form, subject only to such exceptions as shall be reasonably approved
      in writing by Lender; provided ,
      that
      annual audit of the Financial Statements for Borrowers shall not be required,
      and in lieu thereof internally prepared and certified (by Borrowers) annual
      Financial Statements of Borrowers shall suffice to satisfy the foregoing
      requirements for annual Borrower Financial Statements, so long as Guarantor
      provides, and Borrowers hereby agree to cause Guarantor to provide to Lender,
      (1) within 120 days after the end of each calendar year, annual, audited
      consolidated Financial Statements reflecting the consolidated assets and
      liabilities of Borrower and Guarantor (among other Persons included in
      Guarantor’s consolidated financial statements), and (2) copies of all reports
      and filings with the Securities and Exchange Commissions that Guarantor delivers
      and files, in each case within 30 days after such filings are made with the
      Securities and Exchange Commission. The annual Financial Statements for
      Borrowers and Guarantor shall each be accompanied by a certification executed
      by
      the entity’s chief executive officer or chief financial officer or the
      individual Guarantor, in the case of an individual Guarantor, satisfying the
      criteria set forth below. The annual Financial Statements of Borrowers shall
      also be accompanied by a Compliance Certificate (as defined below).




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




(iii)  **Quarterly
      Reporting - Guarantor** .
      Within
      forty-five (45) days after the end of each Calendar Quarter, Borrowers shall
      provide true and complete copies of Guarantor’s Financial Statements for such
      quarter to Lender, together with a certification executed on behalf of Guarantor
      by its chief executive officer or chief financial officer (or by the individual
      Guarantor, in the ease of an individual Guarantor) in accordance with the
      criteria set forth below.




(iv)  **Debt
      Service Coverage Ratio** .
      Within
      thirty (30) days after the end of each Calendar Quarter, Borrowers shall provide
      to Lender Borrowers’ calculation of the Debt Service Coverage Ratio for the
      twelve month period ending at the end of such Calendar Quarter, together with
      the Borrowers’ method of calculation and such detail and background information
      as Lender shall reasonably require and a certification executed on behalf of
      Borrowers by their respective chief financial officers (or other responsible
      officer(s) or representative(s) reasonably acceptable to Lender) in accordance
      with the criteria set forth below.




45




(v)  **Leasing
      Reports** .
      Within
      thirty (30) days after the end of each calendar month, Borrowers shall provide
      to Lender a certified Rent Roll, rental status report and a schedule of Security
      Deposits held under Leases, in form and substance reasonably acceptable to
      Lender.




(vi)  **Monthly
      Reporting** .
      Within
      thirty (30) days after the end of each calendar month, Borrowers shall provide
      to Lender (a) accrual basis operating statements, together with a statement
      of
      cash flow, for each of the Properties, each in a form reasonably satisfactory
      to
      Lender, (a) for such month, (b) for the year to date with a comparison and
      reconciliation with the Operating Budget and Capital Expenditures Budget
      indicating all variances on a line item basis and (c) for the 12 month period
      ended as of the end of such calendar month, together with (b) a certification
      executed on behalf of Borrowers by their respective chief financial officers
      (or
      other responsible officer(s) or representative(s) reasonably acceptable to
      Lender) in accordance with the criteria set forth below.




(vii)  **Additional
      Reporting** .
      In
      addition to the foregoing, Borrowers shall promptly provide to Lender, and
      cause
      each other Borrower Party to promptly provide to Lender, such further documents
      and information concerning its operations, properties, ownership, and finances
      as Lender shall from time to time reasonably request.




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




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




(x)  **Fiscal
      Year** .
      Each
      Borrower represents that its fiscal year ends on December 31, and agrees that
      it
      shall not change its fiscal year.


46




(B)  **Accountants’
      Reports** .
      Promptly upon receipt thereof, Borrowers shall deliver, and cause each other
      Borrower Party to deliver, copies of all significant reports submitted by
      independent public accountants in connection with each annual, interim or
      special audit of the Financial Statements or other affairs of such Borrower
      Party made by such accountants, including the comment letter submitted by such
      accountants to management in connection with the annual audit.




(C)  **Tax
      Returns** .
      Within
      thirty (30) days after filing the same, Borrowers shall deliver to Lender a
      copy
      of their Federal income tax returns (or the return of the applicable Person
      into
      which any Borrower’s Federal income tax return is consolidated) certified on its
      behalf by their chief financial officers (or similar position) to be true and
      correct.




(D)  **Material
      Notices** .




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




(ii)  Borrowers
      shall promptly deliver to Lender copies of any and all material notices
      (including any notice alleging any material default or breach) received by
      any
      Borrower from any manager, any franchisors, any licensors, or any tenants for
      or
      pertaining to any of the Properties.




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




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




(G)  **Insurance** .
      Within
      the thirty (30) day period prior to the end of each insurance policy period
      of
      Borrowers, Borrowers will deliver binders or certificates of insurance
      evidencing renewal of any existing coverages (or copies of any new insurance
      policies not previously delivered to Lender), reports, and/or other information
      (all in form and substance reasonably satisfactory to Lender), (i) outlining
      all
      material insurance coverage maintained as of the date thereof by Borrowers
      and
      all material insurance coverage planned to be maintained by Borrowers in the
      subsequent insurance policy period, and (ii) evidencing payment in full of
      the
      premiums for such insurance policies.


47




(H)  **Other
      Information** .
      With
      reasonable promptness, each Borrower Party will deliver such other information
      and data with respect to such Person and its Affiliates or the Properties as
      from time to time may be reasonably requested by Lender.




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




**Section
      5.3**  **Payment
      of Impositions and Claims** **.**




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




(B)  Borrowers
      shall not be required to pay, discharge or remove any Imposition or Claim so
      long as Borrowers contest in good faith such Imposition or Claim or the
      validity, applicability or amount thereof by an appropriate legal proceeding
      which operates to prevent the collection of such amounts and the sale of any
      of
      the Properties or any portion thereof, so long as: (i) no Event of Default
      shall
      have occurred and be continuing; (ii) prior to the date on which such Imposition
      or Claim would otherwise have become delinquent, Borrowers shall have given
      Lender prior written notice of its intent to contest said Imposition or Claim;
      (iii) prior to the date on which such Imposition or Claim would otherwise have
      become delinquent, Borrowers shall have deposited with Lender (or with a court
      of competent jurisdiction or other appropriate body approved by Lender) such
      additional amounts as are necessary to keep on deposit at all times, an amount
      equal to at least one hundred fifty percent (150%) (or such higher amount as
      may
      be required by applicable law) of the total of (x) the balance of such
      Imposition or Claim then remaining unpaid, and (y) all interest, penalties,
      costs and charges accrued or accumulated thereon, together with such other
      security as may be required in the proceeding, or as may be required by Lender,
      to insure the payment of any such Imposition or Claim and all interest and
      penalties thereon; (iv) no risk of sale, forfeiture or loss of any interest
      in
      any of the Properties or any part thereof arises, in Lender’s judgment, during
      the pendency of such contest; (v) such contest does not, in Lender’s
      determination, have a Material Adverse Effect; (vi) such contest is based on *bona
      fide* ,
      material, and reasonable claims or defenses; and (vii) such proceeding shall
      be
      permitted under and be conducted in accordance with the provisions of any other
      instrument to which any Borrower is subject and shall not constitute a default
      thereunder and such proceeding shall be conducted in accordance with all
      applicable statutes, laws and ordinances. Any such contest shall be prosecuted
      with due diligence, and Borrowers shall promptly pay the amount of such
      Imposition or Claim as finally determined, together with all interest and
      penalties payable in connection therewith. Lender shall have full power and
      authority, but no obligation, to apply any amount deposited with Lender under
      this subsection to the payment of any unpaid Imposition or Claim to prevent
      the
      sale or forfeiture of any of the Properties for non-payment thereof, if Lender
      reasonably believes that such sale or forfeiture is threatened. Any surplus
      retained by Lender after payment of the Imposition or Claim for which a deposit
      was made shall be promptly repaid to Borrowers unless an Event of Default shall
      have occurred, in which case said surplus may be retained by Lender to be
      applied to the Obligations. Notwithstanding any provision of this Section to
      the
      contrary, Borrowers shall pay any Imposition or Claim which it might otherwise
      be entitled to contest if an Event of Default shall occur, or if, in the
      reasonable determination of Lender, any of the Properties is in jeopardy or
      in
      danger of being forfeited or foreclosed. If Borrowers refuse to pay any such
      Imposition or Claim, upon five (5) Business Days’ prior written notice, Lender
      may (but shall not be obligated to) make such payment and Borrowers shall
      reimburse Lender on demand for all such advances.


48




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




(i)  Property
      damage insurance covering loss or damage to the applicable Individual Property
      caused by fire, lightning, hail, hurricane, windstorm, tidal wave, explosion,
      acts of terrorism, vandalism, malicious mischief, and such other losses,
      hazards, casualties, liabilities and contingencies as are normally and usually
      covered by fire, extended coverage and all risk policies in effect where the
      applicable Individual Property is located endorsed to include all of the
      extended coverage perils and other broad form perils, including the standard
      “all risks” clauses, with such endorsements as Lender may from time to time
      reasonably require including, without limitation, building ordinance and law
      (including demolition costs and increased cost of construction coverage),
      lightning, hurricane, windstorm, tidal wave, civil commotion, acts of terrorism,
      hail, riot, strike, water damage, sprinkler leakage, collapse and malicious
      mischief. Such policy shall be in an amount not less than that necessary to
      comply with any coinsurance percentage stipulated in the policy, but not less
      than 100% of the full replacement cost of all Improvements at the applicable
      Individual Property (without any deduction for depreciation), and shall contain
      a replacement cost and agreed amount endorsement in an amount not less than
      the
      outstanding principal amount of the Loan. The deductible under such policy
      shall
      not exceed an amount customarily required by institutional lenders for similar
      properties in the general vicinity of the applicable Individual Property, but
      in
      no event in excess of $5,000, or such other amount as is approved by Lender
      from
      time to time. In addition to and without limiting the foregoing, the property
      insurance required under this Section 5.4(i), and the property insurance and
      business interruption and rent loss insurance required under Sections 5.4(v)
      and
      (vi) below shall be required to cover perils of terrorism and acts of
      terrorism.




49




(ii)  Broad
      form boiler and machinery insurance in an amount equal to the full replacement
      cost of the Improvements at such Individual Property (without any deduction
      for
      depreciation) in which the boiler or similar vessel is located, and including
      coverage against loss or damage from (1) leakage of sprinkler systems and (2)
      damage, breakdown or explosion of steam boilers, electrical machinery and
      equipment, air conditioning, refrigeration, pressure vessels or similar
      apparatus and mechanical objects now or hereafter installed at the applicable
      Individual Property.




(iii)  If
      the
      applicable Individual Property is located in area prone to geological phenomena,
      including, but not limited to, sinkholes, mine subsidence, tidal waves or
      earthquakes, insurance covering such risks in an amount not less than 100%
      of
      the full replacement cost of the Improvements at such Individual Property
      without any deduction for depreciation, with a maximum permissible deductible
      of
      $5,000, or such other amount as is approved by Lender from time to
      time.




(iv)  Flood
      insurance if the applicable Individual Property is located, in whole or in
      part,
      in an area now or hereafter designated as “flood prone” or a “special flood
      hazard area” (as defined under the National Flood Insurance Act of 1968, the
      Flood Disaster Protection Act of 1973 or the National Flood Insurance Reform
      Act
      of 1994 (as each may be amended, or any successor law, collectively, the
“ Flood
      Insurance Acts ”)).
      Such
      policy shall be in an amount equal to 100% of the full replacement cost of
      the
      Improvements at such Individual Property, or such other amount as is approved
      by
      Lender from time to time, and shall have a maximum permissible deductible equal
      to an amount customarily required by institutional lenders for similar
      properties in the general vicinity of the applicable Individual Property, but
      in
      no event in excess of $5,000, or such other amount as is approved by Lender
      from
      time to time.




(v)  Business
      interruption or rent loss insurance in an amount equal to the gross income
      or
      rentals from the applicable Individual Property for an indemnity period of
      eighteen (18) months, such amount being adjusted annually. Lender shall be
      named
      as loss payee under such insurance.




(vi)  During
      any period of reconstruction, renovation or alteration of the applicable
      Individual Property, a complete value, “All Risks” Builders Risk form or “Course
      of Construction” insurance policy in non-reporting form and in an amount
      reasonably satisfactory to Lender.




(vii)  Commercial
      General Liability insurance covering claims for bodily injury, death or property
      damage occurring upon, in or about the applicable Individual Property in an
      amount not less than $1,000,000 per occurrence and $2,000,000 in the aggregate
      with no deductible of self insurance retention, and an umbrella liability policy
      in the amount of $3,000,000.




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




(ix)  Such
      other insurance and endorsements, if any, with respect to each Individual
      Property and the operation thereof as Lender may reasonably require from time
      to
      time, provided same are customarily required by institutional lenders for
      similar properties in the general vicinity of the applicable Individual
      Property, or which are otherwise required by the Loan Documents.




50




Each
      carrier providing any insurance, or portion thereof, required by this Section
      shall be licensed to do business in the jurisdiction in which the applicable
      Individual Property is located, and shall have a claims paying ability rating
      by
      S&P of not less than “AA,” by Moody’s of not less than “Aa2” and by Fitch of
      not less than “AA,” and an A.M. Best Company, Inc. rating of not less than A and
      financial size category of not less than XIII. Except as otherwise expressly
      set
      forth in this Loan Agreement, Borrowers shall cause all insurance (except
      general public liability and excess liability, as to which Lender shall be
      named
      as additional insured, and workers’ compensation insurance) carried in
      accordance with this Section to be payable to Lender as a mortgagee and loss
      payee and not as a coinsured, and, in the case of all policies of insurance
      carried by each lessee, for the benefit of Borrowers (or any of them), if any,
      to cause all such policies to be payable to Lender as Lender’s interest may
      appear.




