LOAN AGREEMENT

                  THIS AMENDED AND RESTATED LOAN AGREEMENT,  made as of June 10,
1998, is entered into by and among OAIC  CALIFORNIA  PARTNERSHIP,  L.P. and OAIC
CALIFORNIA PARTNERSHIP II, L.P., each a California limited partnership, and each
other  entity  that from time to time  joins  this  Agreement  as an  additional
borrower, each having an address at c/o Ocwen Partnership, L.P., The Forum, 1675
Palm Beach Lakes Boulevard,  West Palm Beach, Florida 33601  (collectively,  the
"BORROWER");  each  of the  financial  institutions  signatory  hereto  that  is
identified  as a "LENDER" on the  signature  pages  hereto or that,  pursuant to
SECTION 8.9 hereof, shall become a "Lender" hereunder (individually, a "LENDER",
and  collectively,  the  "LENDERS");  SALOMON  BROTHERS REALTY CORP., a New York
corporation,  having an address at Seven World Trade Center,  New York, New York
10048 as agent for the Lenders (in such capacity together with its successors in
such capacity, the "Agent"); and LASALLE NATIONAL,  BANK, a nationally chartered
bank,  having an address  at 135 South  LaSalle  Street,  Suite  1740,  Chicago,
Illinois 60603, as collateral agent for Lenders ("Collateral Agent").

                                    RECITALS

                  WHEREAS, on April 30, 1998, OAIC California Partnership,  L.P.
and OAIC  California  Partnership  II, L.P.  received an advance  under the Loan
Agreement,  dated as of April 30,  1998,  by and among  such  Persons as initial
Borrower,  the Agent and the Collateral  Agent (the "Initial Loan Agreement") in
an amount equal to $15,081,909.55 secured by, among other things, the three real
properties in San Francisco,  California owned by such Persons,  the Guaranty of
Payment and a pledge of a commercial  mortgage loan held by the  Guarantor  with
respect to the  mortgaged  property  commonly  referred to as "Cortez  Plaza" in
Bradenton, Florida;

                  WHEREAS,  a  condition  precedent  to the making of any future
advances  under the Initial Loan  Agreement is the execution of an amendment and
restatement  to the Initial Loan Agreement  adding to such agreement  provisions
permitting  the Borrower to pledge as  collateral  for the  advances  commercial
mortgage loans secured by commercial mortgaged properties which properties would
have qualified for inclusion under such agreement had such properties been owned
by Borrower and directly pledged to secure the advances;

                  WHEREAS,   this  Agreement  is  the  agreement   amending  and
restating the Initial Loan Agreement to add such provisions;

                  WHEREAS,  it is  understood  and agreed  between  the  parties
hereto that commercial mortgage loans shall not be pledged as collateral for the
advances unless and until further modifications have been made to this Agreement
describing  additional  terms and  conditions  with  respect to such  commercial
mortgage loans;

                  WHEREAS,  Borrower desires to obtain a series of loan advances
(each, an "Advance" and collectively,  the "Loan") from Agent and the Lenders in
an aggregate  amount at any time  outstanding of up to  $200,000,000  (the "Loan
Amount")  to  provide  funding  for a portion of (1) the  purchase  price of and
Capital  Improvement  Costs with respect to the  multi-family,  office,  retail,
industrial,  hotel and other  commercial real properties that Borrower  acquires
and (2) the principal  amount of the  commercial  mortgage loans secured by such
types of commercial  real  properties  that  Borrower  acquires or originates or
makes additional disbursements under and to pay certain other fees and expenses;

                  WHEREAS,  the Lenders are  unwilling to make  Advances  unless
Borrower joins in the execution and delivery of this Agreement, the Note and the
Loan Documents  (each as hereinafter  defined),  which shall establish the terms
and  conditions of the Loan and Guarantor  executes and delivers the Guaranty of
Payment;

                  WHEREAS, Borrower has agreed to establish certain accounts and
to grant to Collateral Agent on behalf of, and for the benefit of the Lenders, a
security  interest  therein  upon  the  terms  and  conditions  of the  security
agreement set forth in SECTION 2.14; and

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                  WHEREAS,  LaSalle National Bank, in its capacity as Collateral
Agent, is willing to join in the security agreement set forth in SECTION 2.14 by
execution and delivery of this Agreement in that capacity;

                  NOW, THEREFORE,  in consideration of the making of the Loan by
Lenders and for other good and valuable  consideration,  the mutual  receipt and
legal sufficiency of which are hereby acknowledged, the parties hereby covenant,
agree, represent and warrant as follows:

                                   ARTICLE I.
                              CERTAIN DEFINITIONS

        SECTION 1.1.  DEFINITIONS.For  all purposes of this  Agreement:  (1) the
capitalized  terms defined in this ARTICLE I have the meanings  assigned to them
in this  ARTICLE  I, and  include  the plural as well as the  singular;  (2) all
accounting terms have the meanings assigned to them in accordance with GAAP; (3)
the words "herein",  "hereof", and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular  Article,  Section,
or other subdivision; and (4) the following terms have the following meanings:

                  "ACCEPTED   PRACTICES"  means  such  customary   practices  as
commercial mortgage collateral agents or banks would follow in the normal course
of their business in performing administrative and custodial duties with respect
to collateral which is generally  similar to the Account  Collateral;  PROVIDED,
HOWEVER,  that "ACCEPTED PRACTICES" shall not be deemed to include any custodial
practices now followed by Collateral  Agent for any such collateral held for its
own  account to the  extent  that such  practices  are more  stringent  than the
practices followed by commercial collateral agents or banks generally.

                  "ACCOUNT  COLLATERAL"  has the  meaning  set forth in  SECTION
2.14(a) hereof.

                  "ACCOUNTS"  means all  accounts  (as defined in the UCC),  now
owned or hereafter acquired by the Borrower, and arising out of or in connection
with, the operation of any REO Property and all other accounts  described in the
Management Agreement and all present and future accounts  receivable,  inventory
accounts,   contract  rights,  chattel  paper,  notes,  acceptances,   insurance
policies,  Instruments,  Documents  or other  rights to payment and all forms of
obligations owing at any time to the Borrower  thereunder,  whether now existing
or hereafter created or otherwise acquired by or on behalf of the Borrower,  and
all Proceeds thereof and all liens,  security interests,  guaranties,  remedies,
privileges and other rights pertaining  thereto,  and all rights and remedies of
any kind forming the subject matter of any of the foregoing.

                  "ACTIVITY  STATEMENT"  has the  meaning  set forth in  SECTION
2.12(d).

                  "ACTIVITY STATEMENT DATE" had the meaning set forth in SECTION
2.12(d).

                  "ACTUAL  KNOWLEDGE"  means, as to any REO Property or Mortgage
Loan, the actual knowledge of those  individuals  performing and responsible for
due  diligence on such REO Property or Mortgage  Loan on the  Borrower's  behalf
after due inquiry and investigation as and to the extent reasonably practiced or
carried out by a purchaser of similar real property.

                  "ADVANCE" has the meaning provided in the Recitals hereto.

                  "ADVANCE  CLOSING DATE" means each date on which an Advance is
made   hereunder  to  provide   Borrower   with  funds  either  (x)  to  acquire
multi-family,  office,  retail,  industrial,  hotel  and other  commercial  real
properties  or to originate or acquire or make  additional  disbursements  under
commercial  mortgage loans secured by such types of commercial  real  properties
pursuant to SECTION 3.3(c) or (y) to pay Capital  Improvement Costs with respect
to such commercial real properties owned by Borrower  pursuant to SECTION 2.1(c)
or (z)  to  increase  the  outstanding  Principal  Indebtedness  by  the  amount
permitted  by the  last  sentence  of  SECTION  2.1(a)  in  connection  with the
satisfaction of the Property Diversification Test pursuant to SECTION 2.1(c).

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<PAGE>

                  "AFFILIATE"  of any  specified  Person  means any other Person
controlling or controlled by or under common control with such specified Person.
For the  purposes of this  definition,  "control"  when used with respect to any
specified  Person means the power to direct the  management and policies of such
Person,  directly  or  indirectly,  whether  through  the  ownership  of  voting
securities or other  beneficial  interests,  by contract or  otherwise;  and the
terms  "controlling"  and  "controlled"  have the  meanings  correlative  to the
foregoing.

                  "AGENT" has the meaning  provided  in the first  paragraph  of
this Agreement.

                  "AGREEMENT"  means  this  Loan  Agreement,  together  with the
Schedules and Exhibits  hereto,  as the same may from time to time  hereafter be
modified, supplemented or amended.

                  "ALLOCATED  LOAN AMOUNT"  means the portion of the Loan Amount
allocated to each REO Property or Mortgage Loan, as such amounts may be adjusted
by the Agent on  behalf of the  Lenders  from  time to time as  hereinafter  set
forth:

                                    (i) The  Allocated  Loan Amount for each REO
                           Property  or   Mortgage   Loan  being  added  to  the
                           Collateral on an Advance Closing Date shall equal the
                           amount of the related  Advance  being  applied to the
                           purchase  price of such  REO  Property  or  principal
                           amount of such Mortgage Loan plus reasonable expenses
                           related to the  acquisition  or origination or making
                           of an additional disbursement as approved by Agent;

                                    (ii) The Allocated  Loan Amount for each REO
                           Property or Mortgage Loan regarding  which an Advance
                           is  being  made  on an  Advance  Closing  Date to pay
                           required Capital Improvement Costs or pursuant to the
                           last sentence of SECTION 2.1(a) shall be increased by
                           the applicable portion of such Advance;

                                    (iii) In the event that in connection with a
                           sale following foreclosure or a 100% Taking of an REO
                           Property or Mortgaged  Property,  the Net Proceeds or
                           Loss Proceeds,  as the case may be, are less than the
                           Allocated Loan Amount of the affected REO Property or
                           Mortgage  Loan,  the  Allocated  Loan  Amount for the
                           remaining REO  Properties and Mortgage Loans shall be
                           increased  by  the  amount  of  the  shortfall,  such
                           increase  being   allocated  to  each  remaining  REO
                           Property and Mortgage Loan on a pro rata basis;

                                    (iv)  Upon  each  payment  of the  Principal
                           Indebtedness  pursuant to SECTION 2.6 OR 2.7(c),  the
                           aggregate   Allocated   Loan   Amount   for  the  REO
                           Properties  and Mortgage  Loans shall be decreased by
                           the amount of such principal  payment,  such decrease
                           being  allocated to each  remaining  REO Property and
                           Mortgage Loan on a pro rata basis;

                                    (v)  Upon  each  payment  of  the  Principal
                           Payment  Amount  pursuant  to  SECTION  2.12(b),  the
                           aggregate   Allocated   Loan   Amount   for  the  REO
                           Properties  shall be  decreased by the amount of such
                           principal  payment  attributable  to REO  Properties,
                           such decrease being allocated to each REO Property on
                           a pro rata basis and the  Allocated  Loan  Amount for
                           each  Mortgage  Loan  shall  be  decreased  as of the
                           applicable  Payment  Date  by  the  portion  of  such
                           Principal  Payment  Amount,  if any,  attributable to
                           principal payments on the related Mortgaged Loan;

                                    (vi) In the event the Principal Indebtedness
                           is  reduced  as a  result  of  (x)  a  Capital  Event
                           executed pursuant to SECTION 2.7(a),  (y) the receipt
                           of Loss Proceeds with respect to a Taking or casualty
                           affecting  an REO  Property or (z) the receipt of Net
                           Proceeds  upon a sale of an REO  Property or Mortgage
                           Loan following foreclosure, the Allocated Loan Amount
                           for the affected REO Property or Mortgage  Loan shall
                           be  reduced  either  (a) to zero  (in  the  case of a
                           Capital  Event,  100% Taking or a 100% 


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<PAGE>


                           casualty where the Lenders release their Lien) or (b)
                           by  the  amount  of  the   reduction   in   Principal
                           Indebtedness  (in the case of a  casualty  where  the
                           Lenders do not release their Lien or a less than 100%
                           Taking), and, if after such reduction pursuant to the
                           foregoing CLAUSE (a) or (b) an additional  payment of
                           principal is to occur  pursuant to the terms  hereof,
                           the  Allocated  Loan  Amount for the  unaffected  REO
                           Properties  and Mortgage  Loans shall be decreased by
                           the additional  payment  amount,  such decrease being
                           allocated to each remaining REO Property and Mortgage
                           Loan on a pro rata basis; and

                                    (vii)  Notwithstanding  anything  set  forth
                           above to the contrary  which  provides for a pro rata
                           allocation,  the Agent may, on behalf of the Lenders,
                           increase or decrease the Allocated Loan Amount of any
                           or all of the REO  Properties  and Mortgage  Loans as
                           appropriate  to  reflect a change  in  Market  Value;
                           PROVIDED,  that any change  pursuant  to this  clause
                           (vii) shall not change the aggregate  Allocated  Loan
                           Amount.

                  "APPLICATION"  means the  Application  dated  April 10,  1998,
prepared by and between Agent and Ocwen Partnership, L.P.

                  "APPLICATION   DEPOSIT"  has  the  meaning   provided  in  the
Application.

                  "APPRAISAL"  means  or an  appraisal  with  respect  to an REO
Property or Mortgaged  Property  prepared by an Appraiser in accordance with the
Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation
and with the  requirements  of Title  11 of the  Financial  Institution  Reform,
Recovery and Enforcement Act (or such other standards and  requirements as shall
be reasonably acceptable to the Agent) and utilizing customary valuation methods
such as the income,  sales/market  or cost  approaches and in form acceptable to
Agent  in  its  sole  discretion,   as  any  of  the  same  may  be  updated  by
recertification from time to time by the Appraiser performing such Appraisal.

                  "APPRAISER"  means any  nationally  recognized  MAI  appraiser
acceptable to Agent in its sole discretion.

                  "ASSIGNMENT"  has the  meaning  set  forth in  SECTION  5.1(v)
hereof.

                  "ASSIGNMENT  AND  SECURITY  AGREEMENT"  means  the  Collateral
Assignment,  Pledge and Security  Agreement between the applicable  Borrower and
Agent, substantially in the form attached hereto as EXHIBIT O, as such agreement
may be modified, supplemented or amended and in effect from time to time.

                  "ASSIGNMENT  OF LEASES" means an  assignment of leases,  rents
and  security  deposits  executed by a Mortgagor  as assignor to the  applicable
Borrower,  or such  Borrower's  predecessor(s)  in interest and thereafter  duly
assigned to such  Borrower,  as assignee  with respect to a Mortgaged  Property,
assigning to such  Borrower,  or its  predecessor(s)  in interest and thereafter
duly assigned to such Borrower,  such Mortgagor's  interest in and to the Leases
and the Property Income with respect to the applicable  Mortgaged  Property,  as
the same may be supplemented, amended or modified.

                  "ASSIGNMENT OF RENTS AND LEASES"  means,  with respect to each
REO  Property,  an  Assignment  of Rents and Leases,  substantially  in the form
attached  hereto as Exhibit J, dated as of the applicable  Advance Closing Date,
granted by a Borrower to the Agent,  for the benefit of the Lenders with respect
to  the  applicable  Leases,  as  same  may  hereafter  from  time  to  time  be
supplemented, amended, modified or extended.

                  "BASIC  CARRYING COSTS" means the following costs with respect
to each REO Property:  (i) Impositions and (ii) insurance  premiums for policies
of insurance  required to be maintained  pursuant to this Agreement or the other
Loan Documents.

                  "BASIC  CARRYING  COSTS  ACCOUNT" has the meaning set forth in
SECTION 2.13(a).

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<PAGE>

                  "BORROWER" has the meaning  provided in the first paragraph of
this Agreement.  References  herein to a Borrower shall mean each entity defined
as Borrower, individually or collectively, as applicable.

                  "BORROWER EXCESS PROCEEDS" means,  with respect to any Capital
Event,  the excess of (i) the Capital Event Proceeds  received over (ii) the sum
of (a) the Release  Price for the  applicable  REO Property or Mortgage Loan and
(b) any other amount  payable under this  Agreement and the other Loan Documents
in connection with the Capital Event.

                  "BORROWER RELEASE PRICE  CONTRIBUTION"  means the amount to be
deposited by the  Borrower  into the  Collection  Account in  connection  with a
Capital Event if the Release Price for an REO Property or Mortgage Loan shall be
greater than the Capital Event Proceeds  received which amount shall be equal to
the difference between such Release Price and such Capital Event Proceeds.

                  "BUSINESS  DAY"  means any day  other  than a  Saturday  and a
Sunday  and a day on which  federally  insured  depository  institutions  in the
States of New York or Illinois or any State where an REO  Property or  Mortgaged
Property is located are authorized or obligated by law,  governmental  decree or
executive   order  to  be  closed.   When  used  with  respect  to  an  Interest
Determination Date,  "BUSINESS DAY" shall mean a day on which banks are open for
dealing in foreign currency and exchange in London and New York City.

                  "CAPITAL  EVENT"  means  any  transfer,   sale,   refinancing,
assignment,  conveyance,  liquidation  or  disposition  of any REO  Property  or
Mortgage  Loan and  "CAPITAL  EVENTS"  shall  have  meaning  correlative  to the
foregoing.  For purposes of this  Agreement,  a "Capital  Event" shall include a
refinancing  in which a voluntary  prepayment of the Principal  Indebtedness  is
made in the  amount  necessary  to obtain a release of the Liens in favor of the
Agent encumbering an REO Property or Mortgage Loan.

                  "CAPITAL EVENT PROCEEDS" means any proceeds of a Capital Event
net of reasonable  third-party  expenses and sales  commissions  related to such
Capital Event payable at the time of the Capital Event.

                  "CAPITAL  IMPROVEMENT  COSTS"  means  costs  incurred or to be
incurred in connection with  replacements and capital repairs made or to be made
to any REO Property  (including,  without limitation,  repairs to the structural
components,  roofs,  building  systems,  and parking  lots, TI Costs and Leasing
Commissions).

                  "CLOSING  DATE" means the date on which this  Agreement  shall
become effective pursuant to SECTION 3.1, such date being June 10, 1998.

                  "CODE"  means the Internal  Revenue Code of 1986,  as amended,
and as it may be  further  amended  from time to time,  any  successor  statutes
thereto,  and applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.

                  "COLLATERAL" means,  collectively,  the "Collateral" under and
as  defined  in  each  and  all of the  Assignment  and  Security  Agreement(s),
Collateral Assignments of Mortgage and REO Mortgages(s), together with any other
collateral or security provided by Borrower with respect to the Loan.

                  "COLLATERAL  AGENT"  means  LaSalle  National  Bank,  or  such
Person's successor in interest or other successor.

                  "COLLATERAL  ASSIGNMENT OF ASSIGNMENT OF LEASES"  means,  with
respect to any Mortgage  Loan, a collateral  assignment of assignment of leases,
rents and security  deposits or similar  instrument,  substantially  in the form
attached hereto as EXHIBIT Q, in recordable  form,  sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record  the  collateral  assignment  of the  Assignment  of Leases to or for the
benefit of Agent on behalf of the Lenders.

                  "COLLATERAL ASSIGNMENT OF MORTGAGE" means, with respect to any
Mortgage  Loan, a Collateral  Assignment of Beneficial  Interest in Mortgage and
Other Documents,  notice of transfer or equivalent instrument,  

                                        5
<PAGE>

substantially  in the form  attached  hereto as EXHIBIT P, in  recordable  form,
sufficient  under the laws of the  jurisdiction  wherein the  related  Mortgaged
Property  is  located to reflect  of record  the  collateral  assignment  of the
Mortgage to or for the benefit of Agent on behalf of the Lenders.

                  "COLLATERAL  IMPAIRMENT"  means the  occurrence  of any of the
following events without the prior written consent of Agent:

                             (i)      if Borrower or any  Affiliate  of Borrower
                                      gives any written  notice to any Mortgagor
                                      that:  (a) directs such person to make any
                                      payments on account of or with  respect to
                                      any Mortgage Loan to which the  Collateral
                                      Agent is entitled to any Person other than
                                      Collateral  Agent;  or  (b)  is  otherwise
                                      inconsistent  with the rights and security
                                      interests  of Agent  under any of the Loan
                                      Documents;

                             (ii)     if any  Mortgagor  makes  any  payment  to
                                      Borrower or any  Affiliate of Borrower (or
                                      Borrower  or  any  Affiliate  of  Borrower
                                      receives  any  Capital  Event  Proceeds or
                                      Loss  Proceeds)  on  account  of  or  with
                                      respect to any Mortgage  Loan and Borrower
                                      does not remit  such  payment to the Agent
                                      as required by this Agreement;

                             (iii)    if Borrower or any  Affiliate of Borrower,
                                      or any  third-party  cash bidder acting by
                                      or on behalf of any of the foregoing or on
                                      behalf of any principal of Borrower at any
                                      foreclosure  sale  under a  Mortgage  Loan
                                      acquires title to a Mortgaged Property and
                                      does not comply with all  requirements  of
                                      this  Agreement  relating to REO Mortgages
                                      and REO Property;

                             (iv)     if Borrower or any  Affiliate  of Borrower
                                      causes  or  permits   any   Affiliate   of
                                      Borrower to be  substituted  as  "trustee"
                                      under  any  deed  of  trust   securing   a
                                      Mortgage Loan;

                             (v)      if Borrower or any  Affiliate  of Borrower
                                      consents  to (a) any change in the payment
                                      terms  of  a  Mortgage  Loan  or  (b)  any
                                      payment or  repayment  of a Mortgage  Loan
                                      for an amount  less  than the  Total  Loan
                                      Balance  or  (c)  any   material   waiver,
                                      amendment,  or  modification of any Ground
                                      Lease  affecting  any  Mortgaged  Property
                                      that is a leasehold or any Mortgage Loan;

                             (vi)     if  Borrower  fails to  return to Agent or
                                      Collateral   Agent   any   Mortgage   Loan
                                      Documents  when and as required by Section
                                      2.18(d); or

                             (vii)    if Borrower or any  Affiliate  of Borrower
                                      otherwise  intentionally  acts or fails to
                                      act in any  manner  that has the effect of
                                      impairing or  diminishing  any  Collateral
                                      under this  Agreement,  other than actions

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<PAGE>

                                      and omissions  expressly permitted by this
                                      Agreement    which   are    performed   in
                                      compliance with this Agreement.

                  "COLLATERAL SECURITY INSTRUMENT" means any right,  document or
instrument,  other  than  an REO  Mortgage,  given  as  security  for  the  Loan
(including,   without   limitation,   the  Pledge  Agreement,   each  Management
Subordination and each Contract  Assignment,  as same may be amended or modified
from time to time).

                  "COLLECTION  ACCOUNT"  has the  meaning  set forth in  SECTION
2.12(a) hereof.

                  "COLLECTION  PERIOD" means,  with respect to any Payment Date,
the  prior  calendar  month;  provided,  HOWEVER,  that in the case of the first
Payment Date, the "Collection  Period" shall be the period from the Closing Date
to the day prior to such Payment Date.

                  "CONDEMNATION  PROCEEDS"  means, in the event of a Taking with
respect to an REO  Property or  Mortgaged  Property,  the proceeds in respect of
such Taking less any reasonable third party  out-of-pocket  expenses incurred in
connection with the Taking or in collecting such proceeds thereof.

                  "CONSUMER  PRICE INDEX" means the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor Statistics of the United States
Department  of Labor,  in the area in which each REO  Property is  located;  All
Items (1982-84=100),  or any successor index thereto, appropriately adjusted and
if the Consumer  Price Index  ceases to be  published  and there is no successor
thereto, such other index as Borrower and Agent shall agree upon.

                  "CONTINGENT  OBLIGATION"  means,  as used in the definition of
Other  Borrowings,   without   duplication,   any  obligation  of  the  Borrower
guaranteeing any indebtedness,  leases, dividends or other obligations ("primary
obligations") of any other Person (the "primary obligor") in any manner, whether
directly or indirectly.  Without  limiting the generality of the foregoing,  the
term  "Contingent  Obligation"  shall  include any  obligation  of the Borrower,
whether or not contingent:

                                    (i)   to   purchase    any   such    primary
                           obligation  or any  property  constituting  direct or
                           indirect security therefor;

                                    (ii)  to advance or supply funds (x) for the
                           purchase or payment of any such primary obligation or
                           (y) to maintain  working capital or equity capital of
                           the primary obligor;

                                    (iii) to purchase  property,  securities  or
                           services  primarily  for the purpose of assuring  the
                           owner of any such primary  obligation  of the ability
                           of the  primary  obligor  to  make  payment  of  such
                           primary obligation; or

                                    (iv)  otherwise  to assure or hold  harmless
                           the owner of such primary  obligation against loss in
                           respect thereof.

The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable  amount of the primary obligation in respect of which
such  Contingent  Obligation  is made or,  if not  stated or  determinable,  the
maximum  reasonably  anticipated  liability  in respect  thereof  (assuming  the
Borrower is required to perform  thereunder)  as determined by the Agent in good
faith.

                  "CONTRACT   ASSIGNMENT"   means,  with  respect  to  each  REO
Property, the Assignment of Contracts, Licenses, Permits, Agreements, Warranties
and Approvals,  substantially in the form attached hereto as EXHIBIT A, dated as
of the applicable Advance Closing Date and executed by a Borrower.

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<PAGE>

                  "CONTRACTS"  means  the  Management  Agreement,  and all other
agreements to which  Borrower is a party,  of which Borrower is a beneficiary or
which are assigned to Borrower by the Manager in the  Management  Agreement  and
which are executed in connection with the construction, operation and management
of the applicable REO Property  (including,  without limitation,  agreements for
the sale, lease or exchange of goods or other property and/or the performance of
services by it, in each case whether now in  existence  or hereafter  arising or
acquired), as any such agreements have been or may be from time to time amended,
supplemented or otherwise modified.

                  "DEED  OF TRUST  TRUSTEE"  means  the  trustee  under  any REO
Mortgage that is legally a "deed of trust."

                  "DEFAULT" means the occurrence of any event which, but for the
giving of notice or the passage of time, or both, would be an Event of Default.

                  "DEFAULT  ADMINISTRATION  FEE"  means an  amount  equal to the
product  of (x)  0.5%  and (y) the  Principal  Indebtedness  as of the  date the
Default  Administration  Fee  becomes  payable;   PROVIDED,   that  the  Default
Administration Fee shall not be payable in the circumstance described in SECTION
7.4 (i.e.,  if the Repayment Fee is being paid in connection with a repayment or
prepayment of the Principal  Indebtedness  after the occurrence of such Event of
Default and prior to its cure).

                  "DEFAULT RATE" means the per annum interest rate equal to 5.0%
per annum in excess of the rate otherwise applicable hereunder.

                  "DEFICIENT  AMOUNT"  has the  meaning set forth in SECTION 5.1
(x)(iv)(2).

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

                  "ELIGIBLE  ACCOUNT" means a separate and identifiable  account
from all other  funds held by the  holding  institution  that is: (i) an account
maintained  with a federal or state  chartered  depository  institution or trust
company  whose  (1)  commercial  paper,  short-term  debt  obligations  or other
short-term  deposits  (or,  in the  case of a  depository  institution  or trust
company that is the principal  subsidiary of a holding  company,  the commercial
paper,  short-term debt obligations or other short-term deposits of such holding
company)  are  rated  by the  Rating  Agencies  not  less  than  "A-i"  (or  the
equivalent),  if the deposits are to be held in the account for less than thirty
(30) days or (2) long-term  unsecured debt  obligations are rated at least "AA-"
(or the  equivalent),  if the  deposits  are to be held in the account more than
thirty (30) days, (ii) an account the deposits in which are fully insured by the
FDIC or (iii) a segregated  trust account  maintained  with the corporate  trust
department  of a federal  or state  chartered  depository  institution  or trust
company subject to regulations  regarding  fiduciary funds on deposit similar to
Title 12 of the Code of Federal  Regulations  SECTION  9.10(b) which,  in either
case, has corporate trust powers,  acting in its fiduciary capacity. An Eligible
Account  shall not be evidenced by a certificate  of deposit,  passbook or other
instrument.  Following a downgrade,  withdrawal,  qualification or suspension of
such  institution's  rating,  each account must promptly (and in any case within
not more than thirty (30) calendar days) be moved to a qualifying institution or
to one or  more  segregated  trust  accounts  in the  trust  department  of such
institution, if permitted.

                  "ENGINEER"  means The Sear-Brown  Group,  Eckland  Consultants
Inc. or such other Independent  Engineer as shall be reasonably  approved by the
Agent.

                  "ENGINEERING REPORT" means the structural  engineering reports
with respect to an REO Property or  Mortgaged  Property  prepared by an Engineer
and delivered to the Agent in connection  with an Advance and any  amendments or
supplements thereto delivered to the Agent.

                  "ENVIRONMENTAL   AUDITOR"  means  Eckland   Consultants  Inc.,
Terrafirma or such other Independent  environmental auditor as shall be approved
by the Agent.

                                        8
<PAGE>

                  "ENVIRONMENTAL CLAIM" means any notice, notification,  request
for information,  claim,  administrative,  regulatory or judicial action,  suit,
judgment,  demand or other communication (whether written or oral) by any Person
or Governmental  Authority  alleging or asserting  liability with respect to the
Borrower,  the Manager in its capacity as Manager of any REO Property or any REO
Property  (whether for damages,  contribution,  indemnification,  cost recovery,
compensation,  injunctive relief,  investigatory,  response, remedial or cleanup
costs,  damages to natural  resources,  personal  injuries,  fines or penalties)
arising out of, based on or resulting from (i) the presence, Use or Release into
the  environment  of any  Hazardous  Substance at any  location  (whether or not
owned,  managed or operated  by the  Borrower  or the  Manager),  (ii) any fact,
circumstance,  condition or occurrence  forming the basis of any  violation,  or
alleged  violation,  of any  Environmental  Law or (iii) any  alleged  injury or
threat of injury to health, safety or the environment.

                  "ENVIRONMENTAL   INDEMNITY   AGREEMENT"   means  that  certain
environmental    indemnity   agreement   relating   to   Hazardous   Substances,
Environmental  Laws  and  environmental  conditions  with  respect  to  the  REO
Properties and Mortgaged  Properties,  dated as of the Closing Date, made by the
Borrower and the  Guarantor to the Agent for the benefit of the Lenders,  in the
form attached hereto as EXHIBIT K.

                  "ENVIRONMENTAL  LAWS"  means any and all  present  and  future
federal, state or local laws, statutes,  ordinances or regulations, any judicial
or  administrative  orders,  decrees or judgments  thereunder,  and any permits,
approvals, licenses, registrations,  filings and authorizations, in each case as
now or hereafter in effect, relating to the environment, human health or safety,
or the  Release or  threatened  Release of  Hazardous  Substances  or  otherwise
relating to the Use of Hazardous Substances.

                  "ENVIRONMENTAL  REPORTS" means a "Phase I  Environmental  Site
Assessment" (and, if necessary,  a "Phase II Environmental  Site Assessment") as
referred  to in  the  ASTM  Standards  on  Environmental  Site  Assessments  for
Commercial Real Estate,  E 1527-94 and an asbestos survey (if applicable,  after
completion of the Phase I Environmental  Site Assessment),  with respect to each
REO Property or Mortgaged Property,  prepared by an Environmental  Auditor,  and
any other environmental report delivered to the Agent pursuant to the provisions
hereof and any amendments or supplements thereto delivered to the Agent.

                  "EQUIPMENT"  means all  "equipment" as defined in the UCC, now
or hereafter owned by the Borrower or in which the Borrower has or shall acquire
an interest, now or hereafter located on, attached to or contained in or used or
usable in connection with any REO Property,  and shall also mean and include all
building  materials,  construction  materials,  personal  property  constituting
furniture, fittings, appliances,  apparatus, leasehold improvements,  machinery,
devices, interior improvements,  appurtenances,  equipment,  plant, furnishings,
fixtures,  computers,  electronic data processing equipment,  telecommunications
equipment and other fixed assets now owned or hereafter acquired by the Borrower
and now or hereafter used in the operation of the business  conducted at any REO
Property,   and  all  Proceeds   thereof  and  as  well  as  all  additions  to,
substitutions for,  replacements of or accessions to any of the items recited as
aforesaid and all  attachments,  components,  parts  (including spare parts) and
accessories, whether installed thereon or affixed thereto, and wherever located,
now or  hereafter  owned  by the  Borrower  and used or  intended  to be used in
connection  with, or with the  operation of, any REO Property or the  buildings,
structures, or other improvements now or hereafter located at such REO Property,
or in connection with any construction being conducted or which may be conducted
thereon,  all regardless of whether the same are located on such REO Property or
are located elsewhere  (including,  without  limitation,  in warehouses or other
storage  facilities  or in the  possession  of or on the  premises  of a bailee,
vendor or  manufacturer)  for purposes of manufacture,  storage,  fabrication or
transportation  and all extensions and  replacements to, and proceeds of, any of
the foregoing, but exclusive of those items which are property of tenants of any
REO  Property or owned by the  Manager,  a third party  contractor  or any other
third party.

                  "ERISA" means the Employee  Retirement  Income Security Act of
1974, as amended from time to time, and the 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.

                                       9
<PAGE>

                  "ERISA  AFFILIATE"  means any corporation or trade or business
that is a member of any group of organizations  (i) described in SECTION 4 14(b)
or (c) of the Code of  which  the  Borrower  is a member  and  (ii)  solely  for
purposes of potential  liability  under Section  302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created  under  Section  302(f) of ERISA and
Section  412(n) of the Code,  described in Section  414(m) or (o) of the Code of
which the Borrower is a member.

                  "EVENT OF  DEFAULT"  has the  meaning set forth in SECTION 7.1
hereof.

                  "EXCESS PROCEEDS TEST" means, as of any date of calculation in
connection with a Capital Event,  the test that shall be satisfied if, after the
consummation of a Capital Event, the Property Diversification Test is satisfied.

                  "EXCESS  PROCEEDS  TEST  NOTICE"  means a written  notice from
Agent to the Borrower,  a copy of which shall be delivered  concurrently  to the
Collateral  Agent,  advising  the  Borrower  whether  or not  the  Borrower  has
satisfied the Excess Proceeds Test and stating the applicable  Release Price and
Borrower Excess Proceeds.

                  "EXTENDED  MATURITY DATE" has the meaning set forth in SECTION
2.17(a) hereof.

                  "EXTENSION  CONDITIONS"  has the  meaning set forth in SECTION
2.17(a) hereof.

                  "EXTENSION  FEE" has the meaning set forth in SECTION  2.17(a)
hereof.

                  "EXTENSION  NOTICE"  has the  meaning  set  forth  in  SECTION
2.17(a) hereof.

                  "EXTENSION  OPTION"  has the  meaning  set  forth  in  SECTION
2.17(a) hereof.

                  "FEE  LETTER"  means the letter  entered into by and among the
Borrower,  Agent and  Collateral  Agent,  with respect to the fees of Collateral
Agent under this Agreement.

                  "FINAL  COLLATERAL  AGENT  CERTIFICATION"  has the meaning set
forth in SECTION 2.18(b).

                  "FIRST  MORTGAGE  LOAN" has the  meaning  set forth in SECTION
5.1(cc).

                  "FISCAL  YEAR" means the  12-month  period  ending on December
31st of each year (or, in the case of the first fiscal year, such shorter period
from the Closing  Date  through such date) or such other fiscal year of Borrower
as Borrower may select from time to time with the prior consent of Agent.

                  "FUND"  has  the  meaning  set  forth  in  the  definition  of
"Permitted Investments."

                  "GAAP" means generally accepted  accounting  principles in the
United States of America as of the date of the applicable financial report.

                  "GENERAL  INTANGIBLES"  means  all  "general  intangibles"  as
defined in the UCC, now owned or hereafter acquired by the Borrower.

                  "GLOBAL NOTE" means the global note  substantially in the form
of EXHIBIT B-1 hereto, made by Borrower to Agent pursuant to this Agreement,  as
such note may be modified, amended, supplemented or extended. To the extent that
Agent from time to time  exchanges  interests in the Global Note for  Registered
Notes  pursuant to SECTION  2.4(b)  hereof,  every  reference to the Global Note
shall be deemed to include all such Registered Notes.

                  "GOVERNMENTAL   AUTHORITY"   means  any  national  or  federal
government,  any state,  regional,  local or other political subdivision thereof
with  jurisdiction  and  any  Person  with  jurisdiction  exercising  executive,
legislative,  judicial,  regulatory or administrative functions of or pertaining
to government.


                                       10
<PAGE>


                  "GROSS REVENUE" means, for any period, the total dollar amount
of all income and  receipts  received by, or for the account of, the Borrower in
the  ordinary  course of business  with respect to each REO Property or Mortgage
Loan  (including,  without  limitation,  all Rents,  Money and  Proceeds  of any
Accounts),  but excluding Loss Proceeds and Proceeds from any Capital Event with
respect to an REO Property or Mortgage Loan.

                  "GROUND  LEASE" means,  with respect to a Mortgage Loan or REO
Property,  if applicable,  the leasehold  interest of a Mortgagor in a Mortgaged
Property or Borrower in such REO Property, respectively.