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




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




**Section
      5.5**  **Maintenance
      of the Properties; Alterations; Casualty or Taking** **.**




(A)  Maintenance
      of the Properties; Alterations .
      Borrowers will maintain the Properties or cause the Properties to be maintained
      in good repair, working order and condition, and will make or cause to be made
      all appropriate repairs, renewals and replacements thereof. Without limitation
      of the foregoing, Borrowers will operate and maintain each Individual Property
      substantially in accordance with the applicable Operating Budget and Capital
      Expenditure Budget. In addition, unless Lender agrees otherwise, Borrowers
      shall
      cause all items in the Capital Expenditure Budget to be performed and completed
      in substantially in accordance with such plan. All work required or permitted
      under this Loan Agreement shall be performed in a good and workmanlike manner
      and in compliance with all applicable laws. So long as no Event of Default
      has
      occurred and is continuing, Borrowers may, without Lender’s consent, perform
      alterations to the Properties which (i) do not constitute a Material Alteration,
      (ii) do not adversely affect any Borrower’s financial condition or the value or
      net operating income of any of the Properties, and (iii) are in the ordinary
      course of Borrowers’ business. No Borrower shall perform any Material Alteration
      without Lender’s prior written consent, which consent shall not be unreasonably
      withheld; provided , however ,
      that
      Lender may, in its sole and absolute discretion, withhold consent to any
      Material Alteration which Lender determines may result in a decrease of net
      operating income from any of the Properties. Lender may, as a condition to
      giving its consent to a Material Alteration, require that Borrowers deposit
      cash
      with Lender for payment of the cost of such Material Alteration in an amount
      equal to 125% of the cost of the Material Alteration as estimated by Lender.
      Upon substantial completion of the Material Alteration, Borrowers shall provide
      evidence reasonably satisfactory to Lender that (i) the Material Alteration
      was
      constructed in accordance with all applicable laws and substantially in
      accordance with plans and specifications approved by Lender (which approval
      shall not be unreasonably withheld or delayed), (ii) all contractors,
      subcontractors, materialmen and professionals who provided work, materials
      or
      services in connection with the Material Alteration have been paid in full
      and
      have delivered unconditional releases of lien and (iii) all material licenses
      necessary for the use, operation and occupancy of the Material Alteration have
      been issued. Borrowers shall reimburse Lender upon demand for all reasonable
      out-of-pocket costs and expenses (including the reasonable fees of any
      architect, engineer or other professional engaged by Lender) incurred by Lender
      in reviewing plans and specifications or in making any determinations necessary
      to implement the provisions of this Section 5.5(A).




51




(B)  Casualty
      or Taking .
      In the
      event of casualty or loss or a Taking at any of the Individual Properties,
      Borrowers shall give immediate written notice of the same to the insurance
      carrier and to Lender and shall promptly commence and diligently prosecute
      to
      completion, in accordance with the terms hereof, all Legal Requirements, the
      repair and restoration of the affected Individual Property as nearly as possible
      to the Pre-Existing Condition (hereinafter defined) (a “ Restoration ”).
      Borrowers shall pay all costs of such Restoration whether or not such costs
      are
      covered by insurance or Condemnation Proceeds. Borrowers hereby authorize and
      empower Lender (a) to make proof of loss, to adjust and compromise or settle
      any
      claim under insurance policies, including business interruption or rent loss
      insurance, or in connection with a Taking, (b) to appear in and prosecute any
      action arising from any insurance policies or Taking, (c) to collect and receive
      insurance proceeds and Condemnation Proceeds, and (d) to deduct therefrom
      Lender’s expenses incurred in the collection of such proceeds; provided however,
      that nothing contained in this Section shall require Lender to incur any expense
      or take any action hereunder. Borrowers further authorize Lender, at Lender’s
      option, (i) to hold the balance of such proceeds to be used to pay for the
      cost
      of Restoration of the applicable Individual Property or (ii) subject to Section
      5.5(C), to apply such proceeds to payment of the Obligations whether or not
      then
      due, in any order, and, provided that no Event of Default has occurred and
      is
      continuing, upon any such application of insurance proceeds or Condemnation
      Proceeds to the Obligations pursuant to the foregoing, no Prepayment
      Consideration shall be due and payable. Notwithstanding the foregoing, in the
      event of a casualty or Taking with respect to an Individual Property where
      the
      loss does not exceed the Restoration Threshold for such Individual Property,
      and
      the casualty or Taking (as applicable), in Lender’s reasonable judgment, has no
      material impact on the remainder of such Individual Property, Borrowers may
      settle and adjust such claim; provided that (a) no Event of Default has occurred
      and is continuing and (b) such adjustment and the Restoration are carried out
      in
      a commercially reasonable and timely manner, and further provided that Lender’s
      reasonable consent shall be required for the adjustment or settlement by any
      Borrower of any claim the settlement or adjustment of which may reasonably
      be
      anticipated to result in proceeds in excess of $500,000.




52




(C)  Proceeds
      Application to Restoration .
      Lender
      shall not exercise Lender’s option to apply insurance proceeds or Condemnation
      Proceeds to payment of the Obligations and Lender shall make the proceeds
      available for Restoration if all of the following conditions are met: (i) no
      Event of Default then exists; (ii) Lender reasonably determines that there
      will
      be sufficient funds to complete the Restoration of the applicable Individual
      Property to at least the Pre-Existing Condition and to timely make all payments
      due under the Loan Documents during the Restoration of the applicable Individual
      Property; (iii) Lender reasonably determines that the fair market value of
      the
      applicable Individual Property after Restoration will not be less than the
      fair
      market value of such Individual Property prior to the occurrence of the loss
      or
      casualty to the Individual Property or the Taking, and that the rental income
      of
      the Properties, after the Restoration of the affected Individual Property to
      the
      Pre-Existing Condition, will be sufficient to meet all Operating Expenses,
      payments for Reserves and payments of principal and interest under the Loan
      and
      maintain a Debt Service Coverage Ratio at least equal to 1.10 to 1; and (iv)
      Lender reasonably determines that the Restoration of the affected Individual
      Property to the Pre-Existing Condition will be completed within one (1) year
      of
      the date of the loss or casualty to the affected Individual Property or the
      Taking, but in no event later than six (6) months prior to the Maturity Date;
      (v) in Lender’s reasonable judgment less than thirty percent (30%) (in the case
      of a fire or other loss or casualty to an Individual Property) or fifteen
      percent (15%) (in the case of a Taking) of the fair market value of the
      applicable Individual Property has been damaged, destroyed or rendered unusable
      as a result of such fire or other casualty or Taking; and (vi) Lender is
      reasonably satisfied that the Individual Property in question can be restored
      and repaired as nearly as possible to the condition it was in immediately prior
      to such casualty or Taking and in compliance with all applicable zoning,
      building and other laws and codes (the “ Pre-Existing
      Condition ”),
      and
      in the case of a Taking Lender is reasonably satisfied that the Taking will,
      upon completion of the Restoration, have no material adverse effect on the
      use,
      operation or value of the applicable Individual Property. Notwithstanding
      anything to the contrary set forth in this Section 5.5, to the extent the
      insurance proceeds paid or payable with respect to any casualty to any
      Individual Property (either singly or when aggregated with all other then
      unapplied proceeds with respect to the affected Individual Property) do not
      exceed the Restoration Threshold and the estimated cost of completing the
      applicable Restoration shall not be greater than the Restoration Threshold,
      and
      provided that no Event of Default shall have occurred and be continuing, such
      proceeds (other than business interruption and rent loss insurance proceeds)
      are
      to be paid directly to Borrowers to be applied to Restoration of the affected
      Individual Property in accordance with the terms hereof. Lender may retain
      business interruption or rent loss insurance proceeds as a reserve, and disburse
      the same on a monthly basis into the Deposit Account for application to debt
      service on the Loan until such time as Restoration is complete.




53




(D)  Disbursement
      for Restoration .
      If
      Lender elects to make the insurance proceeds or Condemnation Proceeds available
      for Restoration of any Individual Property (or is required to make such proceeds
      available pursuant to Section 5.5(C) above), the proceeds shall be disbursed
      by
      Lender to, or as directed by, Borrowers from time to time during the course
      of
      the Restoration, but not more frequently than once a month and in requested
      amounts of not less than $100,000, upon receipt of evidence satisfactory to
      Lender that (i) all materials installed and work and labor performed in
      connection with the Restoration have been paid for in full (other than that
      to
      be paid from the current pending disbursement), and (ii) there exist no notices
      of pendency, mechanic’s or materialman’s liens or notices of intention to file
      same, or any other liens or encumbrances of any nature whatsoever on the
      applicable Individual Property. Borrowers agree that, if at any time during
      the
      Restoration, the cost of completing such Restoration, as reasonably determined
      by Lender, exceeds the undisbursed insurance proceeds, Borrowers shall, promptly
      upon demand by Lender, deposit the amount of such excess with Lender, and Lender
      shall first disburse such deposit to pay for the costs of such Restoration
      on
      the same terms and conditions as the insurance proceeds are disbursed. If
      Borrowers deposit such excess with Lender and if, after completion of the
      Restoration, any funds remain from the combination of insurance proceeds or
      Condemnation Proceeds and the funds so deposited with Lender by Borrowers,
      and
      if no Event of Default shall have occurred and be continuing, then Lender shall
      disburse into the Deposit Account, for application pursuant to Article VII
      hereof, such remaining funds (together with any interest earned
      thereon).




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




(F)  Retainage .
      In no
      event shall Lender be obligated to make disbursements of insurance proceeds
      or
      Condemnation Proceeds in excess of an amount equal to the costs actually
      incurred from time to time for work in place as part of the Restoration, as
      certified by the Approved Architect, less a retainage equal to ten percent
      (10%)
      of such costs incurred until the Restoration has been completed. The retainage
      shall in no event be less than the amount actually held back by Borrowers (or
      any of them) from contractors, subcontractors and materialmen engaged in the
      Restoration. The retainage shall not be released until the Approved Architect
      certifies to Lender that the Restoration has been completed substantially in
      accordance with the provisions of this Section 5.5 and that all material
      approvals necessary for the re-occupancy and use of the affected Individual
      Property have been obtained from all appropriate Governmental Authorities,
      and
      Lender receives evidence reasonably satisfactory to Lender that the costs of
      the
      Restoration have been paid in full or will be paid in full out of the
      retainage.




54




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




**Section
      5.7**  **Environmental
      Compliance** **.**




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




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




(ii)  If
      requested by Lender, all remedial actions under clause (i) above shall be
      performed by contractors, and under the supervision of a consulting engineer,
      which shall not be an Affiliate of any of the Borrowers, each approved in
      advance by Lender which approval shall not be unreasonably withheld or delayed.
      All costs and expenses reasonably incurred in connection with such remedial
      actions shall be paid by Borrowers. If Borrowers do not timely commence and
      diligently prosecute to completion the remedial actions, Lender may (but shall
      not be obligated to), upon 30 days prior written notice to Borrowers of its
      intention to do so, cause such remedial actions to be performed. Borrowers
      shall
      pay or reimburse Lender on demand for all expenses (including reasonable
      attorneys’ fees and disbursements, but excluding internal overhead,
      administrative and similar costs of Lender) reasonably relating to or incurred
      by Lender in connection with monitoring, reviewing or performing any remedial
      actions in accordance herewith.




55




(iii)  No
      Borrower shall commence any remedial actions under clause (i) above without
      Lender’s prior written approval which approval shall not be unreasonably
      withheld or delayed. Notwithstanding the foregoing, if the presence or
      threatened presence of Hazardous Material on, under or about any of the
      Properties poses an immediate threat to the health, safety or welfare of any
      Person or the environment, or is of such a nature that an immediate response
      is
      necessary or required under applicable Environmental Law, then Borrowers may
      commence all necessary remedial actions without Lender’s prior written approval.
      In such events, Borrowers shall notify Lender as soon as practicable and, in
      any
      event, within three Business Days, of any action taken. No Borrower shall enter
      into any settlement agreement, consent decree or other compromise relating
      to
      Hazardous Materials or Environmental Laws unless and until Lender has provided
      its prior written consent thereto.




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




(D)  **O
      & M Program** .
      In the
      event the Environmental Report recommends the development of an operation and
      maintenance program for any of the Properties (including, without limitation,
      with respect to the presence of asbestos and/or lead-based paint) (“ O
      & M Program ”),
      Borrowers shall develop an O & M Program, as approved by Lender, in Lender’s
      sole discretion, and shall, during the term of the Loan, including any extension
      or renewal thereof, comply in all respects with the terms and conditions of
      the
      O & M Program.




**Section
      5.8**  **Environmental
      Disclosure** **.**




(A)  Borrowers
      shall promptly upon becoming aware thereof advise Lender in writing and in
      reasonable detail of: (1) any release, disposal or discharge of any Hazardous
      Material on, under, or about any of the Properties required to be reported
      to
      any federal, state or local governmental or regulatory agency under the
      applicable Environmental Laws except such releases, disposals or discharges
      pursuant to and in compliance with valid permits, authorizations or
      registrations under said Environmental Laws; (2) any and all written
      communications sent or received by any Borrower with respect to any
      Environmental Claims or any release, disposal or discharge of Hazardous Material
      required to be reported to any federal, state or local governmental or
      regulatory agency; (3) any remedial action taken by any Borrower or any other
      Person in response to any Hazardous Material on, under or about any of the
      Properties; (4) the discovery by any Borrower of any occurrence or condition
      on
      any real property adjoining or in the vicinity of any of the Properties that
      could cause the same (or any part thereof) to be classified as “border zone
      property” or to be otherwise subject to any restrictions on the ownership,
      occupancy, transferability or use thereof under any Environmental Laws the
      existence of which could result in an Environmental Claim with respect to the
      affected Individual Property(ies); and (5) any request for information from
      any
      governmental agency that indicates such agency is investigating whether any
      Borrower may be potentially responsible for a release, disposal or discharge
      of
      Hazardous Materials.




56




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




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




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




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




57




**Section
      5.12**  **Leases** **.**




(A)  All
      Leases entered into by Borrowers shall provide for rental rates comparable
      to
      then-existing local market rates and terms and conditions commercially
      reasonable and consistent with then-prevailing local market terms and conditions
      for similar type properties, and in no event shall any Borrower, absent Lender’s
      prior written consent, enter into any Leases (i) other than residential
      apartment leases having lease terms not in excess of two (2) years, or (ii)
      with
      Affiliates of any Borrower Party. Borrowers shall pay to Lender upon demand
      all
      costs and expenses of Lender, including reasonable attorneys’ fees, incurred in
      connection with Lender’s review of any Lease.