                  "GROUND  LEASE  IMPAIRMENT"  means  with  respect  to a Ground
Lease: (i) any termination,  cancellation or surrender (in each case in whole or
in part and whether or not pursuant to an express right  contained in the Ground
Lease);  (ii) any modification,  amendment or  supplementation,  or other change
affecting such Ground Lease;  (iii) any subordination by a Borrower,  or consent
to the  subordination by a Borrower of, such Borrower's  interest in such Ground
Lease to any  mortgage  or other  Lien  encumbering  (or that may in the  future
encumber)  the estate of the lessor  under the  Ground  Lease in any  premise(s)
demised to a Borrower under a Ground Lease; or (iv) a Borrower's delivery of any
notice to any  lessor  under a Ground  Lease  that  impairs  or may  impair,  or
purports to limit the exercise of, Agent's rights and remedies under the related
leasehold  REO Mortgage or the  applicable  Ground  Lease,  whether  caused by a
Borrower or suffered or permitted to occur by a Borrower.

                  "GROUND  RENT"  means  any  and  all  payments  required  of a
Borrower under a Ground Lease, including base rent, fixed rent, additional rent,
and any other payments,  sums or charges payable or required to be paid, whether
to the ground lessor or to a third party, under a Ground Lease.

                  "GUARANTOR" means Ocwen Partnership,  L.P., a Virginia limited
partnership.

                  "GUARANTY OF PAYMENT"  means,  with  respect to the Loan,  the
Guaranty of Payment,  as amended,  guaranteeing the full and timely repayment of
the Loan, from the Guarantor to the Agent for the benefit of the Lenders, in the
form attached hereto as EXHIBIT M.

                  "GUARANTY OF NONRECOURSE  OBLIGATIONS"  means, with respect to
the Loan, the Guaranty of Nonrecourse Obligations guaranteeing the exceptions to
the nonrecourse provisions of the Loan Documents for which liability is retained
as described in SECTION  8.24  hereof,  from the  Guarantor to the Agent for the
benefit of the Lenders, in the form attached hereto as EXHIBIT G.

                  "HAZARDOUS SUBSTANCE" means,  collectively,  (i) any petroleum
or  petroleum  products  or  waste  oils,  explosives,   radioactive  materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls ("PCBS"),
lead in drinking  water,  and  lead-based  paint,  (ii) any  chemicals  or other
materials or substances which are now or hereafter become defined as or included
in the definitions of "hazardous  substances",  "hazardous  wastes",  "hazardous
materials",  "extremely hazardous wastes", "restricted hazardous wastes", "toxic
substances", toxic pollutants", "contaminants", "pollutants" or words of similar
import  under any  Environmental  Law and (iii) any other  chemical or any other
hazardous  material  or  substance,  exposure  to  which  is  now  or  hereafter
prohibited, limited or regulated under any Environmental Law.

                  "IMPOSITIONS" means all taxes (including,  without limitation,
all real estate,  ad valorem,  sales (including those imposed on lease rentals),
use,  single  business,  gross  receipts,  value added,  intangible  transaction
privilege,  privilege  or  license or similar  taxes),  assessments  (including,
without limitation, all assessments for public improvements or benefits, whether
or not  commenced  or  completed  within the term of the Loan,  if any),  ground
rents, water, sewer or other rents and charges,  excises,  levies,  governmental
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 REO  Property,  including  any Rents and  Accounts
(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) the Borrower  (including,  without  limitation,
all income,  franchise,  single  business or other taxes imposed on the Borrower
for the  privilege  of doing  business  in the  jurisdiction  in  which  any REO
Property,  or any other  collateral  delivered  or  pledged  to the  Lenders  in
connection with the Loan, is located) or the Lenders,  (ii) any REO Property,


                                       11
<PAGE>


or any other  collateral  delivered or pledged to the Lenders in connection with
the Loan, or any part thereof or any Rents therefrom or any estate, right, title
or interest therein, or (iii) any occupancy, operation, use or possession of, or
sales from, or activity  conducted on, or in connection with any REO Property or
the leasing or use of such REO Property or any part thereof,  or the acquisition
or financing of the acquisition of such REO Property by the Borrower.

                  "IMPROVEMENTS" means all buildings,  structures,  fixtures and
improvements of every nature whatsoever  situated on the Land comprising any REO
Property on the Closing Date or thereafter (including,  without limitation,  all
gas and electric fixtures,  radiators,  heaters, engines and machinery, boilers,
ranges, elevators and motors, plumbing and heating fixtures, carpeting and other
floor coverings, water heaters, awnings and storm sashes, and cleaning apparatus
which are or shall be  attached  to the Land or said  buildings,  structures  or
improvements   and   including   any   additions,   enlargements,    extensions,
modifications,  repairs or  replacements  thereto,  but exclusive of those items
which are the  property  of the  tenants  of such REO  Property  or of any other
Person other than the Borrower).

                  "INDEBTEDNESS" means the Principal Indebtedness, together with
all  other  obligations  and  liabilities  due or to become  due to the  Lenders
pursuant  hereto,  under the Global Note, any Registered Note, the REO Mortgages
or in accordance  with any of the other Loan  Documents,  and all other amounts,
sums and expenses paid by or payable to the Lenders hereunder or pursuant to the
Global Note, any Registered Note or any of the other Loan  Documents,  including
any Repayment Fee.

                  "INDEMNIFIED  PARTIES"  has the  meaning  set forth in SECTION
5.1(i).

                  "INDEPENDENT"  means,  when used with respect to any Person, a
Person  who (i) does not have any  direct  financial  interest  or any  material
indirect  financial interest in the Borrower or in any Affiliate of the Borrower
and (ii) is not connected  with the Borrower or any Affiliate of the Borrower as
an officer,  employee,  trustee,  partner, director or person performing similar
functions.

                  "INDEX  MATURITY" has the meaning set forth in the  definition
of LIBOR.

                  "INITIAL  COLLATERAL AGENT  CERTIFICATION" has the meaning set
forth in SECTION 2.18(a).

                  "INSTRUMENTS"  means (i) all  "instruments"  as defined in the
UCC,  "chattel  paper" as defined in the UCC, or letters of credit,  evidencing,
representing,  arising from or existing in respect of,  relating to, securing or
otherwise supporting the payment of, any of the Collateral  (including,  without
limitation,  promissory notes,  drafts, bills of exchange and trade acceptances)
and chattel paper  obtained by the Borrower in connection  with any REO Property
or  Mortgaged  Property  (including,  without  limitation,  all  ledger  sheets,
computer records and printouts, data bases, programs, books of account and files
of  the  Borrower  relating  thereto),   (ii)  notes  or  other  obligations  of
indebtedness  owing to the Borrower from whatever source  arising,  in each case
now  owned  or  hereafter  acquired  by the  Borrower  and  (iii)  all  material
covenants,   agreements,   restrictions  and   encumbrances   contained  in  any
instruments,  at any time in  force  affecting  any REO  Property  or  Mortgaged
Property or any part thereof (including,  without limitation,  any which may (a)
require material repairs, modifications or alterations in or to any REO Property
or Mortgaged  Property or any part thereof,  or (b) in any way limit the use and
enjoyment thereof).

                  "INSURANCE  PROCEEDS"  means,  in the event of a casualty with
respect to any REO Property or Mortgaged  Property,  the proceeds received under
any insurance policy.

                  "INSURANCE  REQUIREMENTS"  means  all  material  terms  of any
insurance  policy  required  pursuant to this  Agreement or any Mortgage and all
material  regulations and then current standards  applicable to or affecting any
REO Property or  Mortgaged  Property or any part thereof or any use or condition
thereof,  which  may,  at  any  time,  be  recommended  by  the  Board  of  Fire
Underwriters,  if any, having  jurisdiction  over such REO Property or Mortgaged
Property, or such other body exercising similar functions.

                  "INSURED  CASUALTY"  has the  meaning set forth in SECTION 5.1
(X)(iv)(2).


                                       12
<PAGE>


                  "INTEREST  ACCRUAL  PERIOD"  means,  in  connection  with  the
calculation  of interest  accrued with respect to any Payment  Date,  the period
from and  including the  preceding  Payment Date to but  excluding  such Payment
Date;  PROVIDED,  HOWEVER,  that the first Interest  Accrual Period for the Loan
shall be from the Closing Date to but excluding the first Payment Date.

                  "INTEREST  DETERMINATION  DATE" means,  in connection with the
calculation  of interest  accrued for any Interest  Accrual  Period,  the second
Business Day preceding the first day of such Interest Accrual Period.

                  "INVENTORY"  means  all of the  Borrower's  right,  title  and
interest  in and to any  "inventory"  as  defined  in the  UCC,  whether  now or
hereafter existing or acquired, and which arises out of or is used in connection
with,  directly or indirectly,  the ownership and operation of any REO Property,
all  Documents  representing  the same and all  Proceeds  and  products  of such
Inventory.

                  "JOINDER"  means,  with respect to each Borrower  joining this
Agreement,  the  Joinder,  in the form  attached  as  EXHIBIT S, dated as of the
applicable Advance Closing Date and executed by the applicable Borrower pursuant
to which such Borrower joins in and assumes the  obligations of a Borrower under
this  Agreement,  the  Global  Note,  each  Registered  Note and the other  Loan
Documents and by each partner of member of such Borrower  pursuant to which such
partner or member confirms the pledge of the related ownership  interests to the
Agent.

                  "LAND" has the meaning provided in any REO Mortgage.

                  "LEASES"  means all  leases,  subleases,  lettings,  occupancy
agreements, tenancies and licenses of a Mortgaged Property or by the Borrower as
landlord of each REO Property or any part thereof now or hereafter entered into,
and  all  amendments,  extensions,  renewals  and  guarantees  thereof,  and all
security therefor.

                  "LEASING  COMMISSIONS" means leasing  commissions  incurred by
the Borrower (including,  without limitation, under the Management Agreement) in
connection  with leasing the  commercial  or retail space at any REO Property or
any portion thereof.

                  "LEGAL  REQUIREMENTS" means all governmental  statutes,  laws,
rules, orders, regulations,  ordinances,  judgments,  decrees and injunctions of
Governmental  Authorities  (including,  without limitation,  Environmental Laws)
affecting  either  Borrower,  an REO Property or Mortgaged  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),  and all  permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements,  restrictions and encumbrances contained in any instruments,  at any
time in force  affecting  such REO  Property or  Mortgaged  Property or any part
thereof  (including,  without  limitation,  any which may (i)  require  repairs,
modifications or alterations in or to such REO Property or Mortgaged Property or
any part thereof, or (ii) in any way limit the use and enjoyment  thereof),  but
excluding matters which are the responsibility solely of tenants under Leases.

                  "LENDER"  has the meaning  provided in the first  paragraph of
this Agreement.

                  "LENDER'S TERMS" has the meaning provided in SECTION 5.1(W).

                  "LIBOR"  means  the rate per  annum  calculated  as set  forth
below:

                                    (i)    On each Interest  Determination Date,
                           LIBOR will be  determined on the basis of the offered
                           rate for  deposits  of not less than U.S.  $1,000,000
                           for a period of one  month  (the  "INDEX  MATURITY"),
                           commencing on such Interest Determination Date, which
                           appears  on  Telerate  Page  3750 as of  11:00  a.m.,
                           London  time (or such other page as may  replace  the
                           Telerate  Page on that  service  for the  purposes of
                           displaying  London  interbank  offered rates of major
                           banks).  If no such offered rate appears,  LIBOR with
                           respect to the relevant  Interest Accrual Period will
                           be determined as described in (ii) below.


                                       13
<PAGE>


                                    (ii)   With    respect   to   an    Interest
                           Determination  Date on  which  no such  offered  rate
                           appears on  Telerate  Page 3750 as  described  in (i)
                           above, LIBOR shall be the arithmetic mean,  expressed
                           as a percentage, of the offered rates for deposits in
                           U.S.  dollars for the Index Maturity which appears on
                           the Reuters Screen LIBO Page as of 11:00 a.m., London
                           time,  on such  date.  If, in turn,  such rate is not
                           displayed  on the  Reuters  Screen  LIBO Page at such
                           time,  then LIBOR for such date will be obtained from
                           the  preceding  Business  Day for which  the  Reuters
                           Screen  LIBO  Page  displayed  a rate  for the  Index
                           Maturity.

                                    (iii)  If on any Interest Determination Date
                           the Agent is required but unable to  determine  LIBOR
                           in the manner  provided  in  paragraphs  (i) and (ii)
                           above,  LIBOR for the next  Interest  Accrual  Period
                           shall be LIBOR as determined on the previous Interest
                           Determination  Date  or,  in the  case  of the  first
                           Interest Determination Date, 5.65625%.

All percentages  resulting from any  calculations  referred to in this Agreement
will be rounded upwards,  if necessary,  to the nearest multiple of 1/100 of 1 %
(with  one-half  of 1/100 of 1 % or more  being  rounded  upwards)  and all U.S.
dollar  amounts used in or resulting from such  calculations  will be rounded to
the nearest cent (with one-half cent or more being rounded upwards).

                  "LIEN" means any mortgage,  deed of trust,  lien (statutory or
other),  pledge,  hypothecation,   assignment,  preference,  priority,  security
interest,  or any other encumbrance or charge on or affecting an REO Property or
Mortgaged  Property  or any portion  thereof or the  Borrower,  or any  interest
therein  (including,  without  limitation,  any conditional  sale or other title
retention agreement,  any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement or similar
instrument under the UCC or comparable law of any other  jurisdiction,  domestic
or  foreign,   and  mechanic's,   materialmen's  and  other  similar  liens  and
encumbrances).

                  "LOAN" has the meaning provided in the Recitals hereto.

                  "LOAN AMOUNT" has the meaning provided in the Recitals hereto.

                  "LOAN  DOCUMENTS"  means this Agreement,  the Global Note, the
Registered Note, the REO Mortgages,  the Assignment and Security Agreement,  the
Collateral  Assignments of Mortgage, the Collateral Assignments of Assignment of
Leases, the Management Agreement,  the Management  Subordinations,  the Contract
Assignments,  the  Assignments of Leases and Rents,  the Guaranty of Nonrecourse
Obligations, the Guaranty of Payment, the Pledge Agreement, the Joinders and all
other  agreements,  instruments,  certificates and documents  delivered by or on
behalf of  Borrower,  the Manager or an Affiliate to evidence or secure the Loan
or otherwise in  satisfaction of the  requirements  of this  Agreement,  the REO
Mortgages or the other documents listed above as same may be amended or modified
from time to time.

                  "LOSS PROCEEDS" means  Condemnation  Proceeds and/or Insurance
Proceeds.

                  "LOST NOTE  AFFIDAVIT"  means an  affidavit,  executed  by the
mortgagee or its assignee or the  successor in interest of either of them,  with
respect to a Mortgage Note,  certifying  that the Mortgage Note has been lost or
misplaced and the  circumstances  of such loss, and  containing the  mortgagee's
indemnity  against any loss,  liability  or expense  incurred on account of such
loss, all on terms and conditions satisfactory to Agent.

                  "LOSSES" has the meaning set forth in SECTION 5.1(J).

                  "MANAGEMENT   AGREEMENT"  means,  with  respect  to  each  REO
Property,  the property  management  agreement entered into between Borrower and
the Manager,  substantially in the form attached hereto as EXHIBIT D, or in such
other form as may be approved by the Agent,  as such  agreement  may be amended,
modified or supplemented and in effect from time to time.


                                       14
<PAGE>


                  "MANAGEMENT  SUBORDINATION"  means,  with  respect to each REO
Property,  each Manager's  Consent and  Subordination  of Management  Agreement,
substantially  in the  form  attached  hereto  as  EXHIBIT  E,  dated  as of the
applicable Advance Closing Date,  executed by the Manager,  the Borrower and the
Agent.

                  "MANAGER"  means  Compass  Management  and  Leasing,  Inc.,  a
Delaware  corporation,  or its  successor  in  interest,  or any  other  Manager
approved by Agent.

                  "MARKET  VALUE"  means,  with  respect to an REO  Property  or
Mortgage Loan at any time,  Agent's estimate of the current market value of such
REO Property or Mortgage Loan based upon such methods of analysis as Agent shall
determine in its sole reasonable discretion;  PROVIDED,  that the "Market Value"
of any  Mortgage  Loan that is in default  or which is thirty  (30) days or more
delinquent in respect of any debt service payment  required  thereunder shall be
zero.  Whenever a Market Value  determination  is required under this Agreement,
Borrower shall cooperate with Agent in its determination of Market Value of each
REO Property or Mortgage  Loan  (including,  without  limitation,  providing all
information  and  documentation  in the  possession  of Borrower  regarding  any
individual REO Property or Mortgaged Property).

                  "MARKET VALUE TEST" mean, as of any date of  calculation,  the
test that shall be satisfied if the Principal  Indebtedness  is not greater than
the product of the Market Value and 75%.

                  "MARKET VALUE TEST  DEFAULT"  means the Event of Default which
shall occur if the Borrower fails to make a mandatory  prepayment of the Loan on
the date and in the amount required pursuant to SECTION 2.7(c).  The exercise by
the Borrower of the right to prepay the entire Principal  Indebtedness  pursuant
to  Section  5.1(bb)  shall not in any way limit or affect the  occurrence  of a
Market Value Test Default pursuant to SECTION 2.7(c).

                  "MATERIAL ADVERSE EFFECT" means a material adverse effect upon
(i) the  business  operations,  properties,  assets or condition  (financial  or
otherwise) of the Borrower,  (ii) the ability of the Borrower to perform,  or of
Lenders  to  enforce,  any of the Loan  Documents  or (iii) the value of any REO
Property or Mortgage Loan or the operation thereof.

                  "MEZZANINE LOAN" has the meaning set forth in SECTION 5.1(cc).

                  "MORTGAGE"  means,  with  respect to any  Mortgage  Loan,  the
mortgage,  deed of trust  or other  instrument  creating  a lien on or  priority
ownership interest in an estate in fee simple in real property or a Ground Lease
securing a Mortgage  Note.  To the  extent any such  mortgage,  deed of trust or
other  instrument  has been  restated  or  amended,  "Mortgage"  shall mean such
mortgage, deed of trust or other instrument as so restated or amended.

                  "MORTGAGE LOAN" means each of the mortgage loans  collaterally
assigned  to or for the  benefit  of Agent  pursuant  to the  provisions  of the
Assignment  and Security  Agreement and the  Collateral  Assignments of Mortgage
(including  proceeds from the conversion or sale of any Mortgage Loan) evidenced
by a Mortgage Note and secured by a first Lien Mortgage.