(B)  All
      Leases entered into after the Closing Date with new tenants (i.e. not renewals
      of existing tenants as of the Closing Date) shall be written on Borrowers’
standard lease form currently in use which has been approved by Lender or such
      other form of Lease reasonably approved in writing by Lender; provided that
      notwithstanding the foregoing, the Borrowers may modify any standard lease
      form
      without such approval to the extent necessary to conform such form to any
      applicable Legal Requirements. Borrowers shall not materially change the
      standard lease form without Lender’s prior written consent, which consent shall
      not be unreasonably withheld or delayed, or except as necessary to comply with
      applicable Legal Requirements.




(C)  Each
      Borrower shall comply with, observe and perform all such Borrower’s obligations
      as landlord under all Leases of such Borrower’s Applicable Individual Property
      and shall not do or permit to be done anything to materially impair the value
      of
      the Leases as security for the Obligations. Borrowers shall promptly send Lender
      copies of any notices of default received from the tenant under any Lease and
      shall enforce all of the material terms, covenants and conditions contained
      in
      the Leases upon the part of the lessees thereunder to be observed or performed
      and shall effect a termination or diminution of the obligations of tenants
      under
      leases only in a manner that a prudent owner of a similar property to the
      Properties would enforce such terms covenants and conditions or effect such
      termination or diminution in the ordinary course of business.




(D)  Borrowers
      shall not collect any of the Rents under Leases more than one (1) month in
      advance (not including Security Deposits).




(E)  Borrowers
      shall make all Leases available to Lender or, at Lender’s request upon the
      occurrence and during the continuance of an Event of Default, shall furnish
      Lender with executed copies of all Leases hereafter made (to the extent not
      theretofore provided to Lender). Each Lease at an Individual Property shall
      specifically provide that such Lease is subordinate to the Mortgage encumbering
      such Individual Property; and that in no event shall Lender, as holder of such
      Mortgage or as successor landlord, be liable to the tenant for any act or
      omission of any prior landlord or for any liability or obligation of any prior
      landlord occurring prior to the date that Lender or any subsequent owner acquire
      title to such Individual Property. Each Lease entered into after the date
      hereof, shall specifically provide that the tenant attorns to Lender, such
      attornment to be effective upon Lender’s acquisition of title to such Individual
      Property; that the tenant agrees to execute such further evidences of attornment
      as Lender may from time to time reasonably request; and that the attornment
      of
      the tenant shall not be terminated by foreclosure.




58




**Section
      5.13**  **Management
      and Leasing** **.**




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




(B)  No
      Borrower shall surrender, terminate, cancel, materially modify, renew or extend
      such Management Agreement, or enter into any other Management Agreement with
      Manager or any other Person, or consent to the assignment by the Manager of
      its
      interest under the Management Agreement, in each case without the express
      consent of Lender, which consent may be conditioned upon Borrowers delivering
      a
      Rating Confirmation. If at any time Lender consents to the appointment of a
      new
      Manager (which consent shall not be unreasonably withheld in the absence of
      an
      Event of Default if a Rating Confirmation is obtained, or if Lender does not
      require a Rating Confirmation), such new Manager and Borrowers shall, as a
      condition of Lender’s consent, execute a subordination of management agreement
      in the form delivered in connection with the closing of the Loan.




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




**Section
      5.14**  **Material
      Agreements** **.** Except
      for Leases complying with the Loan Documents and any Management Agreement
      complying with the foregoing, no Borrower shall enter into or become obligated
      under any material agreement pertaining to any of the Properties, including
      brokerage agreements, unless the same may be terminated without cause and
      without payment of a penalty or premium, on not more than thirty (30) days’
prior written notice.




59




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




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




**Section
      5.17**  **Indebtedness** **.** So long
      as the Loan is outstanding, no Borrower shall, directly or indirectly create,
      incur, assume, guaranty, or otherwise become or remain directly or indirectly
      liable with respect to any Indebtedness except:




(A)  the
      Obligations; and




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




60




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




(A)  **No
      Liens** .
      No
      Borrower shall directly or indirectly create, incur, assume, suffer, or permit
      to exist any Lien on or with respect to any of the Properties, any other
      Collateral or any direct or indirect ownership interest in any Borrower, except
      Permitted Encumbrances.




(B)  **No
      Negative Pledges** .
      No
      Borrower shall enter into or assume any agreement (other than the Loan
      Documents) prohibiting the creation or assumption of any Lien upon its
      properties or assets, whether now owned or hereafter acquired.




**Section
      5.19**  **Contingent
      Obligations** **.** No
      Borrower shall directly or indirectly create or become or be liable with respect
      to any Contingent Obligation




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




(A)  No
      Borrower shall permit any other Person to, (i) amend, modify or waive any term
      or provision of such Borrower’s partnership agreement, certificate of limited
      partnership, articles of incorporation, by-laws, articles of organization,
      certificate of formation, limited liability company agreement, operating
      agreement, or other organizational documents relating to any of the
      representations, warranties or covenants of Article IX of this Loan Agreement
      or
      this Section 5.20 or any other material term or provision of such Borrower’s
      organizational documents unless required by law; or (ii) liquidate, terminate,
      wind up or dissolve such Borrower; or (iii) merge with or consolidate such
      Borrower into another Person.




(B)  No
      Borrower shall cancel or otherwise forgive or release any material claim or
      debt
      owed to such Borrower by any Person, except for adequate consideration or in
      the
      ordinary course of such Borrower’s business.




(C)  No
      Borrower shall enter into any agreement which expressly restricts the ability
      of
      such Borrower to enter into amendments, modifications or waivers of any of
      the
      Loan Documents.




(D)  No
      Borrower shall assign or transfer any of its interest in any licenses, permits,
      variances and certificates obtained by such Borrower and used in connection
      with
      the ownership, operation, use or occupancy of any of the Properties (including,
      without limitation, business licenses, state health department licenses,
      licenses to conduct business and all such other permits, licenses and rights,
      obtained from any Governmental Authority or private Person concerning ownership,
      operation, use or occupancy of the Properties).




(E)  Except
      as
      specifically permitted herein pursuant to Article XI hereof, no Borrower shall,
      nor shall any Borrower permit or suffer any other Person on its behalf, to
      (i)
      issue, sell, assign, pledge, convey, dispose or otherwise encumber any stock,
      membership interest, partnership interest, or other equity or beneficial
      interest in such Borrower or (ii) grant any options, warrants, purchase rights
      or other similar agreements or understandings with respect thereto.




61




(F)  No
      Borrower shall acquire by purchase or otherwise all or any part of the business
      or assets of, or stock or other evidence of beneficial ownership of, any
      Person.




**Section
      5.21**  **Transactions
      with Related Persons** **.** Except
      for fees payable to Manager under the Management Agreement, no Borrower shall
      pay any management, consulting, director or similar fees to any Related Person
      of any Borrower or to any director or manager (other than any customary fees
      of
      the Independent Director), officer or employee of any Borrower. No Borrower
      shall directly or indirectly enter into or permit to exist any transaction
      (including the purchase, sale, lease or exchange of any property or the
      rendering of any service) with any Related Person of any Borrower or with any
      director, officer or employee of any Borrower Party, except transactions in
      the
      ordinary course of and pursuant to the reasonable requirements of the business
      of such Borrower and upon fair and reasonable terms which are no less favorable
      to such Borrower than would be obtained in a comparable arm’s length transaction
      with a Person that is not a Related Person of such Borrower. No Borrower shall
      make any payment or permit any payment to be made to any Related Person of
      Borrower when or as to any time when any Event of Default shall
      exist.




**Section
      5.22**  **ERISA** **.**




(A)  **No
      ERISA Plans** .
      No
      Borrower shall establish any Employee Benefit Plan, Pension Plan or
      Multiemployer Plan, or will commence making contributions to (or become
      obligated to make contributions to) any Employee Benefit Plan, Pension Plan
      or
      Multiemployer Plan.




(B)  **Compliance
      with ERISA** .
      No
      Borrower shall: (i) engage in any Prohibited Transaction; or (ii) permit the
      establishment of any Employee Benefit Plan providing post-retirement welfare
      benefits or establish or amend any Employee Benefit Plan which establishment
      or
      amendment could result in liability to any Borrower or any ERISA Affiliate
      or
      increase the obligation of any Borrower. In addition to the prohibitions set
      forth in Article XI hereof, and not in limitation thereof, no Borrower shall
      Transfer its interest or rights in this Agreement or in any of the Properties,
      or attempt to do any of the foregoing or suffer any of the foregoing, nor shall
      any Person owning a direct or indirect interest in any Borrower Transfer any
      of
      its rights or interest (direct or indirect) in any Borrower, attempt to do
      any
      of the foregoing or suffer any of the foregoing, nor shall any Borrower or
      any
      Person owning a direct or indirect interest in any Borrower take, without
      limitation, any action or fail to take any action, if, in any such case, doing
      so would (i) cause the Loan or the exercise of any of Lender’s rights in
      connection therewith to constitute a Prohibited Transaction (unless Borrowers
      furnish a legal opinion reasonably satisfactory to Lender that the same is
      exempt from the Prohibited Transaction provisions or ERISA and the IRC or
      otherwise does not constitute a Prohibited Transaction), assuming solely for
      this purpose that Lender is a Party In Interest or a Disqualified Person with
      respect to an employee benefit plan, if any, which has directly or indirectly
      invested in any Borrower or Sole Member, or (ii) otherwise result in Lender
      being deemed in violation of any applicable provisions of ERISA with respect
      to
      the Loan. Each Borrower and Sole Member shall take such steps as are necessary
      to assure that each of them (and their respective shareholders, partners and
      members) does not commit any act, or fail to commit any act, the occurrence
      of
      which or the failure of which to occur would cause the Loan to be Prohibited
      Transaction.




62




(C)  **No
      Plan Assets** . **No
      Plan Assets** .
      No
      Borrower shall at any time during the term of this Loan Agreement become (1)
      an
      employee benefit plan defined in Section 3(3) of ERISA which is subject to
      ERISA, (2) a plan as defined in Section 4975(e)(1) of the IRC which is subject
      to Section 4975 of the IRC, (3) a “governmental plan” within the meaning of
      Section 3(32) of ERISA or (4) an entity any of whose underlying assets
      constitute “plan assets” of any such employee benefit plan, plan or governmental
      plan for purposes of Title I or ERISA, Section 4975 of the IRC or any state
      statutes applicable to any Borrower regulating investments of governmental
      plans. Borrowers shall deliver to Lender such certification or other evidence
      from time to time throughout the term of the Loan, as reasonably requested
      by
      Lender that the assets of each Borrower do not and will not constitute “plan
      assets” for the purposes of Title I of ERISA of any “employee benefit plan” as
      defined in Section 3 (3) of ERISA, which is subject to Title I or ERISA because
      any Borrower is a Real Estate Operating Company as defined in the U.S.
      Department of Labor Asset Regulation (29 C.F.R. 2510.3-101(e)). For so long
      as
      any portion of the Loan is outstanding, each Borrower shall comply with all
      requirements and take all actions necessary to maintain such Borrower’s status
      as a “Real Estate Operating Company” under the U.S. Department of Labor Plan
      Asset Regulations and to otherwise operate so as to continue to qualify as
      a
“Real Estate Operating Company” under the Plan Asset Regulations (29 C.F.R.
      2510.3-101(e)) such that such Borrower will not be deemed to be an “employee
      benefit plan” as defined in Section 3(3) of ERISA, which is subject to Title I
      of ERISA, and the assets of such Borrower will not be deemed to constitute
“plan
      assets” of one or more such plans for the purposes of Title 1 of ERISA.
      Notwithstanding the foregoing, for so long as long as any portion of the Loan
      is
      outstanding, no transfer, restructuring, mergers or changes of control with
      respect to any Borrower shall be permitted to the extent same would cause any
      Borrower to no longer be a ‘Real Estate Operating Company’ under the Plan Asset
      Regulations.




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




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




**Section
      5.24**  **Environmental
      Matters; Inspection** **.**




(A)  Borrowers
      shall not permit any Hazardous Materials to be present on, under or to emanate
      from any of the Properties, or migrate from adjoining property controlled by
      any
      Borrower onto or into any of the Properties, except under conditions permitted
      by applicable Environmental Laws and, in the event that such Hazardous Materials
      are present on, under or emanate from any of the Properties, or migrate onto
      or
      into any of the Properties, Borrowers shall cause the removal or remediation
      of
      such Hazardous Materials, in accordance with this Loan Agreement and
      Environmental Laws (including, where applicable, the National Contingency Plan
      promulgated pursuant to the Comprehensive Environmental Response, Compensation
      and Liability Act). Borrowers shall use their best efforts to prevent, and
      to
      seek the remediation of, any migration of Hazardous Materials onto or into
      any
      of the Properties from any adjoining property.




63




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




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




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




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




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




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




64





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




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




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




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




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




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




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




65




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




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




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




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




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




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




**Section
      5.31**  **Prohibited
      Persons** **.** Borrowers covenant and agree that none of Borrowers, Guarantor, nor any of
      their
      respective Affiliates, officers, directors, partners or members will knowingly:
      (i) conduct any business, nor engage in any transaction or dealing, with any
      Prohibited Person, including, but not limited to, the making or receiving of
      any
      contribution of funds, goods, or services, to or for the benefit of a Prohibited
      Person; or (ii) engage in or conspire to engage in any transaction that evades
      or avoids, or has the purpose of evading or avoiding, or attempts to violate,
      any of the prohibitions set forth in EO13224. Borrowers further covenant and
      agree to deliver (from time to time) to Lender any such certification or other
      evidence as may be requested by Lender in its sole and absolute discretion,
      confirming that: (x) none of Borrowers, Guarantor, nor their respective
      officers, directors, partners, members or Affiliates is a Prohibited Person;
      and
      (y) none of Borrowers, Guarantor, nor their respective officers, directors,
      partners, members or Affiliates has to its knowledge engaged in any business
      transaction or dealings with a Prohibited Person, including, but not limited
      to,
      the making or receiving of any contribution of funds, goods, or services, to
      or
      for the benefit of a Prohibited Person.




66




**ARTICLE
      VI**


**RESERVES**




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




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




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




**Section
      6.2**  **Funds
      Deposited with Lender** **.**




(A)  **Interest,
      Offsets** .
      Except
      only as expressly provided otherwise herein, all funds of any Borrower which
      are
      deposited with Lender as Reserves hereunder shall be held by Lender in one
      or
      more Permitted Investments. Lender is authorized to commingle any of the
      Reserves with each other and with any other funds held by Lender. All interest
      which accrues on the Reserves shall be taxable to Borrowers and shall be added
      to and disbursed in the same manner and under the same conditions as the
      principal sum on which said interest accrued. Additional provisions pertaining
      to investments are set forth in Article VII.




67




(B)  **Funding
      at Closing** .
      Borrowers shall deposit with Lender the amounts necessary to fund each of the
      Reserves as set forth below. Deposits into the Reserves at Closing may occur
      by
      deduction from the amount of the Loan that otherwise would be disbursed to
      Borrowers, followed by prompt deposit of the same into the applicable
      Sub-Account of the Deposit Account in accordance with the terms hereof.
      Notwithstanding such deductions, the Loan shall be deemed for all purposes
      to be
      fully disbursed at Closing.




**Section
      6.3**  **Impositions
      and Insurance Reserve** **.** On the
      Closing Date, Borrowers shall deposit with Lender (or such agent of Lender
      as
      Lender may designate in writing to Borrowers from time to time) $___________,
      and thereafter Borrowers shall deposit with Lender monthly, on each Payment
      Date
      commencing with the First Payment Date, 1/12th of the annual charges (as
      estimated by Lender) for all Impositions and Insurance Premiums payable with
      respect to the Properties hereunder (said funds, together with any interest
      thereon and any additions thereto, the “ Impositions
      and Insurance Reserve ”).
      Borrowers shall also deposit with Lender on demand, to be added to and included
      within such reserve, a sum of money which Lender reasonably estimates, together
      with such monthly deposits, will be sufficient to make the payment of each
      such
      charge at least thirty (30) days prior to the date initially due. Borrowers
      shall provide Lender with bills and all other documents necessary for the
      payment of the foregoing charges at least thirty (30) days prior to the date
      on
      which each payment shall first become due. So long as (i) no Event of Default
      has occurred and is continuing, (ii) Borrowers have provided Lender with the
      foregoing bills and other documents in a timely manner, and (iii) sufficient
      funds are held by Lender for the payment of the Impositions and Insurance
      Premiums (if applicable) relating to the Properties, Lender shall pay said
      items
      or disburse to Borrowers from such Reserve amounts sufficient to pay said
      items.




**Section
      6.4**  **Replacement
      Reserve** **.** Borrowers shall deposit with Lender monthly, on each Payment Date commencing
      with the First Payment Date, $25,425 for the purpose of creating a reserve
      for
      Capital Expenditures (said funds, together with any interest thereon and
      additions thereto, the “ Replacement
      Reserve ”).
      The
      funds contained in the Replacement Reserve shall be utilized solely to reimburse
      Borrowers for the actual bona fide out-of-pocket cost of Capital Expenditures
      performed during the term of the Loan in accordance with the schedule of
      permitted capital expenditures attached hereto as Schedule
      6.4 ,
      or for
      such other Capital Expenditures as are approved by Lender for disbursements
      from
      the Replacement Reserve (“ Approved
      Capital Expenditures ”),
      and
      shall not be used by any Borrower for purposes for which any other Reserve
      is
      established. Upon Borrowers’ written request for disbursement, Lender shall
      disburse funds from the Replacement Reserve to or for the account of Borrowers,
      to reimburse Borrowers for such Approved Capital Expenditures, on the Payment
      Date following such request, upon satisfaction of each of the conditions listed
      on Schedule
      6.6 and each
      of the conditions set forth in Section 6.6.




**Section
      6.5**  **Security
      Deposits** **.**




(A)  To
      the
      extent any of the Borrowers elect to collect Security Deposits, such Security
      Deposits shall be held by each such Borrower in a segregated account at the
      Clearing Account Bank and disbursed by such Borrower in accordance with the
      terms of the applicable Lease and all Legal Requirements.




68




(B)  If
      any
      tenant under any Lease with respect to which Lender holds a Security Deposit
      defaults such that the Security Deposit is to be drawn upon on account of such
      default, Borrower shall promptly deposit such Security Deposit into the Clearing
      Account and such Security Deposit shall be included as a Receipt.




(C)  Upon
      the
      occurrence of an Event of Default, Borrowers or Manager shall deposit all
      Security Deposits being held or received by Borrowers or Manager into the
      Deposit Account for allocation to the Security Deposit Sub-Account.




**Section
      6.6**  **Conditions
      to Disbursements from the Replacement Reserve; Performance of
      Work** **.**




(A)  **Disbursements
      from the Replacement Reserve** .
      Upon
      Borrowers’ request for disbursement, Lender shall disburse funds from the
      Replacement Reserve to or for the account of Borrowers, to reimburse Borrowers
      for Approved Capital Expenditures (the “ Approved
      Expenditures ”;
      and
      the related Capital Expenditures to which any such request for disbursement
      relates shall be referred to as the “ Work ”),
      on
      the Payment Date following such request, upon satisfaction of each of the
      conditions listed on Schedule
      6.6 and each
      of the conditions set forth below:




(i)  Except
      as
      provided in this Section 6.6, each request for disbursement from the Replacement
      Reserve shall be made only after completion of the Approved Expenditures for
      which disbursement is requested.




(ii)  If
      (1)
      the cost of a particular item of the Approved Expenditures exceeds $25,000,
      (2)
      the contractor performing such item of the Approved Expenditures requires
      periodic payments pursuant to the terms of a written contract, and (3) Lender
      has approved in writing in advance such periodic payments (such approval not
      to
      be unreasonably withheld or delayed), a request for disbursement from the
      Replacement Reserve may be made after completion of a portion of the work under
      such contract, provided (v) such contract requires payment upon completion
      of
      such portion of the work, (w) the materials for which the request is made are
      on
      site at the Individual Property at which the Work is performed and are properly
      secured or have been installed in such Individual Property, (x) all other
      conditions in this Loan Agreement for disbursement have been satisfied, (y)
      funds remaining in the Replacement Reserve together with the amounts that are
      scheduled to be deposited therein by Borrowers are, in Lender’s reasonable
      judgment, sufficient to complete such item of Approved Capital Expenditures,
      and
      (z) if required by Lender, each contractor or subcontractor receiving payments
      under such contract shall provide a waiver of lien with respect to amounts
      which
      have been paid to that contractor or subcontractor.




(iii)  Each
      disbursement from the Replacement Reserve, except for a final disbursement,
      shall be in the amount of actual costs incurred for completed Work (as certified
      by an Approved Architect) less a retainage equal to ten percent (10%) of such
      costs incurred until such Work has been completed. The retainage shall in no
      event be less than the percentage of such costs that the contract with the
      relevant contractor or supplier specifies to be retained and advanced as part
      of
      the final disbursement. No funds will be advanced for materials stored at any
      Individual Property unless such materials are properly stored and secured at
      such Individual Property in accordance with the Borrowers’ customary procedures
      and sound construction practices as reasonably determined by Lender. The
      retainage shall not be released until the Approved Architect certifies to Lender
      that the Work has been completed substantially in accordance with the provisions
      of this Section 6.6 and that all material approvals necessary for occupancy
      and
      use of the subject leased space at the applicable Individual Property have
      been
      obtained from all appropriate Governmental Authorities, and Lender receives
      evidence reasonably satisfactory to Lender that the costs of the Work have
      been
      paid in full or will be paid in full out of the retainage.




69




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




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




(vi)  Lender
      reserves the right, at its option and as a condition to any disbursement from
      the Replacement Reserve, to approve (1) all drawings and plans and
      specifications, if any, for any Work which require aggregate payments in amounts
      exceeding $25,000, and (2) all contracts and work orders with materialmen,
      mechanics, suppliers, subcontractors, contractors and other parties providing
      labor or materials in connection with any Work which require aggregate payments
      in amounts exceeding $25,000. Any such approval shall not be unreasonably
      withheld, conditioned or delayed and shall be deemed given if Lender fails
      to
      respond within ten (10) Business Days after Lender receives all information
      reasonably required to adequately review such drawings, plans and
      specifications, contracts or work orders.




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




70




(B)  **Performance
      of Work** .




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




(ii)  In
      the
      event Lender determines in its reasonable discretion that any Work is not being
      performed in a workmanlike or timely manner or that any Work has not been
      completed in a workmanlike manner, Lender shall have the option to withhold
      disbursement for such unsatisfactory work and so notify Borrowers with
      reasonable detail regarding the basis for Lender’s dissatisfaction and, after
      the expiration of thirty (30) days from the giving of such notice by Lender
      to
      Borrowers of such unsatisfactory work without the cure thereof (or, if such
      unsatisfactory work is susceptible of a cure but cannot reasonably be cured
      within said thirty (30) day period and provided that Borrowers shall have
      commenced to cure such unsatisfactory work within said thirty (30) day period
      and thereafter diligently and expeditiously proceeds to cure the same, after
      the
      expiration of such longer period as is reasonably necessary for Borrowers in
      the
      exercise of due diligence to cure such unsatisfactory work, up to a maximum
      of
      an additional sixty (60) days, without the cure thereof), Lender may proceed
      under existing contracts or contract with third parties to complete such Work,
      as the case may be, and apply amounts contained in the Replacement Reserve
      toward the labor and materials necessary to complete the same, without providing
      any additional prior notice to Borrowers, and exercise any and all other
      remedies available to Lender upon and during the continuance of an Event of
      Default hereunder.




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




71





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




(v)  Borrowers
      shall permit Lender and Lender’s agents and representatives (including, without
      limitation, Lender’s engineer, architect or inspector) or third parties
      performing any Work pursuant to this Section 6.6 to enter onto the Properties
      during normal business hours upon reasonable prior notice (subject to the rights
      of tenants under their Leases) to inspect the progress of any Work and all
      materials being used in connection therewith, to examine all plans and shop
      drawings relating thereto which are or may be kept at the Properties, and to
      complete any Work made pursuant to Section 6.6(B)(ii). Borrowers shall cause
      all
      contractors and subcontractors to cooperate with Lender or Lender’s
      representatives or such other persons described above in connection with
      inspections described in this Section 6.6(B) or the completion of the Work
      pursuant to this Section 6.6(B).




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




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




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




72





**Section
      6.7**  **Completion/Repair
      Reserve** **.** At
      Closing, Borrowers shall reserve from the proceeds of the Loan and shall deposit
      with Lender (or such agent of Lender as Lender may designate in writing from
      time to time), an amount equal to $850,527 (said funds, together with any
      interest thereon and additions thereto, the “ Completion/Repair
      Reserve ”)
      for
      certain work related to immediate physical repairs required on the Properties
      as
      indicated in the Property Condition Reports and/or Environmental Reports for
      the
      Individual Properties prepared and delivered prior to the Closing and as such
      work is more particularly described on Schedule
      6.7 (the
“ Immediate
      Repairs ”).
      Within 120 days after the Closing, Borrowers shall complete such Immediate
      Repairs and shall provide to Lender such documentation, and other evidence
      of
      compliance with law as Lender may reasonably require. The funds contained in
      the
      Completion/Repair Reserve shall be utilized by Borrowers solely for performance
      of the Immediate Repairs in accordance with the recommendations of the Property
      Condition Reports or Environmental Reports, as applicable, and in accordance
      with Lender’s reasonable requirements with respect to such Immediate Repairs,
      and shall not be used by any Borrower for purposes for which any other Reserve
      is established. Upon written application of Borrowers, Borrowers shall be
      entitled to draw upon the Completion/Repair Reserve to pay for costs that have
      been incurred by Borrowers for such Immediate Repairs, provided that (i) no
      Event of Default has occurred and is continuing, (ii) Borrowers shall provide
      to
      Lender such documentation and certifications as Lender may reasonably request
      to
      substantiate the requirement for and entitlement to such disbursement, (iii)
      Borrowers shall provide Lender with all invoices, receipts, lien waivers and
      other documentation of lawful and workmanlike progress or completion, lien-free
      status, and availability of sufficient funds, all as may be reasonably requested
      by Lender, and (iv) Borrowers shall provide Lender such evidence as may be
      reasonably satisfactory to Lender that after payment of any draw for Immediate
      Repairs, the funds remaining in such Reserve shall be sufficient to pay for
      the
      remainder of such Immediate Repairs. Subject to the foregoing conditions,
      Borrowers shall be entitled to draw any remaining balance in the
      Completion/Repair Reserve when all such Immediate Repairs have been completed
      to
      Lender’s reasonable satisfaction and have been paid for.




**ARTICLE
      VII**


**DEPOSIT
      ACCOUNT; CASH MANAGEMENT**




**Section
      7.1**  **Establishment
      of Accounts** **.**




(A)  **Clearing
      Account/Deposit Account** .
      Borrowers acknowledge and confirm that, on or before the Closing Date and
      pursuant to the terms hereof, Borrowers have established and will maintain
      (i)
      one or more an Eligible Accounts for the benefit of the Lender, as secured
      party
      hereunder, to serve (collectively, if more than one) as the “Clearing Account”
(said account(s), and any account(s) replacing the same in accordance with
      this
      Loan Agreement, the “ Clearing
      Account ”;
      and
      the depositary institution in which the Clearing Account is maintained is
      referred to as the “ Clearing
      Account Bank ”)
      and
      (ii) an Eligible Account for the benefit of Lender, as secured party hereunder,
      to service as the “Deposit Account” (said account, and any account replacing the
      same in accordance with this Loan Agreement, the “ Deposit
      Account ”;
      and
      the depositary institution in which the Deposit Account is maintained, the
      “ Deposit
      Account Bank ”;
      the
      Clearing Account Bank and the Deposit Account Bank are sometimes collectively
      referred to herein as the “ Account
      Banks ”).
      The
      Clearing Account and the Deposit Account shall be under the sole dominion and
      control of Lender (which dominion and control may be exercised by Servicer);
      and
      except as expressly provided hereunder, Borrowers shall have no rights to
      control or direct the investment or payment of funds therein. Lender may elect
      to change any financial institution in which any of the Clearing Account and/or
      the Deposit Account shall be maintained. The Deposit Account shall be deemed
      to
      contain such sub-accounts as Lender may designate (“ Sub-Accounts ”),
      which
      may be maintained as separate ledger accounts and need not be separate Eligible
      Accounts. The Sub-Accounts shall include the following:




73




(i)  “ **Debt
      Service Sub-Account** ”
shall
      mean the Sub-Account of the Deposit Account established for the purposes of
      reserving for payments of the Monthly Debt Service Payments and other amounts
      due Lender under the Loan Documents.