                  "MORTGAGE  LOAN  DOCUMENTS"  means  all  of the  documents  or
instruments   necessary  in  the  reasonable  judgment  of  Agent's  counsel  to
effectuate and perfect the pledge of the Mortgage Loans to or for the benefit of
Agent  hereunder,   which  documents  and  instruments  shall  include,  without
limitation:


                                       15
<PAGE>


                  (a)THE  ORIGINAL  EXECUTED  MORTGAGE NOTE ENDORSED IN BLANK BY
THE  APPLICABLE  BORROWER (OR IF THE ORIGINAL  MORTGAGE  NOTE HAS BEEN LOST,  AN
ORIGINAL LOST NOTE AFFIDAVIT WITH A COPY OF THE ORIGINAL  EXECUTED MORTGAGE NOTE
ATTACHED)  CONTAINING  (x) A COMPLETE  CHAIN OF ORIGINAL  ENDORSEMENTS  FROM THE
NAMED PAYEE TO BORROWER  (PROVIDED THAT WITH RESPECT TO MORTGAGE NOTES THAT HAVE
BEEN  TRANSFERRED AT ANY TIME PURSUANT TO A STATUTORY  MERGER,  CONSOLIDATION OR
OTHER SUCH  TRANSACTION,  OTHER EVIDENCE OF THE LEGAL BASIS FOR THE  ACQUISITION
THEREOF,  SUCH AS A  CERTIFICATE  OF MERGER,  MAY BE  FURNISHED  IN LIEU OF SUCH
ENDORSEMENTS) AND (y) ORIGINAL  COUNTERPARTS OF ALL EXTENSIONS AND MODIFICATIONS
THEREOF (OR SIMILAR AFFIDAVITS AS TO LOST EXTENSIONS OR  MODIFICATIONS);  

                  (b)THE ORIGINAL RECORDED MORTGAGE,  WITH EVIDENCE OF RECORDING
THEREON (OR, IN THOSE  INSTANCES  WHERE THE ORIGINAL IS NOT AVAILABLE AND IS NOT
REQUIRED IN ORDER TO ENFORCE  BORROWER'S  INTEREST IN SUCH MORTGAGE LOAN, A COPY
OF THE  MORTGAGE  CERTIFIED BY THE BORROWER TO BE A TRUE AND CORRECT COPY OF THE
ORIGINAL  SUBMITTED FOR RECORDING) AND EACH ORIGINAL RECORDED (OR COPY CERTIFIED
AS SET FORTH  ABOVE IN THIS  PARAGRAPH)  PRIOR  INTERVENING  ASSIGNMENT  THEREOF
SHOWING A COMPLETE CHAIN OF RECORDED  ASSIGNMENTS FROM THE ORIGINAL MORTGAGEE TO
BORROWER,  AND THE ORIGINAL OF ANY  ASSUMPTION OR  MODIFICATION  AGREEMENT  WITH
EVIDENCE OF THE RECORDING THEREOF INDICATED THEREON,  TOGETHER WITH ORIGINALS OR
COPIES OF ANY FORBEARANCE OR RESTRUCTURING  AGREEMENTS PERTAINING THERETO; 

                  (c)AN EXECUTED COLLATERAL ASSIGNMENT OF MORTGAGE IN RECORDABLE
FORM IN FAVOR OF AGENT; 

                  (d)IF THE  MORTGAGOR  HAS  ASSIGNED ITS RIGHTS UNDER LEASES ON
THE  RELATED  MORTGAGED  PROPERTY  TO THE HOLDER OF SUCH  MORTGAGE BY A SEPARATE
INSTRUMENT,  THE ORIGINAL ASSIGNMENT OF LEASES (OR, IN THOSE INSTANCES WHERE THE
ORIGINAL IS NOT AVAILABLE,  A COPY OF THE ASSIGNMENT OF LEASES  CERTIFIED BY THE
APPLICABLE  BORROWER TO BE A TRUE AND CORRECT COPY OF THE ORIGINAL ASSIGNMENT OF
LEASES),  WITH EVIDENCE OF RECORDING  THEREON,  AND ANY INTERVENING  ASSIGNMENTS
THEREOF  SHOWING A COMPLETE  CHAIN OF  RECORDED  ASSIGNMENTS  FROM THE  ORIGINAL
MORTGAGEE TO BORROWER;  

                  (e)AN EXECUTED  COLLATERAL  ASSIGNMENT OF ASSIGNMENT OF LEASES
IN RECORDABLE  FORM IN FAVOR OF AGENT;  

                  (f)WITH RESPECT TO ANY MORTGAGE LOAN FOR WHICH PAYMENTS ON THE
RELATED  MORTGAGE  NOTE SHALL BE OR HAVE BEEN AND CONTINUE TO BE GUARANTEED BY A
PERSON OTHER THAN THE RELATED  MORTGAGOR,  AN ORIGINAL (WHERE AVAILABLE) OR COPY
OF THE  AGREEMENT  RELATING TO SUCH  GUARANTEE;  

                  (g)THE  ORIGINAL  TITLE  POLICY,  INSURING THE INTEREST OF THE
LENDER WITH RESPECT TO THE MORTGAGED PROPERTY, OR, IF SUCH ORIGINAL TITLE POLICY
IS NOT  AVAILABLE,  A COPY THEREOF,  IF ANY, AND SUCH TITLE POLICY SHALL INCLUDE
THE FOLLOWING ENDORSEMENTS,  AS APPLICABLE: (a) FOR ANY ADDITIONAL ADVANCES OVER
THE ORIGINAL AMOUNT OF THE INSURED DEBT, AN ADDITIONAL ADVANCE ENDORSEMENT;  (b)
FOR ANY REVOLVING  MORTGAGE LOANS, A REVOLVING CREDIT  ENDORSEMENT;  (c) FOR ANY
MULTI-DISBURSEMENT  LOAN, IN  JURISDICTIONS  WHERE BY CUSTOM THE AMOUNT OF TITLE
COVERAGE  IS  INCREASED  BY  ENDORSEMENT  WITH  EACH   DISBURSEMENT,   ALL  SUCH
ENDORSEMENTS;  (d) ALTA 110.5  ENDORSEMENTS  OR  EQUIVALENT,  IN THE CASE TO THE
EXTENT THE SAME ARE APPLICABLE IN RESPECT OF THE RELATED MORTGAGE LOAN; (e) SUCH
OTHER  ENDORSEMENTS AS AGENT SHALL  REASONABLY  REQUIRE;  AND (f) AN ENDORSEMENT
RECOGNIZING  BORROWER AS THE INSURED AND AGENT (OR  COLLATERAL  AGENT  ACTING ON
AGENT'S BEHALF) AS COLLATERAL ASSIGNEE PURSUANT TO THE COLLATERAL  ASSIGNMENT OF
MORTGAGE;  

                  (h)A  COPY  OF  THE  UCC-1  FINANCING  STATEMENT  AND  RELATED
CONTINUATION STATEMENTS,  IF ANY, EACH WITH EVIDENCE OF FILING THEREON, TOGETHER
WITH  EITHER (x)  ASSIGNMENTS  OF  FINANCING  STATEMENTS  ON FORM UCC-3 OR UCC-2
NAMING  BORROWER AS  ASSIGNOR  AND AGENT ON BEHALF OF THE LENDERS AS ASSIGNEE OR
(y) IF REQUIRED UNDER  APPLICABLE  LAW, A NEW FINANCING  STATEMENT ON FORM UCC-1
NAMING  BORROWER AS DEBTOR AND AGENT ON BEHALF OF THE LENDERS AS SECURED  PARTY;

                  (i)IF  SEPARATE  FROM  THE  MORTGAGE,  THE  ORIGINAL  SECURITY
AGREEMENT,  ALL ORIGINAL PRIOR ASSIGNMENTS THEREOF (OR, IN THOSE INSTANCES WHERE
THE ORIGINAL SECURITY  AGREEMENT AND ORIGINAL PRIOR ASSIGNMENTS  THEREOF ARE NOT
AVAILABLE,  A  COPY  OF THE  ORIGINAL  SECURITY  AGREEMENT  AND  ORIGINAL  PRIOR
ASSIGNMENTS  CERTIFIED BY BORROWER TO BE A TRUE AND CORRECT COPY OF THE ORIGINAL
SECURITY  AGREEMENT AND ORIGINAL PRIOR  ASSIGNMENTS),  AND AN ASSIGNMENT THEREOF
FROM  BORROWER  TO AGENT ON BEHALF OF THE  LENDERS;  

                  (j)ANY AND ALL AMENDMENTS,  MODIFICATIONS  AND SUPPLEMENTS TO,
AND ANY WAIVERS RELATED TO, ANY OF THE FOREGOING;  

                  (k)AN  ORIGINAL  ASSIGNMENT  IN BLANK OF ALL THE MORTGAGE LOAN
DOCUMENTS   UNDER  WHICH   BORROWER   HOLDS   RIGHTS,   EXECUTED  BY   BORROWER;


                                       16
<PAGE>


                  (l)A  UNILATERAL  NOTICE OF COLLATERAL  ASSIGNMENT OF MORTGAGE
LOAN; AND 

                  (m)SUCH OTHER  DOCUMENTS,  DELIVERIES,  CERTIFICATES AND OTHER
ITEMS AS AGENT SHALL REQUIRE TO EFFECTUATE AND PERFECT THE COLLATERAL ASSIGNMENT
TO AGENT OR  COLLATERAL  AGENT OF THE  MORTGAGE  LOAN AND ALL RIGHTS OF BORROWER
UNDER THE MORTGAGE LOAN. "MORTGAGE NOTE" means the note or other evidence of the
indebtedness of a Mortgagor in respect of a Mortgage Loan secured by a Mortgage,
including  any loan  agreement  evidencing  or  setting  forth the terms of such
indebtedness.

                  "MORTGAGED PROPERTY" means the commercial or multi-family real
property that constitutes first Lien security for a Mortgage Loan, together with
any real or personal  property,  fixtures,  leases and other  property or rights
pertaining thereto.

                  "MORTGAGOR"  means  the  obligor  on a  Mortgage  Note and the
then-current owner of any Mortgaged Property.

                  "MATURITY DATE" means the earlier of (a) the Original Maturity
Date,  or if such date has been extended  pursuant to the  provisions of SECTION
2.17 hereof,  the Extended  Maturity Date, or (b) such earlier date on which the
entire Loan is required to be paid in full, by  acceleration  or otherwise under
this Agreement or any of the other Loan Documents.

                  "MONEY" means all moneys,  cash,  rights to deposit or savings
accounts or other items of legal tender  obtained  from or for use in connection
with the operation of the Mortgaged Property.

                  "MONTHLY  STATEMENT"  has  the  meaning  provided  in  SECTION
2.12(d).

                  "MULTIEMPLOYER  PLAN"  means  a  multiemployer   benefit  plan
defined as such in Section 3(37) of ERISA to which  contributions  have been, or
were  required to have been,  made by the  Borrower or any ERISA  Affiliate  and
which is covered by Title IV of ERISA.

                  "NET  PROCEEDS"  means  either  (x)  the  purchase  price  (at
foreclosure  or  otherwise)  actually  received  by the Agent from a third party
purchaser with respect to each REO Property or Mortgage Loan, as a result of the
exercise by the Agent of its rights, powers, privileges and other remedies after
the occurrence of an Event of Default or (y) in the event that the Agent (or its
nominee) is the purchaser at  foreclosure of such REO Property or Mortgage Loan,
the higher of (i) the amount of the  Agent's  credit bid or (ii) such  amount as
shall be determined in accordance with applicable law (including, if applicable,
the fair  market  value of such REO  Property),  and in  either  case  minus all
reasonable costs and expenses  (including,  without  limitation,  all attorneys'
fees and  disbursements  and any brokerage fees, if applicable)  incurred by the
Agent (and its nominee,  if applicable) in connection  with the exercise of such
remedies;  PROVIDED, HOWEVER, that such costs and expenses shall not be deducted
to the extent such amounts  previously  have been added to the  Indebtedness  in
accordance with the terms of the applicable REO Mortgage or applicable law.

                  "NEW GROUND LEASE" means,  after the termination or expiration
of any Ground Lease, any new, replacement or 4 substitute Ground Lease issued to
or  obtained  by  Agent  or its  designee  with  respect  to or in  place of the
terminated  Ground Lease,  whether  pursuant to any provision of the  terminated
Ground Lease or otherwise.

                  "OFFICER'S  CERTIFICATE" means a certificate  delivered to the
Agent by the Borrower which is signed by an authorized officer of the Borrower.

                  "OPERATING BUDGET" means, with respect to any Fiscal Year, the
operating  budget for each REO Property  reflecting  Borrower's  projections  of
Gross Revenues,  operating  expenses and Capital  Improvement Costs for such REO
Property for such Fiscal Year and on an annual and monthly  basis and  submitted
by Borrower to the Agent for its approval in accordance  with the  provisions of
SECTION 5.1(R)(vi).


                                       17
<PAGE>


                  "ORGANIZATION AGREEMENT" means,  individually or collectively,
as applicable, the Limited Partnership Agreement of OAIC California Partnership,
L.P.,  dated as of August 26, 1997, and amended and restated as of May 13, 1998,
and of OAIC California  Partnership  II, L.P.,  dated as of January 16, 1998 and
amended and  restated as of May 13,  1998,  and each other  limited  partnership
agreement  with respect to a limited  partnership or limited  liability  company
agreement with respect to a limited  liability company that joins this Agreement
after the Closing Date, each as amended and restated from time to time.

                  "ORIGINAL  MATURITY DATE" has the meaning set forth in SECTION
2.17(a) hereof.

                  "ORIGINATION  FEE" means the fee  designated  as  "ORIGINATION
FEE" in the  Application  and payable by the  Borrower to Agent on each  Advance
Closing Date.

                  "OTHER BORROWINGS" means, with respect to the Borrower without
duplication  (but not including the  Indebtedness)  (i) all  indebtedness of the
Borrower for borrowed  money or for the deferred  purchase  price of property or
services,  (ii) all  indebtedness  of the Borrower  evidenced  by a note,  bond,
debenture or similar instrument,  (iii) the face amount of all letters of credit
issued  for  the  account  of  the  Borrower  and,  without   duplication,   all
unreimbursed  amounts drawn  thereunder,  and obligations  evidenced by bankers'
acceptances,  (iv) all  indebtedness  of the  Borrower  secured by a Lien on any
property  owned  by the  Borrower  (whether  or not such  indebtedness  has been
assumed), (v) all Contingent  Obligations of the Borrower,  (vi) liabilities and
obligations for the payment of money relating to a capitalized  lease obligation
or sale/leaseback obligation, (vii) liabilities and obligations representing the
balance  deferred and unpaid of the purchase  price of any property or services,
except those incurred in the ordinary  course of business that would  constitute
ordinarily  a  trade  payable  to  trade  creditors,   and  (viii)  all  payment
obligations  of the  Borrower  under  any  interest  rate  protection  agreement
(including,  without limitation,  any interest rate swaps, caps, floors, collars
or similar agreements) and similar agreements.

                  "PARTICIPATION" has the meaning provided in SECTION 5.1(v).

                  "PAYMENT DATE" has the meaning provided in SECTION 2.5.

                  "PAYMENT DATE  STATEMENT" has the meaning  provided in SECTION
2.12(d).

                  "PBGC"  means  the  Pension   Benefit   Guaranty   Corporation
established under ERISA, or any successor thereto.

                  "PERMITS"   means  all   licenses,   permits,   variances  and
certificates used in connection with the ownership,  operation, use or occupancy
of any REO  Property  issued  to or on behalf of  Borrower  (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 any REO Property).

                  "PERMITTED  ENCUMBRANCES"  means,  with  respect  to each  REO
Property  or  Mortgaged  Property,  collectively,  (i) the Liens  created by the
applicable REO Mortgage or Mortgage,  respectively, and the other Loan Documents
of record,  (ii) all Liens and other  matters  disclosed on the Title  Insurance
Policy concerning such REO Property or Mortgaged Property,  (iii) Liens, if any,
for  Impositions  imposed by any  Governmental  Authority not yet  delinquent or
being contested in good faith and by appropriate  proceedings in accordance with
the  applicable  REO  Mortgage  or  Mortgage,  respectively,  and (iv) rights of
existing and future tenants and residents as tenants only pursuant to Leases.

                  "PERMITTED INVESTMENTS" means any one or more of the following
obligations or securities acquired at a purchase price of not greater than par:

                                    (i)    obligations of, or obligations  fully
                            guaranteed  as to payment of principal  and interest
                            by,   the   United   States   or   any   agency   or
                            instrumentality  thereof,  


                                       18
<PAGE>


                            provided  such  obligations  are  backed by the full
                            faith and credit of the United States of America;

                                    (ii)   obligations  of the following  United
                            States of  America  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);

                                    (iii)  federal funds, unsecured certificates
                            of deposit, time deposits,  bankers' acceptances and
                            repurchase  agreements  with  maturates  of not more
                            than  365   days  of  any   bank,   the   short-term
                            obligations  of  which  are  rated  in  the  highest
                            short-term rating category by the Rating Agencies;

                                    (iv)   certificates  of  deposit,  demand or
                            time deposits, federal funds or banker's acceptances
                            issued  by  any  depository   institution  or  trust
                            company  incorporated  under the laws of the  United
                            States  or of  any  state  thereof  and  subject  to
                            supervision  and examination by federal and/or state
                            banking  authorities,  PROVIDED that the  commercial
                            paper  and/or debt  obligations  of such  depository
                            institution  or trust company (or in the case of the
                            principal   depository   institution  in  a  holding
                            company  system,   the  commercial   paper  or  debt
                            obligations of such holding company) has the highest
                            short-term rating of the Rating Agencies or is rated
                            with a long term  rating of at least AA- by Standard
                            & Pool's Ratings Services or at least Aa3 by Moody's
                            Investors Service, Inc. for such securities;

                                    (v)    debt  obligations  with  maturates of
                            not  more  than 365  days  and  rated by the  Rating
                            Agencies in their highest long-term unsecured rating
                            category;

                                    (vi)   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 maturates of not more
                           than  270  days  and  that  is  rated  by the  Rating
                           Agencies in their highest  short-term  unsecured debt
                           rating;

                                    (vii)  the Federated Prime  Obligation Money
                            Market  Fund  (the  "FUND")  so long as the  Fund is
                            rated  "AAA"  (or  the  equivalent)  by  the  Rating
                            Agencies;

                                    (viii) units of taxable  money  market funds
                            which funds are regulated  investment  companies and
                            seek to  maintain  a  constant  net asset  value per
                            share and which are rated in the highest category by
                            the Rating Agencies; and

                                    (ix)   any  other  demand,  money  market or
                            time  deposit,   demand   obligation  or  any  other
                            obligation,  security or investment, which the Agent
                            shall have approved in writing;

PROVIDED,  HOWEVER,  that (A) the  investments  described in CLAUSES (I) through
(VI) above must have a  predetermined  fixed dollar of principal due at maturity
that  cannot vary or change,  (B) if such  investments  have a variable  rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed  spread (if any) and must move  proportionately  with that index,  and (C)
such investments must not be subject to liquidation prior to their maturity; and
PROVIDED, FURTHER, that, in the judgment of the Agent, 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 that no  instrument  or
security  shall  be a  Permitted  Investment  if  such  instrument  or  security
evidences  (x) a right to receive  


                                       19
<PAGE>


only  interest  payments  or (y) the right to  receive  principal  and  interest
payments derived from an underlying  investment at a yield to maturity in excess
of 120% of the yield to maturity at par of such underlying investment.