(ii)  “ **Reserve
      Sub-Accounts** ”
shall
      mean the Sub-Accounts of the Deposit Account established for the purpose of
      holding funds in the Reserves including: (a) the “ Impositions
      and Insurance Reserve Sub-Account ”
(which
      shall hold the Impositions and Insurance Reserve); (b) the “ Replacement
      Reserve Sub-Account ”
(which
      shall hold the Replacement Reserve); (c) the “ Completion/Repair
      Reserve Sub-Account ”
(which
      shall hold the Completion/Repair Reserve); and (d) “ Supplemental
      Debt Reserve Sub-Account ”.




(iii)  “ **Operating
      Expenses Sub-Account** ”
shall
      mean the Sub-Account of the Deposit Account established for the purposes of
      reserving for payments for Operating Expenses.




(iv)  “ **Security
      Deposit Sub-Account** ”
shall
      mean the Sub-Account of the Deposit Account established for the purpose of
      holding Security Deposits.




(B)  **Account
      Name** .
      The
      Accounts shall each be in the name of Lender, as secured party, or, at Lender’s
      option, in the name of the Borrowers for the benefit of Lender, as secured
      party; provided, however, that in the event Lender transfers or assigns the
      Loan, the Account Banks, at Lender’s request, shall change the name of each
      Account or the beneficiary thereof to the name of the transferee or assignee.
      In
      the event Lender retains a Servicer to service the Loan, the Account Banks,
      at
      Lender’s request, shall change the name of each Account or the beneficiary
      thereof to the name of Servicer, as agent for Lender.




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




74




(D)  **Permitted
      Investments** .
      Sums on
      deposit in the Accounts shall not be invested except in Permitted Investments.
      Funds in the Clearing Account shall not bear interest or be subject to
      investment. Except during the existence of any Event of Default, Borrowers
      shall
      have the right to direct Deposit Account Bank to invest sums on deposit in
      the
      Deposit Account (including the Sub-Accounts) in Permitted Investments approved
      by the Deposit Account Bank; provided, however, in no event shall Borrowers
      direct Deposit Account Bank to make a Permitted Investment if the maturity
      date
      of that Permitted Investment is later than the date on which the invested sums
      are required for payment of an obligation for which the Account was created.
      After an Event of Default and during the continuance thereof, Lender may direct
      the Deposit Account Bank to invest sums on deposit in the Deposit Account
      (including the Sub-Accounts) in Permitted Investments as Lender shall determine
      in its sole discretion. Each Borrower hereby irrevocably authorizes and directs
      the Deposit Account Bank to apply any income earned from Permitted Investments
      to the respective Accounts. The amount of actual losses sustained on a
      liquidation of a Permitted Investment shall be deposited into the Deposit
      Account by Borrowers no later than one (1) Business Day following such
      liquidation to the extent required to meet current obligations. Borrowers shall
      be responsible for payment of any federal, state or local income or other tax
      applicable to income earned from Permitted Investments. The Accounts shall
      be
      assigned the federal tax identification numbers of Borrowers. Any interest,
      dividends or other earnings which may accrue on the Accounts shall be added
      to
      the balance in the applicable Account and allocated and/or disbursed in
      accordance with the terms hereof; provided that any interest, dividends or
      other
      earnings from funds deposited as part of the Impositions and Insurance Reserve
      shall be retained by Lender or its designee (such as the Servicer) as its
      property and supplemental compensation.




**Section
      7.2**  **Deposit
      of Receipts into the Clearing Account and the Deposit
      Account** **.** Borrowers shall and shall cause Manager to direct any and all Rents and other
      Receipts to be deposited promptly into the Clearing Account and in no event
      later than two (2) Business Days after the same are paid to or for the benefit
      of Borrowers. To the extent that Borrowers or any Person on any Borrower’s
      behalf holds any Receipts or Security Deposits, whether in accordance with
      this
      Loan Agreement or otherwise, (i) such amounts shall be deemed to be Collateral
      and shall be held in trust for the benefit, and as the property, of Lender,
      (ii)
      such amounts shall not be commingled with any other funds or property of
      Borrowers or Manager, and (iii) Borrowers or Manager shall deposit such amounts
      in the Clearing Account within two (2) Business Days of receipt. So long as
      the
      Loan shall be outstanding, neither Borrowers nor Manager shall open any other
      property accounts other than the Operating Account and the other Accounts for
      the deposit of Rent, Security Deposits or revenues from the Properties.
      Borrowers represent, warrant and covenant that there are no other accounts
      maintained by Borrowers or Manager into which revenues from the ownership and
      operation of the Properties are deposited.




**Section
      7.3**  **Application
      of Funds in Accounts** **.**




(A)  **Allocations** .
      If any
      Event of Default shall occur and be continuing, then notwithstanding anything
      to
      the contrary in this Section or elsewhere, Lender shall have all rights and
      remedies available under applicable law and under the Loan Documents. Prior
      to
      the occurrence of a Cash Trap Condition, Borrower shall be permitted pursuant
      to
      the Clearing Account Agreement to access and direct the withdrawal and
      disposition of funds in the Clearing Account. Upon and after the occurrence
      of a
      Cash Trap Condition and unless and until a Cash Trap Cure with respect thereto,
      Lender may direct the Clearing Account Bank to transfer all funds deposited
      in
      to the Clearing Account into the Deposit Account on a daily basis, and Lender
      shall direct the Deposit Account Bank to allocate all available funds on deposit
      in the Deposit Account (other than those previously allocated to Sub-Accounts,
      and excepting any Rent that is paid more than one (1) month in advance, which
      shall be retained in the Deposit Account until payment thereof is due under
      the
      applicable Lease) on each Payment Date in the following amounts and order of
      priority:




75




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




(ii)  Second,
      to the Debt Service Sub-Account in the amount of the Monthly Debt Service
      Payment due on such Payment Date, for application on such Payment Date in
      accordance with Section 2.4(A) hereof;




(iii)  Third,
      to
      Lender to pay any other amounts, if any, then due Lender under the Loan
      Documents;




(iv)  Fourth,
      to the Replacement Reserve Sub-Account in the amount of the monthly deposit
      required to be made into the Replacement Reserve pursuant to Section 6.4 hereof
      on such Payment Date;




(v)  Fifth,
      an
      amount equal to the applicable monthly operating expenses (other than repairs,
      replacements and capital expenditures, unless specifically approved by Lender
      for purposes of disbursements) provided in the Approved Operating Budget (or
      such other amount as shall be approved by Lender) shall be transferred to the
      Operating Expenses Sub-Account under the control of Lender; and




(vi)  Sixth,
      all available amounts on each Payment Date after allocation for items (i)
      through (v) above shall be deposited into the Supplemental Debt Reserve
      Sub-Account and held as additional collateral for the Obligations.




(B)  **Cure
      of Cash Trap Condition** .
      So long
      as no Event of Default exists, a Cash Trap Condition occurring due to a Debt
      Service Coverage Ratio of less than the Minimum DSCR Threshold shall be deemed
      cured if the Properties achieve a Debt Service Coverage Ratio of not less than
      the Minimum DSCR Ratio for two consecutive Calendar Quarters after the
      occurrence of the Cash Trap Condition, measured at the end of each such two
      consecutive Calendar Quarters (each a “ Cash
      Trap Cure ”).
      From
      and after a Cash Trap Cure and until the occurrence of a subsequent Cash Trap
      Condition, if any, Lender shall direct the Deposit Account Bank to disburse
      any
      balance in the Supplemental Debt Reserve Sub-Account to Borrower.




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




76




(D)  **Operating
      Expenses Disbursements** .
      Funds
      deposited into the Operating Expenses Sub-Account on or prior to any Payment
      Date shall be disbursed to Borrowers on or promptly following such Payment
      Date,
      and Borrowers shall use such funds for the payment of Operating Expenses and
      Capital Expenditures approved by Lender and not funded by the Replacement
      Reserve, in accordance with the Approved Operating Budget, provided, that Lender
      may require compliance with reasonable conditions prior to disbursement of
      amounts for Operating Expenses held in the Operating Expenses Sub-Account
      including, without limitation, the following:




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




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




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




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




(v)  Lender
      shall have received evidence reasonably satisfactory to Lender, and Lender
      shall
      have determined that sufficient funds will be available for unincurred or
      unfunded remaining Operating Expenses in the Approved Operating Budget for
      such
      calendar month and any additional expenses then reasonably foreseen (and in
      the
      case of an imbalance, Lender may require a deposit of additional funds in the
      amount of the shortfall); and




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




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




77




**Section
      7.4**  **Budget
      Approvals** **.** No later
      than thirty (30) days prior to the expiration of each calendar year, Borrowers
      shall deliver to Lender the proposed Operating Budget and the Capital
      Expenditure Budget (in each case presented on a monthly and annual basis) for
      the Properties for the following calendar year. Each such proposed Operating
      Budget shall identify and set forth Borrowers’ best estimate, after due
      consideration, of all revenue, costs, and expenses for the Properties, and
      shall
      specify gross revenues and Operating Expenses. The Capital Expenditure Budget
      shall identify and set forth Borrowers’ best estimate, after due consideration,
      of all costs and expenses contemplated to be necessary in the related budget
      year (and, as to projects initiated or to be initiated in or prior to the budget
      year but not completed in the budget year, the estimated cost and completion
      schedule) for capital improvements and leasehold improvements, leasing
      commissions and other leasing costs not included in the Operating Budget, and
      the contemplated sources of payment of the same. In the event that either a
      Cash
      Trap Condition or an Event of Default exists, the Operating Budget shall be
      subject to Lender’s reasonable approval, and upon such approval shall, with any
      amendments thereto approved by Lender from time to time, constitute the
“ Approved
      Operating Budget ”
      hereunder. Borrower shall provide a proposed Approved Operating Budget to Lender
      for the then-remaining calendar year within five (5) Business Days after the
      occurrence of a Cash Trap Condition, and thereafter while a Cash Trap Condition
      exists shall provide a proposed Approved Operating Budget to Lender for each
      succeeding calendar year at least thirty (30) days prior to the end of each
      calendar year. If a proposed Approved Operating Budget is not in form and
      substance reasonably satisfactory to Lender, Lender may disapprove the same
      and
      specify the reasons therefor, and Borrowers shall promptly amend and resubmit
      for approval a revised budget, making such changes as are necessary to comply
      with the reasonable requirements of Lender; provided that until such time as
      Borrowers have resubmitted the revised budget and Lender has approved such
      revised budget, the parties shall operate under the provisions of this Article
      VII using the budget submitted to Lender as proposed to be revised by Lender,
      except that actual amounts shall be used for real estate taxes, insurance
      premiums for insurance required hereunder and utilities expenses. Capital
      Expenditures shall not be included in the Approved Operating Budget unless
      Lender shall approve the same in writing in its sole and absolute
      discretion.




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




78




**Section
      7.6**  **Pledge
      of Accounts** **.**




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




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




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




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




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




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




(B)  **Rights
      on Default** .
      Upon
      the occurrence and during the continuance of an Event of Default, Lender may
      notify each of the Account Banks of such Event of Default and, without notice
      from Account Banks or Lender, (a) Borrowers shall have no further right in
      respect of (including, without limitation, the right to instruct Lender or
      any
      Account Bank to transfer from) the Accounts, (b) Lender may direct the Account
      Banks to liquidate and transfer any amounts then invested in Permitted
      Investments to the Accounts or reinvest such amounts in other Permitted
      Investments as Lender may reasonably determine is necessary to perfect or
      protect any security interest granted or purported to be granted hereby or
      to
      enable Account Banks, as agent for Lender, or Lender to exercise and enforce
      Lender’s rights and remedies hereunder with respect to any Account Collateral,
      and (c) Lender may apply any Account Collateral to any Obligations in such
      order
      of priority as Lender may determine. The proceeds of any disposition of the
      Account Collateral, or any part thereof, may be applied by Lender to the payment
      of the Obligations in such priority and proportions as Lender in its discretion
      shall deem proper.




(C)  **Financing
      Statement; Further Assurances** .
      Each
      Borrower hereby irrevocably authorizes Lender at any time and from time to
      time
      to file in any filing office in any jurisdiction any initial financing
      statements and amendments thereto that (1) indicate the Account Collateral
      and
      other Collateral (i) as all assets of such Borrower or words of similar effect,
      regardless of whether any particular asset comprised in the Account Collateral
      or other Collateral falls within the scope of Article 9 of the UCC or such
      jurisdiction, or (ii) as being of an equal or lesser scope or with greater
      detail, and (2) contain any other information required by Part 5 of Article
      9 of
      the UCC for the sufficiency or filing office acceptance of any financing
      statement or amendment, including (x) whether such Borrower is an organization,
      the type of organization and any organization identification number issued
      to
      such Borrower, and (y) a sufficient description of real property to which the
      Collateral relates. Each Borrower agrees to furnish any such information to
      Lender promptly upon request. Each Borrower also ratifies its authorization
      for
      Lender to have filed in any jurisdiction any initial financing statements or
      amendments thereto if filed prior to the date hereof. Each Borrower agrees
      that
      at any time and from time to time, at the expense of such Borrower, such
      Borrower will promptly execute and deliver all further instruments and
      documents, and take all further action, that may be reasonably necessary or
      desirable, or that Lender may reasonably request, in order to perfect and
      protect any security interest granted or purported to be granted hereby
      (including, without limitation, any security interest in and to any Permitted
      Investments) or to enable Lender to exercise and enforce its rights and remedies
      hereunder with respect to any Account Collateral. In the event of any change
      in
      name, identity or structure of any Borrower, such Borrower shall notify Lender
      thereof and promptly after Lender’s request shall execute, file and record such
      UCC financing statements as are necessary to maintain the priority of Lender's
      lien upon and security interest in the Account Collateral, and shall pay all
      expenses and fees in connection with the filing and recording thereof. If Lender
      shall require the filing or recording of additional UCC financing or
      continuation statements, each Borrower shall, promptly after request, execute,
      file and record such UCC financing or continuation statements as Lender shall
      deem necessary, and shall pay all expenses and fees in connection with the
      filing and recording thereof.