                  "PERSON" means any individual,  corporation, limited liability
company, partnership,  joint venture, estate, trust, unincorporated association,
any federal, state, county or municipal government or any bureau,  department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

                  "PERSONALTY"  means  all  right,  title  and  interest  of the
Borrower  in and to  all  goods,  accounts,  general  intangibles,  instruments,
documents,  chattel  paper  and  all  other  personal  property  of any  kind or
character,  including such items of personal property as defined in the UCC, now
owned or hereafter  acquired by the  Borrower  and now or hereafter  affixed to,
placed upon, used in connection with,  arising from or otherwise  related to any
REO Property or which may be used in or relating to the  planning,  development,
financing or  operation of such REO  Property,  including,  without  limitation,
furniture,   furnishings,   equipment,  machinery,  money,  insurance  proceeds,
accounts, contract rights, trademarks, goodwill, chattel paper, documents, trade
names, licenses and/or franchise agreements, rights of the Borrower under leases
of fixtures or other personal property or equipment,  inventory, all refundable,
returnable or reimbursable fees,  deposits or other funds or evidences of credit
or indebtedness  deposited by or on behalf of the Borrower with any governmental
authorities,  boards,  corporations,  providers of utility  services,  public or
private,  including  specifically,   but  without  limitation,  all  refundable,
returnable or  reimbursable  tap fees,  utility  deposits,  commitment  fees and
development costs.

                  "PLAN" means an employee benefit or other plan (i) established
or maintained by the Borrower or any ERISA Affiliate during the five-year period
ended prior to the date of this  Agreement or to which the Borrower or any ERISA
Affiliate  makes, is obligated to make or has, within the five-year period ended
prior to the date of this  Agreement,  been required to make  contributions  and
(ii) that is covered by Title IV of ERISA or Section 302 of ERISA or Section 412
of the Code, other than a Multiemployer Plan.

                  "PLEDGE AGREEMENT" means that certain Pledge Agreement, in the
form  attached  hereto as Exhibit L, dated as of the Closing  Date or an Advance
Closing  Date,  as  applicable,  by the  partners or members of the  Borrower as
pledgor,  to the Agent, as pledgee, as the same may thereafter from time to time
be supplemented, amended, modified or extended.

                  "POLICIES" has the meaning set forth in SECTION 5.1(X)(iii).

                  "PRINCIPAL"  means Ocwen Asset  Investment  Corp.,  a Virginia
corporation.

                  "PRINCIPAL  INDEBTEDNESS"  means the  principal  amount of the
Loan  outstanding  as  adjusted  by each  increase,  by  additional  Advances or
otherwise (including for advances made by Lender to protect the Collateral),  or
decrease in the principal amount of the Loan outstanding, whether as a result of
prepayment or otherwise, from time to time.

                  "PRINCIPAL   PAYMENT  AMOUNT"  means  the  principal   payment
required to be paid on the Loan on each  Payment  Date in an amount equal to the
sum of (1) with  respect to any  Payment  Date,  the  principal  payments on the
Mortgage  Loans  received  during  the  related  Collection  Period and (2) with
respect to each  Payment Date  occurring  after the  Original  Maturity  Date an
amount  equal  to the sum of (i) the  principal  portion  of the  principal  and
interest  payment that would be  sufficient  to amortize  fully the  outstanding
Principal  Indebtedness  (other than any portion  thereof equal to the Allocated
Loan Amount of the REO Properties  that are hotels and of the Mortgage Loans) on
a level payment of principal  and interest  basis over a period of three hundred
(300) months,  minus the number of Payment  Dates that have  occurred  after the
Original  Maturity  Date,  based upon the rate at which interest shall accrue on
the Loan with respect to the Interest  Accrual  Period during which such Payment
Date occurs and (ii) the principal portion of the principal and interest payment
that would be  sufficient  to  amortize  fully the  portion  of the  outstanding
Principal  Indebtedness equal to the Allocated Loan Amount of the REO Properties
that are hotels on a level payment of principal and interest basis over a period
of two hundred forty (240)  months,  minus the number of Payment Dates that have
occurred after the Original Maturity Date, based upon the rate at which interest
shall  accrue on the Loan with  respect to the Interest  Accrual  Period  during
which such Payment Date occurs.


                                       20
<PAGE>


                  "PROCEEDS" shall have the meaning given in the UCC and, in any
event, shall include, without limitation, all of the Borrower's right, title and
interest in and to proceeds,  product,  rents, profits or receipts,  in whatever
form, arising from the Collateral.

                  "PROPERTY  DIVERSIFICATION  TEST"  means,  as of any  date  of
calculation,  the test that  shall be  satisfied  if no single REO  Property  or
Mortgage Loan has a Total Property Cost in excess of 25 % of the aggregate Total
Property Cost of the REO Properties and Mortgage Loans.

                  "PROPERTY INCOME" means all rents,  income,  issues,  profits,
security deposits and other benefits to which the Mortgagor may now or hereafter
be entitled from a Mortgaged Property or under or in connection with the Leases,
including   all  income   received   from   tenants,   lessees,   licensees  and
concessionaires  and other persons occupying space at such Mortgaged Property or
rendering services to such Mortgaged Property's tenants.

                  "RATING  AGENCIES"  means  at  least  two of  Fitch  Investors
Service,  L.P., Moody's Investors Service, Inc., Duff & Phelps Credit Rating Co.
and Standard & Pool's Ratings Services.

                  "REGISTERED NOTES" has the meaning provided in SECTION 2.4(a).

                  "RELEASE"  means  any  release,   spill,  emission,   leaking,
pumping,  injection,  deposit,  disposal,  discharge,   dispersal,  leaching  or
migration into the indoor or outdoor environment (including, without limitation,
the movement of Hazardous  Substances  through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata).

                  "RELEASE  PRICE"  means,  with  respect to any REO Property or
Mortgage  Loan  which is  proposed  to be the  subject of a Capital  Event,  the
Allocated  Loan Amount of such REO  Property or Mortgage  Loan;  PROVIDED,  that
notwithstanding  the  foregoing,  if after the  release of such REO  Property or
Mortgage Loan the Property Diversification Test would not be satisfied, then the
"Release  Price"  shall  equal  the  greater  of (i) the  amount  that  would be
sufficient to cause the  outstanding  Principal  Indebtedness  to be equal to or
less than the product of the Market Value and 65 % and (ii) the  Allocated  Loan
Amount of such REO Property or Mortgage Loan.

                  "RENTS" means all income,  rents,  issues,  profits,  revenues
(including  all oil and gas or other mineral  royalties  and bonuses),  deposits
(other than  utility and  security  deposits)  and other  benefits  from any REO
Property.

                  "REO  MORTGAGE"  means,  with respect to any REO  Property,  a
first priority Mortgage,  Assignment of Leases and Rents, Security Agreement and
Fixture  Filing  or Deed of Trust,  Assignment  of Leases  and  Rents,  Security
Agreement  and Fixture  Filing,  substantially  in the form  attached  hereto as
EXHIBIT C (or a  substantially  similar  agreement  as  modified  to meet  legal
requirements of any jurisdiction in which an REO Property is located),  dated as
of the applicable  Advance Closing Date, granted by the Borrower to the Agent on
behalf of the  Lenders  (or,  in the case of a Deed of  Trust,  to Deed of Trust
Trustee for the benefit of Agent) with  respect to such REO Property as security
for the Loan, as same may hereafter from time to time be supplemented,  amended,
modified or extended.

                  "REO PROPERTY" individually and in the aggregate means, at any
time, any or all of the Land, the Improvements,  the Personalty, the Leases, the
Ground  Leases,  the Rents,  and the  Equipment (to the extent the same shall be
deemed  to  be  fixtures),   and  all  rights,  titles,  interests  and  estates
appurtenant  thereto,  encumbered  by, and more  particularly  described in, the
applicable REO Mortgage.

                  "REPAYMENT  FEE" means  0.50% of the total  amount of Advances
under this Agreement,  with respect to a Mortgage Loan or REO Property,  payable
at the earliest to occur of (1) with respect to any individual  Mortgage Loan or
REO Property,  the time the Agent releases its Liens thereon in accordance  with
this  Agreement,  (2) the Maturity Date or (3)  termination  of this  Agreement;
PROVIDED,  HOWEVER,  that  notwithstanding the foregoing,  (i) the Repayment Fee
payable as described  above shall be fully credited  against the fees payable in
connection  with a refinancing  of the Loan by the initial Lender or by SSBH and
realized by the initial  Lender or by SSBH  (including  any debt  securitization
related to the REO Properties or Mortgage  Loans lead managed by SSBH),  (ii) no


                                       21
<PAGE>


Repayment Fee shall be payable in connection with any prepayment or repayment of
the Principal  Indebtedness (1) on any Payment Date out of Loss Proceeds, (2) if
the Borrower shall  concurrently be paying the Default  Administration  Fee, (3)
pursuant to Section 9.1 (or comparable provision) of any REO Mortgage,  (4) made
pursuant to SECTION 5.1 (bb) in connection with the Market Value Test or certain
Assignments  of the Loan as  described  therein or (5) made  pursuant to SECTION
2.7(a) in  connection  with a Capital  Event with  respect to an REO Property or
Mortgage  Loan  consummated  with an  Affiliate of the Borrower in the event the
Borrower consummates such Capital Event in order to comply with the Market Value
Test,  but only to the extent of the  reduction  in the  Principal  Indebtedness
necessary to comply with the Market Value Test.

                  "REQUEST  FOR  RELEASE"  means,  with  respect  to one or more
Mortgage Loans or REO Properties,  a Request for Release,  substantially  in the
form attached hereto as EXHIBIT U, executed by Borrower.

                  "SINGLE-PURPOSE   ENTITY"  means  a  Person,   other  than  an
individual, which (i) is formed or organized solely for the purpose of acquiring
and directly holding an ownership interest in any REO Property or Mortgage Loan,
(ii) does not engage in any  business  unrelated to any REO Property or Mortgage
Loan and the financing thereof,  (iii) does not hold or acquire any assets other
than those  related to its interest in any REO Property or Mortgage Loan and the
financing  thereof or incur any  indebtedness  other than as  permitted  by this
Agreement,  any REO  Mortgage  or the  other  Loan  Documents,  (iv) has its own
separate  books and records,  and accounts,  in each case which are separate and
apart  from the books and  records  and  accounts  of any other  Person,  (v) is
subject  to all of the  limitations  on  powers  set  forth in the  Organization
Agreement of Borrower as of the Closing  Date,  (vi) holds itself out as being a
Person  separate and apart from any other Person and (vii) has or is controlled,
directly or indirectly,  by a Person that has at least one independent  director
that is not an employee,  officer, director, or paid consultant of any Affiliate
of such Person or of any principal or officer of such Person.

                  "SSBH" means Salomon Smith Barney Holdings or its successor in
interest.

                  "SURVEY"  means an  ALTA/ACSM  survey of each REO  Property or
Mortgaged Property prepared by a registered  Independent surveyor,  certified to
Agent  for the  benefit  of  Lenders  and the Title  Companies,  and in form and
content satisfactory to Agent and the Title Companies.

                  "TAKING"  means a taking or  voluntary  conveyance  during the
term hereof of all or part of any REO  Property or  Mortgaged  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 such REO Property or Mortgaged Property or any
portion thereof whether or not the same shall have actually been commenced.

                  "TI  COSTS"  means  tenant  improvement  costs and  allowances
incurred  by the  Borrower  in  connection  with  renewing  existing  Leases  or
executing new Leases on the commercial or retail space at any REO Property.

                  "TITLE  COMPANIES" has the meaning set forth in the definition
of "Title Insurance Policy.

                  "TITLE INSURANCE  POLICY" means a mortgagee's  title insurance
policy or policies (a) issued by one or more title companies satisfactory to the
Agent (the "TITLE  COMPANIES")  which  policy or policies  shall be in form ALTA
1970  (with  co-insurance  or  reinsurance  as the  Agent may  require),  naming
Borrower (or, in the case of an REO Property,  the Agent) as the insured  party,
(b) insuring the  applicable  Mortgage or, in the case of an REO  Property,  REO
Mortgage as being a first and prior lien upon the applicable  Mortgaged Property
or, in the case of an REO Property,  REO Property,  (c) showing no  encumbrances
against the  applicable  Mortgaged  Property or, in the case of an REO Property,
REO  Property  (whether  junior or  superior to the  applicable  Mortgage or REO
Mortgage)   which  are  not   acceptable  to  the  Agent  other  than  Permitted
Encumbrances,  (d) in an  amount  reasonably  acceptable  to the  Agent  for the
applicable  REO Property or Mortgaged  Property,  and (e)  otherwise in form and
content  acceptable to the Agent.  Such Title Insurance Policy shall include the
following endorsements or affirmative coverages, to the extent applicable to the
Advance, in form and substance reasonably acceptable to the Agent: variable rate
endorsement;  survey endorsement;  comprehensive  endorsement;  zoning (ALTA 3.1
with parking 


                                       22
<PAGE>


added);  first  loss,  last  dollar and  tie-in  endorsement;  access  coverage;
separate tax parcel  coverage;  contiguity (if  applicable)  coverage;  and such
other  endorsements  as the Agent shall  reasonably  require in order to provide
insurance against specific risks identified by the Agent in connection with such
REO Property or Mortgaged Property.

                  "TOTAL LOAN BALANCE" means, as to any Mortgage Loan, an amount
equal to the  full  outstanding  amount  of such  Mortgage  Loan  including  all
principal,  interest,  prepayment premium,  repayment premium, yield maintenance
payments (if any), minimum internal-rate-of-return  payments (if any), breakage,
and  other  charges  payable  by  the  Mortgagor   pursuant  to  the  applicable
documentation.

                  "TOTAL PROPERTY COST" means, with respect to each REO Property
or Mortgage  Loan,  the sum of (i) in the case of an REO Property,  the purchase
price or, in the case of a Mortgage Loan, the outstanding  principal amount plus
related acquisition or origination costs and expenses reasonably approved by the
Agent and (ii) required Capital  Improvement Costs identified at the time of the
related  Advance to acquire such REO Property  and  mutually  acceptable  to the
Agent and the Borrower.

                  "TRADEMARK" means the trademark licenses,  trademarks,  rights
in intellectual property,  trade names, service marks and copyrights relating to
any REO Property or the license to use  intellectual  property  such as computer
software  owned  or  licensed  by the  Borrower  or other  proprietary  business
information relating to the Borrower's policies,  procedures,  manuals and trade
secrets.

                  "TRANSACTION"  means the transaction  contemplated by the Loan
Documents.

                  "TRANSACTION  COSTS"  means  all costs  and  expenses  paid or
payable  by  the  Borrower  relating  to  the  Transaction  (including,  without
limitation,  appraisal  fees,  legal fees and accounting  fees and the costs and
expenses described in SECTION 8.23).

                  "TRANSFER" means the conveyance, assignment, sale, mortgaging,
encumbrance  (other  than a  Permitted  Encumbrance),  pledging,  hypothecation,
granting of a security  interest  in,  granting of options  with  respect to, or
other disposition of (directly or indirectly,  voluntarily or involuntarily,  by
operation  of law or  otherwise,  and  whether  or not for  consideration  or of
record) all or any portion of any legal or beneficial interest (a) in all or any
portion of any REO  Property or  Mortgage  Loan;  (b) in the stock,  membership,
partnership  interests or other beneficial ownership interests in the members or
partners of the  Borrower;  (c) in the  Borrower;  or (d) in any Person having a
direct or indirect legal or beneficial  ownership in the Borrower and shall also
include,  without  limitation to the foregoing,  the  following:  an installment
sales agreement wherein the Borrower agrees to sell any REO Property or any part
thereof  or any  interest  therein  for a price to be paid in  installments;  an
agreement by the Borrower  leasing all or a substantial part of any REO Property
to one or more Persons pursuant to a single or related transactions,  or a sale,
assignment  or other  transfer  of, or the grant of a security  interest in, the
Borrower's  right,  title and  interest  in and to any  Leases  or any  Rent;  a
transaction  or other event  pursuant to which the Principal no longer  controls
(directly  or  indirectly)  the sole  member  of the  Borrower;  any  instrument
subjecting any REO Property to a condominium regime or transferring ownership to
a cooperative corporation; the dissolution or termination of the Borrower or the
merger or  consolidation  of the Borrower with any other Person;  and, except as
permitted  hereby,  any transfer of  management of any REO Property to an entity
that is not  controlled  by the  Borrower;  PROVIDED,  that  whenever  the  term
"Transfer"  is  used  in  this  Agreement,  such  term  shall  not  include  any
conveyance,  sale,  assignment  or  other  disposition  of any  interest  in the
Borrower or the  Guarantor  or the  Principal  if,  after  giving  effect to the
proposed transaction, the ownership interests in the Borrower are owned not less
than 51 % directly or indirectly  by the Guarantor or if the Guarantor  does not
own at least  such  percentage  of  ownership  interests  in the  Borrower,  the
Guarantor  exercises  a majority of voting  rights and  operating  control  with
respect to the Borrower.

                  "UCC"  means  with  respect  to any  Collateral,  the  Uniform
Commercial  Code as in  effect  on the  date  hereof  in the  state  where  such
Collateral is located, as amended from time to time; PROVIDED, that if by reason
of mandatory  provisions  of law, the  perfection or the effect of perfection or
nonperfection of the security  interest in any item or portion of the Collateral
is governed by the Uniform  Commercial Code as in effect in a jurisdiction other
than the state where such  Collateral  is located,  "UCC" shall mean the Uniform
Commercial  Code as in effect 


                                       23
<PAGE>


in such other  jurisdiction  for purposes of the provisions  hereof  relating to
such perfection or effect of perfection or nonperfection.

                  "UCC  SEARCHES"  has the meaning  set forth in SECTION  3.5(g)
hereof.

                  "UNILATERAL NOTICE OF COLLATERAL  ASSIGNMENT OF MORTGAGE LOAN"
means,  with respect to any Mortgage  Loan,  a Unilateral  Notice of  Collateral
Assignment  of  Mortgage  Loan,  substantially  in the form  attached  hereto as
EXHIBIT T, executed by Borrower.

                  "USE" means,  with  respect to any  Hazardous  Substance,  the
generation,  manufacture,  processing,  distribution,  handling, use, treatment,
recycling  or storage of such  Hazardous  Substance  or  transportation  of such
Hazardous Substance in connection with or affecting any REO Property.

                  "WELFARE  PLAN"  means an  employee  welfare  benefit  plan as
defined in Section 3(1) of ERISA  established  or  maintained by the Borrower or
any ERISA  Affiliate  or that  covers  any  current  or former  employee  of the
Borrower or any ERISA Affiliate.


                                  ARTICLE II.
                                 GENERAL TERMS

        SECTION 2.1.       THE LOAN.
                               (a)      Subject to the terms and  conditions  of
                                        this  Agreement,  the Lenders shall lend
                                        to  Borrower  from the  initial  Advance
                                        Closing  Date  to  but   excluding   the
                                        Original Maturity Date a total amount up
                                        to  the  Loan  Amount  in  one  or  more
                                        Advances.  The  proceeds of each Advance
                                        shall be used  solely  for the  purposes
                                        identified  in SECTION  2.2  hereof.  On
                                        each  Advance  Closing  Date,  upon  the
                                        satisfaction of the conditions set forth
                                        in  SECTIONS  3.3,  3.4  and 3.5 (in the
                                        case of an Advance  for the  acquisition
                                        of an REO Property or the acquisition or
                                        origination  of or making of  additional
                                        disbursements  under a Mortgage Loan) or
                                        SECTION   2.1(c)  (in  the  case  of  an
                                        Advance for Capital  Improvement Costs),
                                        the  Lenders  shall  initiate  a wire or
                                        other transfer of immediately  available
                                        funds  to  an  account   designated   by
                                        Borrower  in an amount  equal to (x) the
                                        principal amount of the related Advance,
                                        less (y) the sum of (i) the  Origination
                                        Fee  (giving  credit to the  Application
                                        Deposit),    (ii)   the    out-of-pocket
                                        expenses    incurred   by   Lenders   in
                                        connection   with  the  origination  and
                                        funding  of the  Advance  and  (iii) the
                                        reasonable  fees and expenses of Agent's
                                        counsel and Collateral  Agent's  counsel
                                        (subject in the case of clauses (ii) and
                                        (iii) to the  restriction  set  forth in
                                        SECTION 2.1(c)). After the making of the
                                        initial  Advance  on the  Closing  Date,
                                        Borrower  may not  receive  (i) a single
                                        Advance  per  month  for  REO   Property
                                        acquisitions     or    Mortgage     Loan
                                        acquisitions    or    originations    or
                                        additional  disbursements and/or Capital
                                        Improvement Costs in an amount less than
                                        $250,000 or two other Advances per month
                                        for   REO   Property   acquisitions   or
                                        Mortgage    Loan     acquisitions     or
                                        originations or additional disbursements
                                        only in an amount  less than  $5,000,000
                                        each  or  (ii) an  Advance  at any  time
                                        after the Agent shall have  notified


                                       24
<PAGE>


                                        the Borrower  that the Market Value Test
                                        has  not  been   satisfied   until   the
                                        Borrower     shall     have     achieved
                                        satisfaction  of such  test or  (iii) an
                                        Advance  for the  acquisition  of an REO
                                        Property   or   the    acquisition    or
                                        origination  of a Mortgage Loan which is
                                        not  acceptable to the Agent in its sole
                                        determination  after  completion  of its
                                        due  diligence  evaluation.  The maximum
                                        principal amount of each Advance for the
                                        acquisition  of an REO  Property  or the
                                        acquisition  or  origination  of or  the
                                        making  of  an  additional  disbursement
                                        under   a   Mortgage   Loan   shall   be
                                        determined as of the applicable  Advance
                                        Closing  Date on which such REO Property
                                        is acquired or Mortgage Loan is acquired
                                        or originated or additional disbursement
                                        with respect  thereto and shall,  in any
                                        event,  equal 75 % (or, if the  Property
                                        Diversification   Test   would   not  be
                                        satisfied  following the  acquisition of
                                        such  REO  Property  or  acquisition  or
                                        origination of such Mortgage Loan,  65%)
                                        of the  related  purchase  price  in the
                                        case  of an REO  Property  or  principal
                                        amount  in the case of a  Mortgage  Loan
                                        plus   related    costs   and   expenses
                                        reasonably   approved   by  the   Agent.
                                        Notwithstanding   anything   in  SECTION
                                        2.1(a) or 2.1(c)  to the  contrary,  the
                                        maximum  principal  amount  of  Advances
                                        made  pursuant  to this  Agreement  with
                                        respect to an REO  Property  or Mortgage
                                        Loan shall be limited to (a) 75% (or, if
                                        the  Property  Diversification  Test has
                                        not been  satisfied,  65%) of the lesser
                                        of (1) the related  Total  Property Cost
                                        and (2) the related Market Value. If the
                                        Property  Diversification  Test  was not
                                        satisfied  on any Advance  Closing  Date
                                        for the  acquisition  of an REO Property
                                        or Mortgage Loan but has been  satisfied
                                        as  of  a  subsequent   date,  then  the
                                        Borrower    shall   be   entitled,    at
                                        Borrower's  request  pursuant to SECTION
                                        2.1(c),  to  receive  an  Advance  on  a
                                        subsequent  Advance  Closing Date in the
                                        amount   with   respect   to   all   REO
                                        Properties and Mortgage Loans sufficient
                                        to  cause  the   outstanding   Principal
                                        Indebtedness  to be  equal to 75% of the
                                        lesser of (1) the related Total Property
                                        Cost   minus   any   required    Capital
                                        Improvement Costs identified at the time
                                        of acquisition of the REO Properties and
                                        mutually  acceptable to the Borrower and
                                        the Agent,  but not  incurred as of such
                                        subsequent  Advance Closing Date and (2)
                                        the related Market Value.

                               (b)      The Loan shall  constitute  one  general
                                        obligation  of  Borrower  to the Lenders
                                        and  shall be  secured  by the  security
                                        interest in and Liens  granted  upon all
                                        of the  Collateral,  and  by  all  other
                                        security interests and Liens at any time
                                        or times  hereafter  granted by Borrower
                                        to the Lenders or to Collateral Agent on
                                        behalf of the Lenders.

                               (c)      After the  Closing  Date,  so long as no
                                        Event of Default shall have occurred and
                                        be continuing, the Lenders shall lend to
                                        the  Borrower  Advances  either  (x) for
                                        required   Capital   Improvement   Costs
                                        identified at the time of acquisition of
                                        each   REO    Property    and   mutually
                                        acceptable to the Borrower and the Agent
                                        or  (y)  in  the   amount   contemplated
                                        pursuant to the last sentence of SECTION
                                        2.1(a),  in each case in accordance 


                                       25
<PAGE>


                                        with the procedure  set forth below,  to
                                        be  applied  in the case of  clause  (x)
                                        solely towards such Capital  Improvement
                                        Costs referred to in an Operating Budget
                                        (or  pro  forma   financial   statement)
                                        approved  by the Agent or to be remitted
                                        in  the  case  of  clause   (y)  to  the
                                        Borrower    for   general    partnership
                                        purposes, respectively:

                                        (i)   the  Borrower  shall submit to the
                                              Agent   not  less  than  ten  (10)
                                              Business   Days   prior   to   the
                                              proposed   funding  date  of  such
                                              Advance an Officer's  Certificate,
                                              substantially   in  the   form  of
                                              EXHIBIT N,  describing  (x) in the
                                              case  of an  Advance  for  Capital
                                              Improvement  Costs,  the aggregate
                                              Capital   Improvement   Costs  for
                                              which  such  funds  are  currently
                                              intended   to   be   applied   and
                                              currently  need  to  be  spent  on
                                              (attaching  the Operating  Budget,
                                              invoices, receipts and evidence of
                                              work  completed) and of which such
                                              funds equal not more than 75% (or,
                                              if  the  Property  Diversification
                                              Test has not been satisfied,  65%)
                                              of    the     required     Capital
                                              Improvement  Costs  identified  at
                                              the  time  of  acquisition  of the
                                              related REO  Property and mutually
                                              acceptable  to Borrower  and Agent
                                              and   (y)   the   amount   of  the
                                              requested Advance,  and certifying
                                              that (i) the  representations  and
                                              warranties  of  the  Borrower  set
                                              forth in  SECTION  4.1  hereof are
                                              true and  correct  on such date as
                                              if made on such date  (subject  to
                                              any  exceptions  set  forth  in  a
                                              schedule  to  such   certificate),
                                              (ii) no  Default  with  respect to
                                              the  payment  of money or Event of
                                              Default   has   occurred   and  is
                                              continuing  on  such  date,  (iii)
                                              Borrower  is in good  standing  in
                                              its  jurisdiction of formation and
                                              (iv) there have been no changes in
                                              the  Organization  Agreement since
                                              the Closing Date (or if there have
                                              been changes, certifying as to the
                                              changes);

                                        (ii)  the  Agent  shall  have  five  (5)
                                              Business Days from the date of its
                                              receipt    of    the     Officer's
                                              Certificate  specified  in  CLAUSE
                                              (i)   above   and   the   required
                                              attachments  to object in  writing
                                              to the Advance due to the proposed
                                              costs not being  required  Capital
                                              Improvement  Costs  identified  at
                                              the  time of  acquisition  of such
                                              REO  Property  referred  to in the
                                              Operating  Budget  (or  pro  forma
                                              financial  statement) or not being
                                              permitted   by   the   penultimate
                                              sentence of SECTION 2.1(a); and

                                        (iii) in the  event  the  Lenders  shall
                                              make the  Advance,  on the Advance
                                              Closing   Date,  so  long  as  the
                                              Borrower shall have satisfied each
                                              of the  conditions  set  forth  in
                                              SECTIONS 3.5(f) (in the case of an
                                              Advance  for  Capital  Improvement
                                              Costs  only)  (for  this  purpose,
                                              such  condition  being  limited to
                                              delivery   of   the    appropriate
                                              endorsement to the Title Insurance
                                              Policy),  (L), (M), and (N) (as if
                                              the  Additional  Advance Date were
                                              the  


                                       26
<PAGE>


                                              Closing  Date for  this  purpose),
                                              the  Lenders  shall  make the wire
                                              transfer  contemplated  by SECTION
                                              2.1(a) to an account designated by
                                              Borrower   of   the   Advance   in
                                              immediately  available  funds (the
                                              out-of-pocket expenses and counsel
                                              fees and  expenses  referred to in
                                              SECTION  2.1(a)  for this  purpose
                                              being  limited  to (1) in the case
                                              of   an   Advance    for   Capital
                                              Improvement    Costs   only,   any
                                              reasonable  out-of-pocket expenses
                                              incurred    by   the    Agent   in
                                              connection  with an  inspection of
                                              the  applicable REO Property prior
                                              to the making of such  Advance and
                                              (2)  reasonable  fees and expenses
                                              of the Lenders'  counsel  relating
                                              to issues  raised in obtaining the
                                              applicable  Title Insurance Policy
                                              endorsement).


        SECTION 2.2.   USE OF PROCEEDS.  Proceeds of each Advance  shall be used
for the following purposes: (a) to pay (whether on the date of acquisition or on
a subsequent  date pursuant to the last sentence of SECTION 2.1(a)) a portion of
the  acquisition  cost and  Capital  Improvement  Costs with  respect to the REO
Properties or to provide  funding for a portion of the  principal  amount of the
Mortgage  Loans,  (b) to pay to the  Lenders  the  Origination  Fee  then due on
account of such Advance,  (c) to pay to the Lenders the  out-of-pocket  expenses
incurred by the Lenders in connection  with the  origination  and funding of the
Loan, and (d) to pay to counsel to each of the Collateral  Agent, the Agent, and
the Borrower its respective fees, expenses and disbursements.


        SECTION 2.3.   SECURITY  FOR THE LOAN.  The Global  Note and  Borrower's
obligations hereunder and under the other Loan Documents shall be secured by (a)
liens  upon  the  Mortgage  Loans  pursuant  to the  Collateral  Assignments  of
Mortgage,  (b) liens upon the REO Properties pursuant to the REO Mortgages,  (c)
the  Guaranty of  Nonrecourse  Obligations,  (d) the Pledge  Agreement,  (e) the
Guaranty  of Payment and (f) the  security  interest  and Liens  granted in this
Agreement and in the other Loan documents.


        SECTION 2.4.       BORROWER'S GLOBAL NOTE.
                               (a)      Borrower's   obligation   to   pay   the
                                        principal  of and  interest  on the Loan
                                        and all other amounts due under the Loan
                                        Documents  shall be evidenced  initially
                                        by the Global  Note,  duly  executed and
                                        delivered  by  Borrower  on the  Closing
                                        Date.  The Global  Note shall be payable
                                        as to principal,  interest and all other
                                        amounts due under the Loan Documents, as
                                        specified  in  this  Agreement,  with  a
                                        final maturity on the Maturity Date. The
                                        Agent  and  the  Collateral   Agent  are
                                        hereby  authorized  to  endorse  on  the
                                        schedule attached to the Global Note (or
                                        on  a  continuation   of  such  schedule
                                        attached  to the Global  Note and made a
                                        part  thereof) an  appropriate  notation
                                        evidencing  the date and  amount of each
                                        Advance and each  payment of  principal,
                                        interest or other  amounts due under the
                                        Loan Documents, in respect thereof. Such
                                        schedule  shall,  absent manifest error,
                                        constitute  prima facie  evidence of the
                                        accuracy  of the  information  contained
                                        therein. The failure of the Agent or the
                                        Collateral  Agent to make a notation  on
                                        the  schedule  to  the  Global  Note  as
                                        aforesaid    shall   not    affect   the
                                        obligations  of  Borrower  hereunder  or
                                        under the Global  Note or any other Loan
                                        Document in any respect. The Agent shall
                                        have the right to have the  Global  Note
                                        subdivided,  by exchange for  


                                       27
<PAGE>


                                        promissory notes of lesser denominations
                                        or  otherwise,  upon written  request to
                                        the  Borrower  and, in such  event,  the
                                        Borrower    shall    promptly    execute
                                        additional or  replacement  Global Notes
                                        (the Agent  agreeing  to return or cause
                                        to be returned any  superseded  original
                                        promissory  notes to the Borrower  prior
                                        to   or   contemporaneously   with   the
                                        delivery   of   the    replacement    or
                                        additional Global Note); PROVIDED,  that
                                        the   Borrower   shall   not  incur  any
                                        additional    cost   or   liability   in
                                        connection  with  such   subdivision  in
                                        excess  of  that   contemplated  by  the
                                        original  Global Note.  At no time shall
                                        the aggregate  original principal amount
                                        of  the   Global   Note   (or  of   such
                                        replacement   Notes)   exceed  the  Loan
                                        Amount.

                               (b)      At  the  time  of  each  Advance,   upon
                                        request  of Agent,  Agent  may  exchange
                                        interests in the Global  Note,  in whole
                                        or in  part,  for  notes  in the form of
                                        registered  notes  ("REGISTERED  NOTES")
                                        set  forth  in   EXHIBIT   B-2   hereto.
                                        Registered  Notes shall be issued in the
                                        name of Agent in the  initial  principal
                                        amount  requested  by  Agent  and  Agent
                                        shall make appropriate  notations on the
                                        Global   Note  to  reflect  the  reduced
                                        aggregate principal amount of the Global
                                        Note in an amount  equal to such initial
                                        principal   amount  of  such  Registered
                                        Note.  No such  exchange of a beneficial
                                        interest shall be effective  absent such
                                        notation.  Upon  delivery to Borrower of
                                        Agent's request  referred to above and a
                                        copy of the Global Note  containing such
                                        notation,   Borrower  shall  deliver  to
                                        Agent  Registered  Notes  in the form of
                                        EXHIBIT  B-2.  Registered  Notes are not
                                        exchangeable for interests in the Global
                                        Note.  Unless and until the Global  Note
                                        is  exchanged  in full,  the Global Note
                                        shall in all respects be entitled to the
                                        same benefits under,  and subject to the
                                        same  terms  and   conditions  of,  this
                                        Agreement as Registered  Notes delivered
                                        hereunder.  All Registered  Notes issued
                                        upon any  exchange of  interests  in the
                                        Global Note for a Registered  Note shall
                                        be the  valid  obligations  of  Borrower
                                        evidencing  the same debt,  and entitled
                                        to the same rights and benefits,  as the
                                        Global  Note under this  Agreement,  and
                                        any  reference to the Global Note in any
                                        of the Loan Documents shall be deemed to
                                        also refer to such Registered  Notes. As
                                        an  accommodation  to the Borrower,  the
                                        Agent has on the  Closing  Date  allowed
                                        only OAIC Florida  Partnership,  L.P. to
                                        execute  and deliver a  Registered  Note
                                        and may from time to time  following the
                                        Closing Date allow a Registered  Note to
                                        be  signed  by only  one  Borrower.  All
                                        Borrowers (including, but not limited to
                                        OAIC   Florida   Partnership,    Limited
                                        Partnership    who   has   joined   this
                                        Agreement   pursuant   to   a   Joinder)
                                        acknowledge    and   agree   that   this
                                        procedure is a formal accommodation only
                                        and,  notwithstanding  the fact that any
                                        individual  Borrower  is not a signatory
                                        to  any  such   Registered   Note,   all
                                        Borrowers  nevertheless  remain  jointly
                                        and   severally   liable  for  the  debt
                                        evidenced by such  Registered  Note, and
                                        that  the  Global  Note  and  all of the
                                        Registered  Notes evidence a single debt
                                        and a single Loan for which they are all
                                        responsible.


                                       28
<PAGE>


                               (c)      The    parties    to   this    Agreement
                                        acknowledge  and agree  that (i) as more
                                        particularly   set   forth  in  the  REO
                                        Mortgage   with   respect   to  the  REO
                                        Property  referred to as "Cortez  Plaza"
                                        in Bradenton,  Florida, a portion of the
                                        Indebtedness  evidenced  by  the  Global
                                        Note is  secured  by such REO  Mortgage,
                                        and   (ii)   all   State   of    Florida
                                        documentary  stamp and intangible  taxes
                                        payable    with    respect    to    such
                                        Indebtedness  was paid, and such payment
                                        was noted,  on such REO  Mortgage at the
                                        time of its  recordation  in the  Public
                                        Records of Manatee County,  Florida. The
                                        provisions  of this  SECTION  2.4(c) are
                                        hereby  incorporated  by this  reference
                                        into the Global Note.