79




(D)  **Termination
      of Agreement** .
      This
      Loan Agreement shall create a continuing security interest in the Account
      Collateral and shall remain in full force and effect until payment in full
      of
      the Obligations. Upon payment and performance in full of the Obligations, this
      Loan Agreement shall terminate and Borrowers shall be entitled to the return,
      upon its request and at their expense, of such of the Account Collateral as
      shall not have been sold or otherwise applied pursuant to the terms hereof,
      and
      Lender shall execute such instruments and documents as may be reasonably
      requested by Borrowers to evidence such termination and the release of the
      lien
      hereof.




**Section
      7.7**  **Lender
      Appointed Attorney-In-Fact** **.** Each
      Borrower hereby irrevocably constitutes and appoints Lender as such Borrower’s
      true and lawful attorney-in-fact, coupled with an interest and with full power
      of substitution, to execute, acknowledge and deliver after an Event of Default
      any instruments and to exercise and enforce every right, power, remedy, option
      and privilege of such Borrower with respect to the Account Collateral, and
      do in
      the name, place and stead of such Borrower, all such acts, things and deeds
      for
      and on behalf of and in the name of such Borrower, which such Borrower is
      required to do hereunder or under the other Loan Documents or which Lender
      may
      deem necessary or desirable to more fully vest in Lender the rights and remedies
      provided for herein and to accomplish the purposes of this Loan Agreement
      including the filing of any UCC financing statements or continuation statements
      in appropriate public filing offices on behalf of such Borrower, in any of
      the
      foregoing cases, upon such Borrower’s failure to take any of the foregoing
      actions within five (5) Business Days after notice from Lender. The foregoing
      powers of attorney are irrevocable and coupled with an interest. If any Borrower
      fails to perform any agreement herein contained and such failure shall continue
      for five (5) Business Days after notice of such failure is given to Borrowers,
      Lender may perform or cause performance of any such agreement, and any
      reasonable expenses of Lender and any Account Banks in connection therewith
      shall be paid by Borrowers.




80




**ARTICLE
      VIII**


**DEFAULT,
      RIGHTS AND REMEDIES**




**Section
      8.1**  **Event
      of Default** **.**




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




(A)  **Scheduled
      Payments** .
      Failure
      of Borrowers to pay any scheduled payment amount when the same is due under
      this
      Loan Agreement, the Note, or any other Loan Documents (whether such amount
      is
      interest, principal, Reserves, or otherwise), including the failure to pay
      all
      outstanding Obligations on the Maturity Date; or




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




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




(D)  **Breach
      of Provisions Regarding Insurance, Transfers, Liens, Single
      Purpose** .
      (i)
      Failure to keep in force the insurance required by Section 5.4 hereof; (ii)
      the
      failure to comply with any other covenant of Section 5.4 which failure under
      this clause (ii) continues for five (5) Business Days after notice from Lender;
      (iii) breach of Article IX or Article XI hereof; (iv) breach or default under
      any of Sections 5.13(B), 5.17, 5.18 or 5.19 hereof; or (v) breach or default
      under Section 6.5 hereof or Section 7.2 hereof; or




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




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




81




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




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




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




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




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




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




82




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




(N)  **Default
      under Management Agreement** .
      Any
      event of default on the part of any Borrower shall occur and be continuing
      under
      any Management Agreement.




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




**Section
      8.2**  **Acceleration
      and Remedies** **.**




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




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




83




(C)  Lender
      shall have the right from time to time to partially foreclose any or all of
      the
      Mortgages in any manner and for any amounts secured by such Mortgage(s) then
      due
      and payable as determined by Lender in its sole discretion including, without
      limitation, the following circumstances: (i) in the event Borrowers default
      beyond any applicable grace period in the payment of one or more scheduled
      payments of principal and interest, Lender may foreclose any of the Mortgages
      to
      recover such delinquent payments, or (ii) in the event Lender elects to
      accelerate less than the entire outstanding principal balance of the Loan,
      Lender may foreclose any Mortgage to recover so much of the principal balance
      of
      the Loan as Lender may accelerate and such other sums secured by such Mortgage
      as Lender may elect. Notwithstanding one or more partial foreclosures, the
      Properties shall remain subject to the Mortgages to secure payment of sums
      secured by the Mortgages and not previously recovered.




(D)  Any
      amounts recovered from the Properties or any other collateral for the Loan
      after
      an Event of Default may be applied by Lender toward the payment of any interest
      and/or principal of the Loan and/or any other amounts due under the Loan
      Documents in such order, priority and proportions as Lender in its sole
      discretion shall determine.




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




**Section
      8.3**  **Performance
      by Lender** **.**




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




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




84




**ARTICLE
      IX**


**SINGLE-PURPOSE,
      BANKRUPTCY-REMOTE REPRESENTATIONS,**


**WARRANTIES
      AND COVENANTS**




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




(A)  was
      organized solely for purpose of owning and operating its Applicable Individual
      Property;




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




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




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




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




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




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




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




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




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




85




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




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




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




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




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




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




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




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




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




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




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




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




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




86




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




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




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




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




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




(CC)  maintains,
      and will continue to maintain its books and records and financial statements
      separate from those of any other Person;




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




(EE)  does
      not
      and will not commingle its funds or assets with those of any other Person,
      and
      holds and will hold its assets in its own name;




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




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




87




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




(II)  shall
      cause reputable Delaware counsel acceptable to Lender (the “ Delaware
      Law Firm ”)
      to
      deliver to Lender an opinion letter reasonably satisfactory to Lender, whereby
      the Delaware Law Firm opines (which opinion may be subject to standard
      assumptions, qualifications, limitations and exceptions acceptable to Lender),
      among other requirements of Lender, that: (1) the unanimous consent of the
      Sole
      Member and the Independent Director is required in order for such Borrower
      to
      file a voluntary bankruptcy petition; (2) the provision in such Borrower’s
      Borrower Organizational Documents that requires unanimous consent as a condition
      to filing a voluntary bankruptcy petition is enforceable against the Sole
      Member; (3) the bankruptcy, dissolution, liquidation or death of the Sole Member
      will not cause such Borrower to be dissolved; (4) no creditor of the Solo Member
      shall have the right to obtain possession of, or otherwise exercise legal or
      equitable remedies with respect to, any of such Borrower’s property; and (5)
      Delaware law, not federal law, governs the determination of what persons or
      entities have the authority to file a voluntary bankruptcy petition on behalf
      of
      such Borrower.




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




**ARTICLE
      X**


**RESTRUCTURING
      LOAN, SECONDARY MARKET TRANSACTIONS**




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




88




**Section
      10.2**  **Cooperation;
      Limitations** **.** Borrowers shall use all reasonable efforts and cooperate in good faith with
      Lender in effecting any such restructuring or Secondary Market Transaction.
      Such
      cooperation shall include without limitation, executing and delivering such
      amendments to the Loan Documents and the organizational documents of any
      Borrower as Lender may request at no material out-of-pocket cost to Borrowers,
      provided however that no such amendment shall modify (i) the aggregate weighted
      average of the interest rate payable under the Loan, (ii) the stated maturity
      date of the Loan, (iii) the aggregate amortization of the principal amount
      of
      the Loan, (iv) the non-recourse provisions of the Loan or (v) any provision,
      the
      effect of which would materially and substantively increase Borrowers’
obligations or materially and substantively decrease Borrowers’ rights under the
      Loan Documents. Such cooperation also shall include using reasonable efforts
      to
      obtain such certificates and assurances from governmental entities and others
      as
      Lender may reasonably request.




**Section
      10.3**  **Information** **.** Borrowers shall provide such access to the Properties, personnel of the Manager
      and of Borrowers’ constituent members and such information, reports, copies of
      notices and documents relating to Borrower Parties, Manager, the Properties
      and
      Collateral and the business and operations of all of the foregoing and such
      opinions of counsel (including, without limitation, nonconsolidation opinions)
      as Lender may reasonably request or as any Rating Agency may request in
      connection with any such Secondary Market Transaction including, without
      limitation, updated financial information, appraisals, market studies,
      environmental reviews (Phase Is and, if appropriate, Phase IIs), property
      condition reports and other due diligence investigations together with
      appropriate verification of such updated information and reports through letters
      of auditors and consultants and, as of the closing date of the Secondary Market
      Transaction, updated representations and warranties made in the Loan Documents
      and such additional representations and warranties any Rating Agency may request
      or Lender or any purchaser, transferee, assignee, trustee, servicer or potential
      investor (the Rating Agencies and all of the foregoing parties, collectively,
      “ Interested
      Parties ”)
      may
      reasonably request. Within ten (10) days after request by Lender, Borrowers
      shall provide an opinion of counsel reasonably satisfactory to Lender to the
      effect that the description of the Loan and the terms of the Loan Documents
      contained in the Disclosure Documents (hereinafter defined) and such other
      legal
      matters contained therein as Lender may reasonably require do not contain any
      untrue statement of any material fact or omit to state any material fact
      necessary to make the statements therein not misleading and if required by
      any
      Rating Agency or reasonably required by Lender, shall provide revisions or
      “bringdowns” to the opinions delivered at Closing (including nonconsolidation
      opinions), or if required new versions of such opinions, addressed to Lender,
      any trustee under any Securitization backed in whole or in part by the Loan,
      any
      Rating Agency that assigns a rating to any securities in connection therewith
      and any investor purchasing securities therein. Lender shall be permitted to
      share all such information with the investment banking firms, Rating Agencies,
      accounting firms, law firms, other third party advisory firms, potential
      investors, servicers and other service providers and other parties involved
      in
      any proposed Secondary Market Transaction. Borrowers understand that any such
      information may be incorporated into any offering circular, prospectus,
      prospectus supplement, private placement memorandum or other offering documents
      for any Secondary Market Transaction. Lender and all of the aforesaid
      third-party advisors and professional firms and investors shall be entitled
      to
      rely upon such information. Without limiting the foregoing, Borrowers and
      Guarantor shall provide in connection with each of (i) a preliminary and a
      final
      private placement memorandum or (ii) a preliminary and final prospectus or
      prospectus supplement, as applicable (the documents referred to in the foregoing
      clauses (i) and (ii), collectively, the “ Disclosure
      Documents ”),
      an
      agreement certifying that Borrowers and Guarantor have examined such Disclosure
      Documents specified by Lender and that each such Disclosure Document, as it
      relates to Borrowers, Guarantor, any Affiliates, the Properties, Manager and
      all
      other aspects of the Loan, does not, and as to information provided in third
      party reports of engineers and environmental consultants, to Borrowers’ and
      Guarantor’s knowledge after due inquiry, does not contain any untrue statement
      of a material fact or omit to state a material fact necessary in order to make
      the statements made, in the light of the circumstances under which they were
      made, not misleading (a “ Disclosure
      Certificate ”).
      Borrowers and Guarantor shall, jointly and severally, indemnify, defend, protect
      and hold harmless Lender, its Affiliates, directors, employees, agents and
      each
      Person, if any, who controls Lender or any such Affiliate within the meaning
      of
      Section 15 of the Securities Act of 1933 or Section 20 of the Securities
      Exchange Act of 1934, and any other placement agent or underwriter with respect
      to any Securitization or Secondary Market Transaction from and against any
      losses, claims, damages, liabilities, costs and expenses (including, without
      limitation, reasonable attorneys’ fees and disbursements) that arise out of or
      are based upon any untrue statement of any material fact contained in any
      Disclosure Certificate or other information or documents furnished by any
      Borrower, Guarantor or their Affiliates or in any representation or warranty
      of
      any Borrower Party contained herein or in the other Loan Documents or arise
      out
      of or are based upon the omission or alleged omission to state therein a
      material fact required to be stated in such information or necessary in order
      to
      make the statements in such information not materially misleading. Lender and
      its Affiliates may publicize the existence of the Obligations in connection
      with
      Lender’s Secondary Market Transaction activities or otherwise.




89




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




90




**ARTICLE
      XI**


**RESTRICTIONS
      ON LIENS, TRANSFERS; RELEASE OF PROPERTIES**




**Section
      11.1**  **Restrictions
      on Transfer and Encumbrance** **.** Except
      as expressly permitted in this Article XI, no Borrower shall cause or suffer
      to
      occur or exist, directly or indirectly, voluntarily or involuntarily, by
      operation of law or otherwise, any sale, transfer, mortgage, pledge, Lien or
      encumbrance (other than Permitted Encumbrances) of (i) all or any part of any
      of
      the Properties or any interest therein, or (ii) any direct or indirect ownership
      or beneficial interest in any Borrower or Sole Member, irrespective of the
      number of tiers of ownership or any profits or proceeds of any such direct
      or
      indirect ownership interest, or (iii) any change of control of any Borrower
      or
      Sole Member (any of the foregoing, a “ Transfer ”)
      without the prior written consent of Lender, which Lender may withhold in its
      sole and absolute discretion.