        SECTION 2.5.       PRINCIPAL AND INTEREST.
                               (a)      Borrower  shall pay to Lenders  interest
                                        on  the  Principal  Indebtedness  of the
                                        Loan  from  the  Closing   Date  to  but
                                        excluding  the date  the  Loan  shall be
                                        paid  in  full  at  the  interest   rate
                                        provided   in  SECTION   2.5(b)   below.
                                        Interest on the Loan shall accrue on the
                                        Principal Indebtedness commencing on the
                                        Closing  Date and  shall be  payable  in
                                        arrears  on  July  1,  1998,  and on the
                                        first  day  of  each  and  every   month
                                        thereafter  through  the  month in which
                                        the Maturity Date occurs, unless, in any
                                        such  case,  such day is not a  Business
                                        Day, in which event such interest  shall
                                        be  payable  on the first  Business  Day
                                        following  such date  (such date for any
                                        particular  month,  the "PAYMENT DATE").
                                        The Agent and the Collateral Agent shall
                                        calculate   LIBOR   on   each   Interest
                                        Determination   Date  for  the   related
                                        Interest   Accrual   Period   and  shall
                                        communicate  to  Borrower  such rate and
                                        the amount of  interest  due and payable
                                        on the  Global  Note for  such  Interest
                                        Accrual  Period  not less  than five (5)
                                        Business   Days  prior  to  the  related
                                        Payment  Date.  The  entire  outstanding
                                        Principal  Indebtedness  of the Loan and
                                        the  Global  Note,   together  with  all
                                        accrued but unpaid interest  thereon and
                                        all  other  amounts  due  under the Loan
                                        Documents      (including,       without
                                        limitation,  the Repayment Fee) shall be
                                        due  and  payable  by  Borrower  to  the
                                        Lenders on the Maturity  Date.  Interest
                                        shall be  computed on the basis of a 360
                                        day year and the  actual  number of days
                                        elapsed.

                               (b)      Each Advance shall bear interest  during
                                        each  Interest  Accrual  Period from and
                                        including its respective Advance Closing
                                        Date at a rate  per  annum  equal to the
                                        sum  of  LIBOR   determined  as  of  the
                                        Interest  Determination Date immediately
                                        preceding  such Interest  Accrual Period
                                        plus 1.75 %.

                               (c)      Principal  payments on the Loan shall be
                                        made on each  Payment  Date in an amount
                                        equal to the Principal Payment Amount.

                               (d)      While an Event of Default  has  occurred
                                        and is continuing, Borrower shall pay to
                                        the Lenders interest at the Default Rate
                                        on any amount  owing to Lenders not paid
                                        when due  until  such  amount is paid in
                                        full.


                                       29
<PAGE>


        SECTION 2.6.       VOLUNTARY PREPAYMENT.
                               (a)      Borrower  may  voluntarily   prepay  the
                                        Loan,  in  whole  or  in  part,  on  any
                                        Payment Date; PROVIDED,  HOWEVER,  that,
                                        any such prepayment shall be accompanied
                                        by an amount  representing  all  accrued
                                        interest  on the  portion  of  the  Loan
                                        being prepaid and other amounts then due
                                        under  the  Loan  Documents  (including,
                                        without limitation, the Repayment Fee).

                               (b)      In  the  event  of  any  such  voluntary
                                        prepayment,   Borrower  shall  give  the
                                        Agent  written   notice  (or  telephonic
                                        notice promptly confirmed in writing) of
                                        its intent to prepay, which notice shall
                                        be  given  at least  thirty  (30)  days'
                                        prior to the date upon which  prepayment
                                        is to be  made  and  shall  specify  the
                                        Payment Date on which such prepayment is
                                        to  be  made  and  the  amount  of  such
                                        prepayment. If any such notice is given,
                                        the  amount  specified  in  such  notice
                                        shall  be due and  payable  on the  date
                                        specified therein (unless such notice is
                                        revoked  by  Borrower  prior to the date
                                        specified   therein   in   which   event
                                        Borrower shall immediately reimburse the
                                        Agent   for  any   costs   incurred   in
                                        connection   with  the  giving  of  such
                                        notice and its revocation).


        SECTION 2.7.       MANDATORY PREPAYMENT.
                               (a)      So  long  as no  Event  of  Default  has
                                        occurred  and  is  continuing   and  the
                                        Indebtedness  has not been  accelerated,
                                        Borrower may enter into a Capital  Event
                                        with  respect  to  an  REO  Property  or
                                        Mortgage Loan; PROVIDED,  HOWEVER,  that
                                        (i)  Borrower  shall have given Agent at
                                        least fifteen (15) Business  Days' prior
                                        written  notice of the Capital Event and
                                        the amount of anticipated  Capital Event
                                        Proceeds,  (ii) if the Capital  Event is
                                        consummated with a Person that is not an
                                        Affiliate of Borrower, then such Capital
                                        Event shall be on an arms length  basis,
                                        as  reasonably  determined by the Agent,
                                        (iii)   if   the   Capital    Event   is
                                        consummated   with   an   Affiliate   of
                                        Borrower,  then such Capital Event shall
                                        require the prior written consent of the
                                        Agent and (iv)  Borrower  shall  make or
                                        cause  to be made  the  deposits  to the
                                        Collection   Account   referred   to  in
                                        SECTION 2.12(a)(ii);  PROVIDED, FURTHER,
                                        that notwithstanding the acceleration of
                                        the  Indebtedness   after  an  Event  of
                                        Default has occurred and is  continuing,
                                        a Capital  Event may be  consummated  if
                                        (1) the Indebtedness  shall be repaid in
                                        full as a result of such  Capital  Event
                                        or (2) such Capital Event would cure the
                                        event or condition that caused the Event
                                        of   Default   and  in  the   reasonable
                                        determination  of Agent  based  upon the
                                        remaining  REO  Properties  and Mortgage
                                        Loans,   the   Lenders   shall   not  be
                                        disadvantaged  by  allowing  the Capital
                                        Event  to   proceed.   Within  ten  (10)
                                        Business  Days  of  Agent's  receipt  of
                                        Borrower's  notice of a  Capital  Event,
                                        Agent  shall   deliver  to  Borrower  an
                                        Excess Proceeds Test Notice with respect
                                        to such Capital Event.

                               (b)      Except as otherwise  provided in SECTION
                                        2.12(f) in the event Loss  Proceeds  are
                                        required  to  be  made   available   for


                                       30
<PAGE>


                                        restoration  pursuant to SECTION  5.1(x)
                                        or 5.1(y) and  excluding  Loss  Proceeds
                                        which the  Borrower is obligated to turn
                                        over to tenants or other  third  persons
                                        pursuant to applicable law, in the event
                                        of a  casualty  or a  Taking  of any REO
                                        Property or Mortgaged Property, in whole
                                        or in part,  Borrower  shall  deposit or
                                        cause to be deposited  all Loss Proceeds
                                        received  by  Borrower  with  respect to
                                        such REO Property or Mortgaged  Property
                                        into  the  Collection  Account  no later
                                        than   the   Business   Day    following
                                        collection  and  receipt  thereof.  Such
                                        Loss Proceeds shall be applied solely to
                                        make the payments  required  pursuant to
                                        CLAUSE  SECOND of SECTION  2.12(b)(i) of
                                        this Agreement.

                               (c)      Not later  than ten (10)  Business  Days
                                        following  the Business Day on which the
                                        Agent shall have  notified  the Borrower
                                        in writing  that the  Market  Value Test
                                        has not  been  satisfied,  the  Borrower
                                        shall  prepay  the  Loan  in part in the
                                        amount  necessary  to cause  the  Market
                                        Value  Test to be  satisfied.  Any  such
                                        prepayment  shall be  accompanied  by an
                                        amount representing all accrued interest
                                        on the portion of the Loan being prepaid
                                        and  other  amounts  then due  under the
                                        Loan   Documents   (including,   without
                                        limitation,   the  Repayment  Fee).  The
                                        Agent   shall   specify  in  any  notice
                                        delivered   pursuant   to   the   second
                                        preceding  sentence  the  amount  of the
                                        Principal  Indebtedness  the  payment of
                                        which  shall  satisfy  the Market  Value
                                        Test.

                               (d)      Upon payment or  prepayment  of the Loan
                                        in  full,  Borrower  shall  pay  to  the
                                        Lenders,  in  addition  to  the  amounts
                                        specified  in SECTION  2.6,  SECTION 2.7
                                        and SECTION  2.12,  as  applicable,  all
                                        other  amounts  then due and  payable to
                                        the   Lenders   pursuant   to  the  Loan
                                        Documents.


        SECTION 2.8.       APPLICATION OF PAYMENTS  AFTER EVENT OF DEFAULT.  All
proceeds relating to any repayments of the Loan after the Collateral Agent shall
have received  written  notice of the  occurrence of an Event of Default and the
acceleration of the Indebtedness shall be applied to pay: FIRST, any unpaid fees
of the  Collateral  Agent payable  pursuant to the Fee Letter and any reasonable
out-of-pocket  costs and expenses of Collateral  Agent and the Lenders,  in that
order,  reimbursable pursuant to the terms of this Agreement arising as a result
of such repayment or in connection with any REO Property or Mortgaged  Property;
SECOND, any accrued and unpaid interest then payable with respect to the Loan or
the portion  thereof  being  repaid;  THIRD,  the  Repayment Fee and the Default
Administration  Fee; and FOURTH, the outstanding  Principal  Indebtedness or the
portion thereof being repaid.


        SECTION 2.9.       METHOD  AND  PLACE OF  PAYMENT  FROM  THE  COLLECTION
                           ACCOUNT TO THE AGENT.
                               (a)      Except   as    otherwise    specifically
                                        provided   herein,   all   payments  and
                                        prepayments under this Agreement and the
                                        Note  shall be made from the  Collection
                                        Account  to the  Agent  not  later  than
                                        12:00 P.M.,  New York City time,  on the
                                        date  when  due  and  shall  be  made in
                                        lawful  money of the  United  States  of
                                        America by wire  transfer  in federal or
                                        other immediately available funds to its
                                        account  at  Mellon  Bank,   Pittsburgh,
                                        Pennsylvania (ABA No. 043000261, Account
                                        No. 117-7107,  Reference: Ocwen Property
                                        Facility)  and the Agent shall  


                                       31
<PAGE>


                                        disburse  such  payments  to the  Person
                                        entitled  thereto on the Business Day of
                                        receipt  of such  payments  (or the next
                                        Business   Day  if  the   payments   are
                                        received after 12:00 P.M., New York City
                                        time  on  such   Business  Day)  to  the
                                        account  designated  by such  Person  in
                                        writing  to the Agent  from time to time
                                        in  accordance  with SECTION  2.12.  Any
                                        funds  received  by the Agent after such
                                        time shall, for all purposes hereof,  be
                                        deemed  to have  been  paid on the  next
                                        succeeding Business Day. The Agent shall
                                        notify Borrower and the Collateral Agent
                                        in writing of any changes in the account
                                        to which  payments  are to be made.  All
                                        payments made by Borrower hereunder,  or
                                        by   Borrower   under  the  other   Loan
                                        Documents,  shall  be made  irrespective
                                        of, and without any  deduction  for, any
                                        set-offs or counterclaims.

                               (b)      Except to the extent otherwise  provided
                                        herein,  (i) each payment or  prepayment
                                        of  principal  of the  Loan by  Borrower
                                        shall  be  made  to the  Agent  for  the
                                        account  of  the  Lenders  pro  rata  in
                                        accordance  with the  respective  unpaid
                                        portion of the Loan held by such Lenders
                                        and (ii) each payment of interest on the
                                        Loan by  Borrower  shall  be made to the
                                        Agent for the account of the Lenders pro
                                        rata in  accordance  with the amounts of
                                        interest on the portion of the Loan held
                                        by such  Lenders then due and payable to
                                        the respective Lenders.


        SECTION 2.10.      TAXES. All payments made by Borrower under the Global
Note and this Agreement  shall be made free and clear of, and without  deduction
or  withholding  for or on account  of, any present or future  income,  stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,
now or  hereafter  imposed,  levied,  collected,  withheld  or  assessed  by any
Governmental Authority (other than taxes imposed on the income of the Lenders).


        SECTION 2.11.      RELEASE OF COLLATERAL.
                               (a)      Notwithstanding  any other  provision of
                                        this   Agreement   or  any  other   Loan
                                        Document,   upon  the  occurrence  of  a
                                        Capital  Event  with  respect to any REO
                                        Property or Mortgage  Loan as  described
                                        in SECTION 2.7(a) hereof and the deposit
                                        by Borrower into the Collection  Account
                                        of  the  Capital  Event   Proceeds  with
                                        respect thereto  (including any required
                                        Borrower  Release  Price  Contribution),
                                        Agent, on behalf of the Lenders,  shall,
                                        simultaneously  with such Capital Event,
                                        release the Lien of the  applicable  REO
                                        Mortgage  or  Collateral  Assignment  of
                                        Mortgage and UCC-1 financing  statements
                                        and any  other  Liens  in  favor  of the
                                        Lenders relating to such REO Property or
                                        Mortgage  Loan  or the  portion  thereof
                                        affected by such Capital Event.

                               (b)      If (i) Agent on  behalf  of the  Lenders
                                        receives  Loss  Proceeds with respect to
                                        any REO Property or Mortgage Loan in the
                                        event  of a  Taking  affecting  such REO
                                        Property   or  the   related   Mortgaged
                                        Property   in   whole   or  a   casualty
                                        affecting  100% of such REO  Property or
                                        the  related  Mortgaged  Property  (or a
                                        substantial    portion    thereof)    as
                                        described  in SECTION  2.12(f),  (ii) 


                                       32
<PAGE>


                                        in the  case of a  casualty  only,  such
                                        Loss Proceeds together with the Borrower
                                        Release Price Contribution,  if any, are
                                        equal to at least the applicable Release
                                        Price and (iii) such Loss  Proceeds (and
                                        Borrower Release Price Contribution,  if
                                        any)   are   applied   to   reduce   the
                                        Indebtedness in accordance with SECTIONS
                                        2.7(b) and 2.12(b), then Agent on behalf
                                        of the Lenders shall simultaneously with
                                        such application  release or cause to be
                                        released the Lien of the  applicable REO
                                        Mortgage  or  Collateral  Assignment  of
                                        Mortgage and UCC-1 financing  statements
                                        and any  other  Liens  in  favor  of the
                                        Lenders relating to such REO Property or
                                        Mortgage  Loan  and  shall  execute  all
                                        documentation  reasonably  requested  of
                                        Agent  with  respect  to  such  release;
                                        PROVIDED, that in the case of a casualty
                                        only,   Agent   shall   not   have   any
                                        obligation  to release  its Lien  unless
                                        and until it has received the payment of
                                        the Principal  Indebtedness in an amount
                                        equal to the applicable Release Price.

                               (c)      Upon and concurrently  with repayment of
                                        the  Loan  and  all  other  amounts  due
                                        hereunder  and under the Loan  Documents
                                        in full in  accordance  with  the  terms
                                        hereof and  thereof,  the Lenders  shall
                                        release  all Liens  with  respect to all
                                        collateral.

                               (d)      Upon  receipt  from  the  Borrower  of a
                                        Request for Release in the form attached
                                        hereto,   the  Collateral   Agent  shall
                                        promptly release the documents requested
                                        therein for the  purposes so  requested.
                                        The Agent shall  promptly  execute,  and
                                        shall  cause  the  Collateral  Agent  to
                                        execute,  as appropriate,  all documents
                                        required to be executed in such  Request
                                        for Release.

        SECTION 2.12.      CENTRAL CASH MANAGEMENT.
                               (a)      COLLECTION   ACCOUNT   DEPOSITS  TO  AND
                                        WITHDRAWALS FROM THE COLLECTION ACCOUNT.

                                        (i)  On  or  before  the  Closing  Date,
                                             Borrower   shall    establish   and
                                             maintain with the Collateral Agent,
                                             one collection  account for the REO
                                             Properties  and Mortgage Loans (the
                                             "COLLECTION   ACCOUNT"),   with   a
                                             separate and unique  identification
                                             number   and   entitled    "LaSalle
                                             National Bank (as Collateral  Agent
                                             for Salomon  Brothers Realty Corp.)
                                             pursuant to a Loan Agreement, dated
                                             as of June  10,  1998,  among  OAIC
                                             California  Partnership,  L.P.  and
                                             OAIC  California   Partnership  II,
                                             L.P. and Each Other Entity  Joining
                                             the Loan  Agreement  as a Borrower,
                                             Salomon  Brothers  Realty Corp., as
                                             Agent for the Lenders named therein
                                             and  LaSalle   National   Bank,  as
                                             Collateral  Agent." The  Collection
                                             Account   shall   be  an   Eligible
                                             Account.  So long as the Collateral
                                             Agent  has  not  received   written
                                             notice from the Agent that an Event
                                             of  Default  has  occurred  and  is
                                             continuing,  all  Rents  and  Money
                                             received  from  Accounts  and under
                                             Leases for the REO  Properties  and
                                             all   Proceeds 

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<PAGE>

                                             thereof   and  all   payments   and
                                             collections  on the Mortgage  Loans
                                             shall be  payable  directly  to the
                                             Borrower  or  the  Manager  at  the
                                             election of Borrower.  Borrower and
                                             Manager shall not have any right to
                                             withdraw  Money from the Collection
                                             Account.  All payments  made to the
                                             Collection  Account by or on behalf
                                             of  Borrower  which are  payable to
                                             Agent or Collateral  Agent shall be
                                             deemed   received   by   Agent   or
                                             Collateral  Agent,  as  applicable,
                                             upon   such    deposit   into   the
                                             Collection Account.

                                        (ii) So  long  as no  Event  of  Default
                                             shall   have    occurred   and   be
                                             continuing,   the  Borrower   shall
                                             deposit in the Collection  Account:
                                             (a) not  later  than  the  close of
                                             business on the  Business Day prior
                                             to   each   Payment   Date,   funds
                                             sufficient  to pay (1) the interest
                                             then  due and  payable  on the Note
                                             for the  related  Interest  Accrual
                                             Period,  (2) the Principal  Payment
                                             Amount, if any, (3) the fees of the
                                             Collateral  Agent and (4) any other
                                             amounts under this  Agreement,  the
                                             Note or the Loan  Documents  due on
                                             such  Payment  Date  and  regarding
                                             which   the   Borrower   has   been
                                             notified  in  writing,  (b)  as and
                                             when  required  by SECTION  2.7(b),
                                             Loss   Proceeds   received  by  the
                                             Borrower,  (c) simultaneously  with
                                             the  consummation  of  any  Capital
                                             Event,  the Capital Event  Proceeds
                                             resulting  from such Capital Event,
                                             and (d) not later than the close of
                                             business on the  Business Day prior
                                             to the Business Day on which all or
                                             a  portion  of such  Capital  Event
                                             Proceeds   are  to  be  applied  to
                                             prepay the Principal  Indebtedness,
                                             an amount  equal to the accrued and
                                             unpaid interest with respect to the
                                             Principal    Indebtedness   to   be
                                             prepaid  with  such  Capital  Event
                                             Proceeds  through  the date of such
                                             prepayment    of   the    Principal
                                             Indebtedness  and,  if  applicable,
                                             any    Borrower    Release    Price
                                             Contribution due in connection with
                                             any such Capital Event.