**Section
      11.2**  **Permitted
      Transfers of Beneficial Interests in Sole Member** **.** Transfers (but not pledges, collateral assignments or encumbrances) of direct
      or
      indirect ownership interests in the Sole Member shall be permitted without
      Lender’s consent provided that (i) no Event of Default then exists, (ii)
      Borrowers shall give Lender written notice of such transfer together with copies
      of all instruments effecting such transfer not less than ten (10) Business
      Days
      prior to the date of such transfer; (iii) such transfer does not and will not
      result in the termination or dissolution of any Borrower, by operation of law
      or
      otherwise; (iv) Sole Member shall continue to be the sole member of each
      Borrower; (v) no Person not currently owning, directly or indirectly, more
      than
      49% of the beneficial director or indirect ownership interests in Sole Member
      acquires (together with such Person’s immediate family members and Affiliates)
      more than 49% of the beneficial direct or indirect ownership interests in Sole
      Member; (vi) David Lichtenstein continues to directly or indirectly control
      Sole
      Member and each Borrower; (vii) such transfer shall not result in a change
      of
      control of such Borrower or Sole Member or a change of Manager without Lender’s
      written consent; and (viii) in each case, the single purpose nature and
      bankruptcy remoteness of each Borrower after such transfer is satisfactory
      to
      Lender and in accordance with the standards of the Rating Agencies.




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




91




**Section
      11.3**  **Assumability** **.** In the
      event that the Borrowers desire to transfer all of the Properties (it being
      understood and agreed that no transfer of any Individual Property less than
      all
      of the Properties shall be permitted pursuant to this Section 11.3) to another
      party (the “ Transferee
      Borrower ”)
      and
      have the Transferee Borrower assume all Borrowers’ obligations under the Loan
      Documents, and have replacement guarantors and indemnitors assume all of the
      obligations of Guarantor under the Loan Documents from and after such transfer
      (collectively, a “ Transfer
      and Assumption ”),
      Borrowers may make a written application to Lender for Lender’s consent to the
      Transfer and Assumption, subject to the conditions set forth in this Section;
      provided that no more than one Transfer and Assumption shall be permitted during
      the term of the Loan. Together with such written application, Borrowers shall
      pay to Lender the reasonable review fee then required by Lender. Borrowers
      also
      shall pay on demand all of the out-of- pocket costs and expenses incurred by
      Lender, including reasonable attorneys’ fees and expenses, and including the
      fees and expenses of Rating Agencies and other outside entities, in connection
      with considering any proposed Transfer and Assumption, whether or not the same
      is permitted or occurs. Lender may grant or withhold its consent to a Transfer
      and Assumption in its sole and absolute discretion. Completion of any Transfer
      and Assumption shall be subject to such conditions as Lender may determine
      to
      impose, and shall in any event be subject to satisfaction of the following
      conditions:




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




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




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




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




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




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




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




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




92




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




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




Upon
      completion of a Transfer and Assumption permitted under this Section 11.3 and
      execution of replacement guaranties and indemnities by replacement guarantors
      and indemnitors approved by Lender as provided in this Section 11.3, Borrower
      and any original Guarantors shall, as part of the documentation executed at
      the
      closing of the Transfer and Assumption, be released from liability under the
      Loan Documents accruing from and after the completion of the Transfer and
      Assumption, but not from any liabilities for acts and occurrences taking place
      prior thereto.




**ARTICLE
      XII**


**RECOURSE;
      LIMITATIONS ON RECOURSE**




**Section
      12.1**  **Limitations
      on Recourse** **.** Subject
      to the provisions and qualifications of this Article, Lender shall not enforce
      the liability and obligation of the Borrowers to perform and observe any of
      their obligations that may be contained in the Note, this Loan Agreement, the
      Mortgages or any other Loan Document by any action or proceeding wherein a
      money
      judgment shall be sought against Borrowers, except that Lender may bring a
      foreclosure action, an action for specific performance or any other appropriate
      action or proceeding to enable Lender to enforce and realize upon its interest
      under the Note, this Loan Agreement, the Mortgages and the other Loan Documents,
      or in the Properties, the Rents, or any other Collateral pursuant to the Loan
      Documents; provided , however ,
      that,
      except as specifically provided herein, any judgment in any such action or
      proceeding shall be enforceable against Borrowers only to the extent of
      Borrowers’ interest in the Properties, in the Rents and in any other Collateral.
      Lender, by accepting the Note, this Loan Agreement, the Mortgages and the other
      Loan Documents, shall not sue for, seek or demand any monetary judgment against
      any Borrower in any such action or proceeding under or by reason of or under
      or
      in connection with the Note, this Loan Agreement, the Mortgage or the other
      Loan
      Documents. Notwithstanding anything to the contrary in this Loan Agreement,
      the
      Mortgages or any of the Loan Documents, the provisions of this Section 12.1
      and
      the other provisions of the Loan Documents shall not, however: (a) constitute
      a
      waiver of any right which Lender may have under Sections 506(a), 506(b), 1111(b)
      or any other provisions of the Bankruptcy Code to file a claim for the full
      amount of the Obligations secured by the Mortgages or to require that all
      Collateral shall continue to secure all of the Obligations owing to Lender
      in
      accordance with the Loan Documents; (b) constitute a waiver, release or
      impairment of any obligation evidenced or secured by any of the Loan Documents;
      (c) impair the right of Lender to name any Borrower as a party defendant in
      any
      action or suit for foreclosure and sale under any of the Mortgages or other
      Loan
      Documents; (d) impair the right of Lender to obtain the appointment of a
      receiver; (e) impair the enforcement of any of the Assignments of Leases; or
      (f)
      constitute a prohibition against Lender to seek a deficiency judgment against
      Borrowers in order to fully realize the security granted by the Mortgages and
      other Loan Documents or to commence any other appropriate action or proceeding
      in order for Lender to exercise its remedies against the Properties or any
      other
      Collateral.




93







**Section
      12.2**  **Recourse
      to Borrowers and Guarantor** **.** Notwithstanding the provisions of Section 12.1 or anything contained herein
      to
      the contrary, Borrowers and Guarantor shall be personally liable for, and the
      provisions of Section 12.1 shall not in any way limit or constitute a waiver
      of
      the right of Lender to enforce the liability and obligation of Borrowers and
      Guarantor, by money judgment or otherwise, for the following, all of which
      shall
      be the personal obligation and liability of Borrowers under this Loan Agreement
      and of Guarantor under the Guaranty: (A) the entire Loan and all the other
      Obligations in the event of (i) a voluntary bankruptcy filing or other similar
      event by any Borrower; (ii) any Involuntary Borrower Party Bankruptcy which
      is
      solicited, procured, consented to or acquiesced in by any Borrower Party or
      any
      Affiliate of any of them; (iii) any failure of any Borrower to comply with
      Section 9.1 of this Agreement such that such failure was considered by a court
      as a factor in the court’s finding for a consolidation of the assets of Borrower
      with the assets of another Person; (iv) any transfer of, or grant by any
      Borrower of a lien upon, the Property or any portion thereof in violation of
      Section 11.1 of this Agreement, or any transfer or grant of a lien upon any
      direct or indirect interest in any Borrower in violation of Section 11.1, or
      any
      other intentional violation of Section 11.1 of this Agreement; or (v) the
      failure of any Borrower to pay to Lender the first regularly scheduled
      installment of principal and interest on the Loan on the First Payment Date;
      and
      (B) without limiting the provisions of clause (A) above, any liability, loss,
      damage, cost or expense (including, without limitation, attorneys’ fees and
      expenses) suffered or incurred by Lender resulting from any and all of the
      following: (i) the occurrence of any of the events described in the foregoing
      clauses (A)(i) or (A)(ii), or any breach of Section 9.1 or Section 11.1 of
      this
      Agreement (in each case without a duplication of recovery by virtue of such
      matters resulting in recourse under both the foregoing clause (A) and this
      clause (B)); (ii) fraud or intentional misrepresentation by any Borrower Party
      or any Affiliate thereof in this Loan Agreement or any other Loan Document
      or
      otherwise in connection with the Loan; (iii) misappropriation of, or other
      failure by any Borrower Party or any Affiliate thereof to apply in accordance
      with the provisions of the Loan Documents, any insurance proceeds, condemnation
      awards or other sums or payments relating to the Properties or the insurance
      required hereunder, or any rents, profits, issues, products and income of the
      Properties, Security Deposits, Lease termination payments or recoveries upon
      Leases, Prepaid Rents or any other funds received or collected by or on behalf
      of any Borrower or any Borrower Party or any Affiliate, including any failure
      or
      refusal to deliver Security Deposits to Lender as required under this Loan
      Agreement; (iv) any payments made by any Borrower to any Affiliate thereof
      in
      violation of the Loan Documents after the occurrence and during the continuance
      of an Event of Default; (v) any removal or disposal of any portion of any of
      the
      Properties by any Borrower Party, its agents, Affiliates, officers, employees
      or
      property manager to the extent such portion of the Properties is not replaced
      by
      the Borrowers with like property of equivalent value; (vi) intentional waste
      of
      any of the Properties; (vii) any Borrower Party or any Affiliate of any of
      them
      contests or in any way interferes with, directly or indirectly, any foreclosure
      action or sale commenced by Lender or with any other enforcement of Lender’s
      rights, powers or remedies under any of the Loan Documents or under any document
      evidencing, securing or otherwise relating to any of the Properties or any
      other
      collateral for the Obligations (whether by making any motion, bringing any
      counterclaim, claiming any defense, seeking any injunction or other restraint,
      commencing any action seeking to consolidate any such foreclosure or other
      enforcement with any other action, or otherwise), other than contests brought
      in
      good faith by any Borrower upon which such Borrower ultimately prevails pursuant
      to a final, non-appealable judgment entered against Lender; (viii) the seizure
      or forfeiture of any of the Properties, or any portion thereof, or Lender’s
      interest therein, resulting from criminal wrongdoing by any Borrower, its
      respective agents, Affiliates, officers or employees; (ix) any claims for
      payment of any commission, charge or brokerage fee to anyone which may be
      payable in connection with the Closing and funding of the Loan; (x) any
      Borrower’s failure to pay transfer fees and charges due Lender under the Loan
      Documents in connection with any transfer of all or any part of any of the
      Properties, or any interest therein, from such Borrower to such Borrower’s
      transferee, or transfer of any beneficial interest in such Borrower; (xi)
      failure by any Borrower to comply with the covenants, obligations, liabilities,
      warranties and representations contained in the Environmental Indemnity or
      otherwise pertaining to environmental matters; (xii) in the event Lender has
      waived (or any Borrower has failed to pay) the monthly collection for real
      and
      personal property taxes, assessments, insurance premiums, or ground rents,
      then
      failure by any Borrower to pay any or all such taxes, assessments, premiums
      and
      rents to the extent that income from the Properties is available for such
      purpose; (xiii) in the event that an Affiliate of any Borrower is the Manager,
      then any management fee taken by such Manager after the occurrence and during
      the continuation of an Event of Default unless otherwise approved by Lender
      in
      writing; or (xiv) willful misconduct by any Borrower, its agents, Affiliates,
      officers or employees which causes or results in a material diminution, or
      material loss of value, of any of the Properties that is not reimbursed by
      insurance or which willful misconduct exposes Lender to claims, liability or
      costs of defense in any litigation or other legal proceeding. In addition,
      Borrowers and Guarantors shall be personally liable for, and the provisions
      of
      Section 12.1 shall not in any way limit or constitute a waiver of the right
      of
      Lender to enforce the liability and obligation of Borrowers and Guarantor,
      by
      money judgment or otherwise, for all reasonable costs and expenses, including
      attorneys’ fees and expenses, incurred in collecting any amount due under the
      Loan Documents which, as to Borrowers, are recourse obligations of Borrowers
      as
      described in this Section 12.2 or, as to Guarantor, are recourse obligations
      of
      Guarantor under the Guaranty, or is an obligation of Borrowers and/or Guarantor
      under the Environmental Indemnity.






94






**Section
      12.3**  **Miscellaneous** **.** No
      provision of this Article shall (i) affect (A) the enforcement of, or (B) the
      personal liability of and recourse against any guarantor or indemnitor
      (including the Guarantor) and the assets of any such guarantor and indemnitor
      for all liabilities and obligations under, the Environmental Indemnity, the
      Guaranty or any guaranty or similar agreement executed in connection with the
      Loan, (ii) release or reduce the debt evidenced by the Note, (iii) impair the
      lien of the Mortgages, this Loan Agreement or any other Loan Document, (iv)
      impair the rights of Lender to enforce any provisions of the Loan Documents,
      or
      (v) limit Lender’s ability to obtain a deficiency judgment or judgment on the
      Loan or otherwise against any Borrower Party to the extent necessary to obtain
      any amount for which such Borrower Party may be personally liable in accordance
      with this Article or any other Loan Document.






95






**ARTICLE
      XIII**


**MISCELLANEOUS**




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




**Section
      13.2**  **Indemnity** **.** In
      addition to the payment of expenses as required elsewhere herein, whether or
      not
      the transactions contemplated hereby shall be consummated, Borrowers agree,
      jointly and severally, to indemnify, defend, protect, pay and hold Lender,
      its
      successors and assigns (including, without limitation, the trustee and/or the
      trust under any trust agreement executed in connection with any Securitization
      backed in whole or in part by the Loan and any other Person which may hereafter
      be the holder of the Note or any interest therein), and the officers, directors,
      stockholders, partners, members, employees, agents and Affiliates of Lender
      and
      such successors and assigns (collectively called the “ Indemnitees ”)
      harmless from and against any and all liabilities, obligations, losses, damages,
      penalties, actions, judgments, suits, claims, Tax Liabilities, broker’s or
      finders fees, reasonable costs, expenses and disbursements of any kind or nature
      whatsoever (including the reasonable fees and disbursements of counsel for
      such
      Indemnitees in connection with any investigative, administrative or judicial
      proceeding commenced or threatened, whether or not such Indemnitee shall be
      designated a party thereto) that may be imposed on, incurred by, or asserted
      against that Indemnitee, in any manner relating to or arising out of any of
      the
      following (to the extent that insurance proceeds paid on account of same shall
      be inadequate) (A) the enforcement of any of the Loan Documents; (B) any breach
      by any Borrower of any representation, warranty, covenant, or other agreement
      contained in any of the Loan Documents; (C) the presence, release, threatened
      release, disposal, removal, or cleanup of any Hazardous Material located on,
      about, within or affecting any of the Properties or any violation of any
      applicable Environmental Law for which any Borrower is liable; (D) any claim
      brought by any third party arising out of any condition or occurrence at or
      pertaining to any of the Properties; (E) any design, construction, operation,
      repair, maintenance, use, non-use or condition of any of the Properties or
      Improvements, including claims or penalties arising from violation of any
      applicable laws or insurance requirements, as well as any claim based on any
      patent or latent defect, whether or not discoverable by Lender; (F) any
      performance of any labor or services or the furnishing of any materials or
      other
      property in respect of any of the Properties or any part thereof; (G) any
      contest referred to in Section 5.3(B) hereof; (H) any obligation or undertaking
      relating to the performance or discharge of any of the terms, covenants and
      conditions of the landlord contained in the Leases; or (I) the use or intended
      use of the proceeds of any of the Loan (the foregoing liabilities herein
      collectively referred to as the “ Indemnified
      Liabilities ”),
      except to the extent caused by Lender’s gross negligence or willful misconduct.
      Any amounts payable to any Indemnitee by reason of the application of this
      Section 13.2 shall be payable on demand and shall bear interest at the Default
      Rate from the date such loss or damage is sustained by any Indemnitee until
      paid. The obligations and liabilities of Borrowers under this Section 13.2
      shall
      survive the term of the Loan and the exercise by Lender of any of its rights
      or
      remedies under the Loan Documents, including the acquisition of the Properties
      (or any of them) by foreclosure or a conveyance in lieu of
      foreclosure.






96






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




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




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




97





If
      to
      Borrowers or any Borrower Party:




c/o
      Lightstone Holdngs LLC


326
      Third
      Street


Lakewood,
      New Jersey 08701


Attention:
      David Lichtenstein


Facsimile:
      732-363-7183




With
      copies to:




Herrick,
      Feinstein LLP


2
      Park
      Avenue


New
      York,
      New York 10016


Attention:
      Sheldon Chanales, Esq.


Facsimile:
      212-545-3313




If
      to
      Lender:




Citigroup
      Global Markets Realty Corp.


388
      Greenwich Street, 19 th Floor


New
      York,
      New York 10013


Attn:
      Elisa DePalma


Facsimile:
      212-816-4197




With
      copies to:




Sidley
      Austin LLP


One
      South
      Dearborn Street


Chicago,
      Illinois 60603


Attn:
      Charles Schrank


Facsimile:
      (312) 853-7036




Any
      party
      may change the address at which it is to receive notices to another address
      in
      the United States at which business is conducted (and not a post-office box
      or
      other similar receptacle), by giving notice of such change of address in
      accordance with the foregoing. This provision shall not invalidate or impose
      additional requirements for the delivery or effectiveness of any notice (i)
      given in accordance with applicable statutes or rules of court, or (ii) by
      service of process in accordance with applicable law. If there is any assignment
      or transfer of Lender interest in the Loan, then the new Lender may give notice
      to the parties in accordance with this Section, specifying the addresses at
      which the new Lender shall receive notice, such new Lender shall be entitled
      to
      notice at such address in accordance with this Section. In the event that the
      Borrowers hereunder shall at any time consist of more than one (1) person or
      entity, then (x) any notice sent to the foregoing address(es) for notice for
      Borrowers shall be binding on each and all of the Borrowers, and (y) any notice
      sent by any of the persons or entities so comprising the Borrowers shall be
      binding on the Borrowers hereunder and all of the persons or entities so
      comprising the Borrowers (and, in the event of conflicting notices from the
      persons or entities comprising the Borrowers, Lender shall be permitted to
      rely
      on the first notice received by Lender from any person or entity comprising
      the
      Borrowers with respect to the subject matter of such conflict, without
      inquiry).






98






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




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




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




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




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




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




99






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




**Section
      13.13**  **Sophisticated
      Parties, Reasonable Terms, No Fiduciary Relationship** **.** Each
      Borrower represents, warrants and acknowledges that (i) it is a sophisticated
      real estate investor, familiar with transactions of this kind, and (ii) it
      has
      entered into this Loan Agreement and the other Loan Documents after conducting
      its own assessment of the alternatives available to it in the market, and after
      lengthy negotiations in which it has been represented by competent legal counsel
      of its choice. Each Borrower also acknowledges and agrees that the rights of
      Lender under this Loan Agreement and the other Loan Documents are reasonable
      and
      appropriate, taking into consideration all of the facts and circumstances
      including the quantity of the Loan, the nature of the Properties, and the risks
      incurred by Lender in this transaction. No provision in this Loan Agreement
      or
      in any of the other Loan Documents and no course of dealing between the parties
      shall be deemed to create (i) any partnership or joint venture between Lender
      and any Borrower or any other Person, or (ii) any fiduciary or similar duty
      by
      Lender to any Borrower or any other Person. The relationship between Lender
      and
      Borrowers is exclusively the relationship of a creditor and a debtor, and all
      relationships between Lender and any other Borrower Party are ancillary to
      such
      creditor/debtor relationship.




**Section
      13.14**  **Reasonableness
      of Determinations** **.** In any
      instance where any consent, approval, determination or other action by Lender
      is, pursuant to the Loan Documents or applicable law, required to be done
      reasonably or required not to be unreasonably withheld, Borrowers shall bear
      the
      burden of proof of showing that the same was not reasonable. In all cases Lender
      shall conclusively be deemed to be acting reasonably when implementing any
      standard or requirement of any applicable Rating Agency, or in refusing or
      delaying any consent due to the existence of any Event of Default. In no event
      shall references herein or in the other Loan Documents to the “existence” or
“continuance” of an Event of Default imply that any Event of Default, or any
      Default, once maturing into an Event of Default due to the expiration of any
      applicable cure period or by operation of this Loan Agreement in the event
      no
      cure period is provided hereunder, shall be further susceptible of cure by
      Borrowers or otherwise cease to be an Event of Default in the absence of a
      written waiver of such Event of Default by the Lender. In the event that a
      claim
      or adjudication is made that Lender or its agents have acted unreasonably or
      unreasonably delayed acting in any case where, by law or under this Loan
      Agreement or the other Loan Documents, Lender or such agent, as the case may
      be,
      has an obligation to act reasonably or promptly, neither Lender nor its agents
      shall be liable for any monetary damages, and Borrowers’ sole remedy shall be
      limited to commencing an action seeking injunctive relief or declaratory
      judgment. Any action or proceeding to determine whether Lender has acted
      reasonably shall be determined by an action seeking declaratory
      judgment.






100






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




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




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




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




**Section
      13.19**  **Waiver
      of Jury Trial** **.**  **EACH OF BORROWERS AND LENDER HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
      TRIAL
      OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS LOAN
      AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN BORROWERS AND
      LENDER RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND
      LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. EACH OF BORROWERS AND
      LENDER ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT,
      BUT FOR THIS WAIVER, BE REQUIRED OF IT. THE SCOPE OF THIS WAIVER IS INTENDED
      TO
      BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
      AND
      THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT
      CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
      STATUTORY CLAIMS. EACH OF BORROWERS AND LENDER ACKNOWLEDGES THAT THIS WAIVER
      IS
      A MATERIAL INDUCEMENT TO ENTER INTO THIS LOAN AGREEMENT, THAT EACH HAS ALREADY
      RELIED ON THE WAIVER IN ENTERING INTO THIS LOAN AGREEMENT AND THAT EACH WILL
      CONTINUE TO RELY ON THE WAIVER IN THE FUTURE. EACH OF BORROWERS AND LENDER
      FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
      COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
      FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING
      THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
      WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 13.19 AND EXECUTED BY
      EACH
      OF THE PARTIES HERETO), AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
      RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LOAN AGREEMENT, THE LOAN
      DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. IN
      THE
      EVENT OF LITIGATION, THIS LOAN AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
      TO A
      TRIAL BY THE COURT.**






101






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




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




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






102






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




**Section
      13.24**  **Waiver
      of Counterclaim** **.** Each
      Borrower hereby waives the right to assert a counterclaim, other than compulsory
      counterclaim, in any action or proceeding brought against it by Lender or its
      agents.




**Section
      13.25**  **Brokers
      and Financial Advisors** **.** Each
      Borrower hereby represents that neither it nor any of its Affiliates has dealt
      with any financial advisors, brokers, underwriters, placement agents, agents
      or
      finders in connection with the transactions contemplated by this Loan Agreement.
      Borrowers hereby agree, jointly and severally, to indemnify and hold Lender
      harmless from and against any and all claims, liabilities, costs and expenses
      of
      any kind in any way relating to or arising from a claim by any Person that
      such
      Person acted on behalf of the indemnifying party in connection with any Borrower
      or its respective Affiliates transactions contemplated herein. The provisions
      of
      this Section 13.25 shall survive the expiration and termination of this
      Agreement and the repayment of the Obligations.




**Section
      13.26**  **Joint
      and Several Liability** **.** All
      representations, warranties, covenants (both affirmative and negative) and
      all
      other obligations hereunder shall be the joint and several obligation of each
      Borrower and a default or Event of Default by any Borrower shall be deemed
      a
      default or Event of Default by all of the Borrowers. The representations,
      covenants and warranties contained herein or in any other Loan Document shall
      be
      read to apply to each Borrower when the context so requires but a breach of
      any
      such representation, covenant or warranty or a breach of any obligation under
      the Loan Documents shall be deemed a breach by all the Borrowers, entitling
      Lender to exercise all of its rights and remedies under all the Loan Documents
      and under applicable law.





103





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




**BORROWER:****SCOTSDALE
                    MI LLC****,**a Delaware limited liability
                    companyBy:
                LVP
                  Michigan Multifamily Portfolio LLC, a Delaware limited liability
                  company,its sole Managing Member
  By:
                  /s/
                    David
                    LichtensteinName:
                  David
                    LichtensteinTitle:
                  President
  **CARRIAGE
                        PARK MI LLC**,
                        a
                        Delaware limited liability companyBy:
                    LVP
                      Michigan Multifamily Portfolio LLC, a Delaware limited liability
                      company,its sole Managing Member
  By:
                      /s/
                        David
                        LichtensteinName:
                      David
                        LichtensteinTitle:
                      President
 **MACOMB
                          MANOR MI LLC**,a
                          Delaware limited liability companyBy:
                      LVP
                        Michigan Multifamily Portfolio LLC, a Delaware limited liability
                        company,its sole Managing Member
  By:
                        /s/
                          David
                          LichtensteinName:
                        David
                          LichtensteinTitle:
                        President
  **CARRIAGE
                              HILL MI LLC**,a
                              Delaware limited liability companyBy:
                          LVP
                            Michigan Multifamily Portfolio LLC, a Delaware limited
                            liability company,its sole Managing Member
  By:
                            /s/
                              David
                              LichtensteinName:
                            David
                              LichtensteinTitle:
                            President
 
 
 **LENDER**:**/s/
                                CITIGROUP GLOBAL MARKETS REALTY CORP**.,
                                a New York corporation





**LIST
      OF SCHEDULES**






Schedules
              A-1 - A-4
            Individual
              PropertiesSchedule
                3.1(N)
            BudgetsSchedule
                4.1(C)
            Organizational
                Chart for Borrower PartiesSchedule
                6.4
            Approved
                Capital ExpendituresSchedule
                6.6
            Certain
                Reserve Funding ConditionsSchedule
                6.7
            Immediate
                Repairs










List
          of Schedules




**SCHEDULE
      A-1**












Schedule
          A-1




**SCHEDULE
      A-2**












Schedule
          A-2




**SCHEDULE
      A-3**






Schedule
          A-3







**SCHEDULE
      A-4**






Schedule
          A-4





**SCHEDULE
      3.1(N)**




**Budgets**















Schedule
          3.1(N)




**SCHEDULE
      4.1(C)**




**Organizational
      Chart**







Schedule
          4.1(C)




**SCHEDULE
      6.4**




**Approved
      Capital Expenditures**






Schedule
          6.4




**SCHEDULE
      6.6**




**REPLACEMENT
      RESERVE FUNDING CONDITIONS**




1.  Borrowers
      shall have submitted to Lender a written request for disbursement at least
      ten
      (10) days prior to the Payment Date on which Borrowers request such disbursement
      be made, specifying the specific Capital Expenditures for which the disbursement
      is requested and such other information (such as the price of materials and
      the
      cost of contracted labor or other services) as Lender may reasonably require,
      which request must be on a form specified or approved by Lender;




2.  On
      the
      date such request is received by Lender and on the Payment Date such payment
      is
      to be made, no Event of Default shall exist and remain uncured;




3.  Lender
      shall have received a certificate from the Borrowers stating that all Capital
      Expenditures at the applicable Individual Property to be funded by the requested
      disbursement have been completed in a good and workmanlike manner and in
      accordance with any plans and specifications approved by Lender and all Legal
      Requirements of any Governmental Authority having jurisdiction over such
      Individual Property, such certificate to be accompanied, in either case, by
      a
      copy of any license, permit or other approval by any Governmental Authority
      required to commence (only for the first advance with respect to each distinct
      item of work) and/or complete (only for the final advance with respect to each
      distinct item of work) such Capital Expenditures;




4.  Lender
      shall have received a certificate from the Borrowers stating that each Person
      that supplied materials or labor in connection with the Capital Expenditures
      to
      be funded by the requested disbursement has been paid in full or will be paid
      in
      full upon such disbursement, such certificate to be accompanied by copies of
      invoices for all items or materials purchased and all contracted labor or
      services provided;




5.  Lender
      shall have received appropriate lien waivers from each contractor, supplier,
      materialman, mechanic or subcontractor who receives payment in an amount equal
      to or greater than $10,000 for completion of its work or delivery of its
      materials, which lien waivers shall conform to the requirements of applicable
      law and shall cover all work performed and materials supplied (including
      equipment and fixtures) for the applicable Individual Property by that
      contractor, supplier, subcontractor, mechanic or materialman through the date
      covered by the current disbursement request; and




6.  At
      Lender’s option, Lender shall have received a title search for the applicable
      Individual Property effective to the date of the disbursement, which search
      shows that no mechanic’s or materialmen’s liens or other Liens of any nature
      have been placed against the applicable Individual Property since the date
      of
      recordation of the Mortgage affecting such Individual Property and that title
      to
      such Individual Property is free and clear of all Liens (other than the
      Permitted Encumbrances).






Schedule
          6.6





**SCHEDULE
      6.7**




**Completion/Repair
      Reserve**


Schedule
              6.7