                                        (iii)So  long  as the  Collateral  Agent
                                             shall  not  have  received  written
                                             notice from the Agent that an Event
                                             of  Default  has  occurred  and  is
                                             continuing,  on  the  Business  Day
                                             succeeding   the  Business  Day  on
                                             which any  Capital  Event  Proceeds
                                             are  deposited  in  the  Collection
                                             Account, the Collateral Agent shall
                                             apply  such  funds,  together  with
                                             additional    funds   of   Borrower
                                             necessary   to  make  the  payments
                                             described  below,  in each  case to
                                             the extent of the amounts set forth
                                             in written  instructions  delivered
                                             by Borrower to Collateral Agent and
                                             Agent, as follows:

                           FIRST,  to the  payment to the Agent on behalf of the
                  Lenders of the  Principal  Indebtedness  in an amount equal to
                  the applicable  Release Price together with accrued and unpaid
                  interest on such amount of the  Principal  Indebtedness  being
                  prepaid; and

                                       34
<PAGE>

                           SECOND,  to  the  payment  to  the  Borrower  of  the
                  Borrower Excess Proceeds, if any.

                                        (iv) In the  event  that  the  Agent  on
                                             behalf of the Lenders has  notified
                                             Borrower and the  Collateral  Agent
                                             in writing that an Event of Default
                                             has  occurred  and  is  continuing,
                                             Borrower shall commence  depositing
                                             and shall  thereafter  deposit  (or
                                             shall cause the Manager to deposit)
                                             directly   into   the    Collection
                                             Account,   all   Rents   and  Money
                                             received  from  Accounts  or  under
                                             Leases for the REO  Properties  and
                                             all   Proceeds   thereof   and  all
                                             payments  and  collections  on  the
                                             Mortgage    Loans.     After    the
                                             Collateral   Agent   has   received
                                             written  notice  from the  Agent on
                                             behalf of the Lenders that an Event
                                             of  Default  has  occurred  and  is
                                             continuing and the Indebtedness has
                                             been accelerated,

                           (w) all  payments  and  collections  on the  Mortgage
                  Loans and all Rents and Money  received from Accounts or under
                  Leases and  derived  from any REO  Property  and all  Proceeds
                  thereof  shall be  payable  to Agent  for the  account  of the
                  Lenders or as otherwise directed by the Agent on behalf of the
                  Lenders,

                           (x) the  Agent on behalf of the  Lenders  shall  make
                  deposits,  or cause  deposits  to be made,  of such  payments,
                  collections,  Rents,  Money  and  Proceeds  to the  Collection
                  Account, as required by this Agreement, and the Borrower shall
                  cooperate (and shall cause the Manager to cooperate)  with the
                  Agent on behalf of the Lenders in the making of such  deposits
                  or causing such deposits to be made,

                           (y)  Borrower  shall not have any right to direct any
                  withdrawals from the Collection  Account or the Basic Carrying
                  Costs Account,  or to make any withdrawals  therefrom  without
                  the  prior  written  consent  of the  Agent on  behalf  of the
                  Lenders, and

                           (z) Proceeds on deposit in the Collection Account and
                  the  Basic  carrying  Costs  Account  may  be  applied  by the
                  Collateral  Agent on behalf of the  Lenders for the payment of
                  the Indebtedness pursuant to SECTION 2.8 of this agreement.

                               (b)      DISTRIBUTION  OF  CASH.  So  long  as no
                                        Event of  Default  has  occurred  and is
                                        continuing,  on each Payment  Date,  the
                                        Collateral   Agent  shall  withdraw  the
                                        funds  on  deposit  in  the   Collection
                                        Account on such Payment Date,  and shall
                                        apply  such  funds,  in each case to the
                                        extent of the amounts  available  in the
                                        Collection  Account as  described  above
                                        and set  forth  in the  related  Payment
                                        Date Statement delivered by Borrower, as
                                        follows:

                  FIRST,  to the payment to the Agent of the  interest  then due
         and payable on the Note with  respect to the related  Interest  Accrual
         Period;

                  SECOND,   to  the  payment  to  the  Agent  of  the  Principal
         Indebtedness  in an amount  equal to the sum of the  Principal  Payment
         Amount,  if any, then due and payable and any amount to which the Agent
         is entitled pursuant to Section 2.7(b) of this Agreement;

                  THIRD,  to the payment to the Collateral  Agent of the fees of
         the Collateral Agent then due and payable; and

                                       35
<PAGE>

                  FOURTH,  to the  payment  of any  indemnification  to which an
         Indemnified Party is entitled pursuant to SECTIONS 5.1(i) and 5.1(j)

                  FIFTH,  to the  extent  any  funds  remain  in the  Collection
         Account after payment of the amounts described in CLAUSES FIRST through
         FOURTH above, to the Borrower.

                               (c)      PERMITTED  INVESTMENTS.  Borrower  shall
                                        direct  Collateral  Agent in  writing to
                                        invest and  reinvest  any balance in the
                                        Collection Account, from time to time in
                                        Permitted     Investments;     PROVIDED,
                                        HOWEVER,  that (i) the  maturity  of the
                                        Permitted Investments on deposit therein
                                        shall be at the  discretion of Borrower,
                                        but in  any  event  no  later  than  the
                                        Business Day  immediately  preceding the
                                        date on which such funds are required to
                                        be  withdrawn   therefrom   pursuant  to
                                        SECTION   2.12(A)   or   (B)   of   this
                                        Agreement,  (ii) after  Collateral Agent
                                        has  received  written  notice  from the
                                        Agent  that  an  Event  of  Default  has
                                        occurred  and  is  continuing,  Borrower
                                        shall  not  have  any  right  to  direct
                                        investment   of  the   balance   in  the
                                        Collection   Account,   (iii)  all  such
                                        Permitted  Investments  shall be held in
                                        the name of  Collateral  Agent on behalf
                                        of the  Lenders  and (iv) if no  written
                                        investment  direction is provided to the
                                        Collateral   Agent  by   Borrower,   the
                                        Collateral   Agent   shall   invest  any
                                        balance in the Collection  Account in an
                                        investment  of  the  type  described  in
                                        CLAUSE  (VIII)  of  the   definition  of
                                        Permitted  Investments.  Borrower  shall
                                        cause  all  income  or other  gain  from
                                        investments   of   Money   held  in  the
                                        Collection  Account to be  deposited  in
                                        such  account  immediately  upon receipt
                                        and  any  loss   resulting   from   such
                                        investments  shall  be  charged  to such
                                        account.  The  Agent,  the  Lenders  and
                                        Collateral Agent shall have no liability
                                        for any loss in  investments of funds in
                                        the Collection Account that are invested
                                        in Permitted Investments (unless, in the
                                        case  of  Collateral   Agent,   invested
                                        contrary  to the  Agent's or  Borrower's
                                        written  direction)  and  no  such  loss
                                        shall affect  Borrower's  obligation  to
                                        fund,  or  liability  for  funding,  the
                                        Collection   Account.   Borrower   shall
                                        include all  earnings on the  Collection
                                        Account  as  income  of   Borrower   for
                                        federal   and   applicable   state   tax
                                        purposes.

                               (d)      MONTHLY  AND  PAYMENT  DATE  STATEMENTS.
                                        With respect to each Collection  Period,
                                        the  Collateral  Agent shall prepare and
                                        deliver,  or shall  cause to be prepared
                                        and delivered,  to the Agent a statement
                                        (each,  a "MONTHLY  STATEMENT") no later
                                        than five (5)  Business  Days  after the
                                        end of such  Collection  Period  setting
                                        forth  the  aggregate  deposits  to  and
                                        withdrawals from the Collection  Account
                                        and the Basic Carrying Costs Account and
                                        the opening and closing balances in such
                                        accounts.  With  respect to each Payment
                                        Date and the related  Collection  Period
                                        and Interest  Accrual  Period,  Borrower
                                        shall  prepare  and  deliver,  or  shall
                                        cause to be prepared  and  delivered  to
                                        Collateral   Agent  and  the  Agent,   a
                                        statement   (each,   a   "PAYMENT   DATE
                                        STATEMENT")  no later  than  the  second
                                        Business  Day prior to such Payment Date
                                        with respect to each of the items below,
                                        setting forth the following:

                                       36
<PAGE>

                                        (i)    the  aggregate  deposits  to  the
                                               Collection   Account  during  the
                                               related Collection Period and the
                                               opening and  closing  balances in
                                               the Collection Account;

                                        (ii)   the amount of  interest  then due
                                               and  payable on the  Global  Note
                                               with   respect  to  the  Interest
                                               Accrual  Period   (including  the
                                               applicable  number  of  days  and
                                               interest  rate which were applied
                                               in determining such amount);

                                        (iii)  the amount of the  Repayment  Fee
                                               and  Extension  Fee, if any, then
                                               due and payable;

                                        (iv)   the   amount   of  any  fees  and
                                               expenses  of   Collateral   Agent
                                               payable   pursuant   to  the  Fee
                                               Letter and any indemnification to
                                               which  an  Indemnified  Party  is
                                               entitled under this Agreement;

                                        (v)    the  following  information  with
                                               respect    to    the    Principal
                                               Indebtedness    in    a    format
                                               acceptable to the Agent:  (1) the
                                               Principal  Indebtedness as of the
                                               preceding  Payment Date,  (2) any
                                               principal  paid  to  the  Lenders
                                               since the prior Payment Date, (3)
                                               the  principal   payable  to  the
                                               Lenders   pursuant   to   SECTION
                                               2.12(B) on such Payment Date, (4)
                                               the Principal Indebtedness on the
                                               current Payment Date (taking into
                                               account  such  payments)  and (5)
                                               the total  Allocated  Loan Amount
                                               for   the  REO   Properties   and
                                               Mortgage  Loans  as of the  prior
                                               Payment  Date,   any  changes  in
                                               Allocated  Loan Amount of any REO
                                               Property or  Mortgage  Loan since
                                               the prior Payment Date and on the
                                               current  Payment  Date,  and  the
                                               final  Allocated  Loan  Amount of
                                               each REO  Property  and  Mortgage
                                               Loan on the current Payment Date;

                                        (vi)   the amount  remitted to the Basic
                                               Carrying    Costs    Account   in
                                               accordance with SECTION 2.13(a);

                                        (vii)  the  amount,  if any,  payable to
                                               Borrower   pursuant   to  SECTION
                                               2.12(b); and

                                        (viii) with  respect  to  each  Mortgage
                                               Loan, the following  information:
                                               (1)    principal   and   interest
                                               payments  since the prior Payment
                                               Date,  (2)  prepayment   notices,
                                               whether voluntary or involuntary,
                                               (3)  extensions  or requests  for
                                               modification,  (4) delinquencies,
                                               (5)    material    defaults    or
                                               negotiations  with the  Mortgagor
                                               and  (6)  any  other  information
                                               reasonably requested by Agent.

In addition,  no later than the twentieth (20th) day of each calendar month (the
"ACTIVITY  STATEMENT  DATE"),  commencing in the first full calendar month after
the Closing  Date,  Borrower  shall  prepare and  deliver,  or shall cause to be
prepared and delivered to the Collateral Agent and the Agent, a statement (each,
an  "ACTIVITY  STATEMENT")  in hard copy and on diskette  and/or a copy  through
electronic  mail with  respect to the  Collection  Period 

                                       37
<PAGE>

and Interest  Accrual  Period for the Payment Date  immediately  preceding  such
Activity Statement Date setting forth the following: (x) a cash flow report in a
format  reasonably  acceptable  to the Agent  describing  with  respect  to each
Mortgage Loan,  the interest and principal  payments and balances in any reserve
accounts  thereon and,  with  respect to each REO  Property,  the related  Gross
Revenue, property expenses,  Capital Improvement Costs and net operating income;
and (y) a  summary  report  of new  Leases,  Lease  renewals  or  extensions  or
cancellations and Lease modifications and similar proposals with respect to each
REO Property or Mortgaged Property.

                               (e)      LOSS   PROCEEDS.   In  the  event  of  a
                                        casualty or Taking  with  respect to any
                                        REO  Property  or  Mortgaged   Property,
                                        unless  pursuant  to  SECTION  5.1(x) or
                                        5.1(y) or the related Mortgage, the Loss
                                        Proceeds  are to be made  available  for
                                        restoration  or to the  tenants,  all of
                                        Borrower's  interest  in  Loss  Proceeds
                                        shall be paid directly to the Collection
                                        Account to satisfy the  requirements  of
                                        SECTION 2.7(b). If the Loss Proceeds are
                                        to be  made  available  for  restoration
                                        pursuant to SECTION  5.1(x) or 5.1(y) of
                                        the  Mortgage  or to the  tenants,  such
                                        Loss   Proceeds   shall   be   held   by
                                        Collateral   Agent   in   a   segregated
                                        interest-bearing  escrow  account in the
                                        name of  Collateral  Agent on  behalf of
                                        the   Lenders   to  be   opened  by  the
                                        Collateral   Agent   within   three  (3)
                                        Business Days after the Collateral Agent
                                        first  receives  written  notice  of the
                                        necessity therefor from the Agent, to be
                                        withdrawn   by   Collateral   Agent  for
                                        delivery  to  Borrower or to the tenants
                                        from  time to  time  to pay  restoration
                                        costs pursuant to a schedule  reasonably
                                        acceptable to the Agent and Borrower. If
                                        any  Loss   Proceeds   are  received  by
                                        Borrower,  such Loss  Proceeds  shall be
                                        received in trust for the Lenders, shall
                                        be   segregated   from  other  funds  of
                                        Borrower, and shall be forthwith paid to
                                        Collateral Agent to the extent necessary
                                        to comply with this Agreement.

                               (f)      LOCKBOXES.   To  the  extent   that  any
                                        Mortgage Loan includes or provides for a
                                        lockbox for collection of Rents from the
                                        Mortgaged Property,  at such time as the
                                        Mortgage Loan becomes  Collateral  under
                                        this  Agreement  Borrower  shall  assign
                                        such lockbox to the Collateral Agent (as
                                        directed by Agent),  and otherwise  take
                                        such  steps  as  Agent   shall   require
                                        (including  delivery  of  notices to all
                                        tenants  directing them to pay all Rents
                                        to the  Collateral  Agent) to have Rents
                                        sent   directly   from  tenants  of  the
                                        Mortgaged  Property to Collateral  Agent
                                        after  the  occurrence  of an  Event  of
                                        Default   and    acceleration   of   the
                                        Indebtedness.   All  such   Rents   sent
                                        directly  to  Collateral  Agent shall be
                                        deposited in the Collection  Account and
                                        applied   in    accordance    with   the
                                        provisions of this Agreement. Collateral
                                        Agent  shall be under no  obligation  to
                                        contact or communicate with any tenant.

                               (g)      COLLATERAL AGENT'S RELIANCE.  Collateral
                                        Agent may rely and shall be protected in
                                        acting or  refraining  from  acting upon
                                        any  written   notice,   instruction  or
                                        request  furnished to it  hereunder  and
                                        believed by it to be genuine and to have
                                        been signed or  presented  by the proper
                                        party or parties.  Collateral  Agent may
                                        rely on written notice from the Agent as
                                        to the occurrence and  continuance of an
                                        Event  of   Default,   without   further
                                        written  notice  by the  Lenders  to the
                                        contrary.

                                       38
<PAGE>

        SECTION 2.13.      BASIC CARRYING COSTS ACCOUNT.
                               (a)      BASIC CARRYING COSTS ACCOUNT.  Not later
                                        than  the  Closing  Date,  the  Borrower
                                        shall  establish  and maintain  with the
                                        Collateral  Agent an account which shall
                                        be an  Eligible  Account  and  shall  be
                                        designated   the  Basic  Carrying  Costs
                                        Account  (the  "BASIC   CARRYING   COSTS
                                        ACCOUNT") for the benefit of the Lenders
                                        until the Loan is paid in full.  On each
                                        Payment  Date,  if the  Agent  shall not
                                        have notified the Borrower that an Event
                                        of   Default   has   occurred   and   is
                                        continuing,  the Borrower  shall deposit
                                        in the Basic Carrying Costs Account,  an
                                        amount  equal  to  the  product  of  (x)
                                        0.0833,  and  (y)  the  sum of  (i)  the
                                        annual amount set forth in the Operating
                                        Budget approved by Agent with respect to
                                        each REO  Property  referred  to therein
                                        for  Basic  Carrying  Costs and (ii) the
                                        Basic  Carrying  Costs  included  in any
                                        pro-forma  financial statement delivered
                                        in  connection  with  the  making  of an
                                        Advance for an REO  Property as to which
                                        an   Operating   Budget   has  not  been
                                        delivered.  Any and all Moneys  remitted
                                        to  the  Basic  Carrying  Costs  Account
                                        together with any Permitted  Investments
                                        in  which  such  Moneys  are or  will be
                                        invested or reinvested  during the terms
                                        of this Agreement,  shall be held in the
                                        Basic  Carrying  Costs Account and shall
                                        be  withdrawn  by the  Collateral  Agent
                                        within  three  (3)   Business   Days  of
                                        written    request   of   the   Borrower
                                        delivered to Agent and Collateral  Agent
                                        together  with  documentation  and other
                                        evidence   (including   invoices)   with
                                        respect to the use of such funds, to pay
                                        or  reimburse  the  Borrower  for  Basic
                                        Carrying   Costs.   In  the   event  the
                                        Borrower   satisfies   the   outstanding
                                        Indebtedness  in full,  the  Lenders and
                                        the  Collateral  Agent (upon  receipt of
                                        written  notice  thereof from the Agent)
                                        shall  release  any and all  amounts  on
                                        deposit  in  the  Basic  Carrying  Costs
                                        Account to the  Borrower on the Business
                                        Day on which  the  Borrower  repays  the
                                        outstanding  Indebtedness  in full.  The
                                        Collateral    Agent    shall    not   be
                                        responsible  for   confirmation  of  the
                                        application of funds  withdrawn from the
                                        Basic  Carrying  Costs  Account  to  the
                                        applicable purposes set forth above.

                               (b)      INVESTMENT OF FUNDS. All or a portion of
                                        any Moneys in the Basic  Carrying  Costs
                                        Account    shall   be    invested    and
                                        reinvested,  so long as Collateral Agent
                                        has not received written notice from the
                                        Agent  that  an  Event  of  Default  has
                                        occurred   and   is    continuing,    by
                                        Collateral   Agent  in  accordance  with
                                        written   instructions    delivered   by
                                        Borrower,  or after Collateral Agent has
                                        received  written notice from Agent that
                                        an Event of Default has  occurred and is
                                        continuing,  by  Agent,  in one or  more
                                        Permitted   Investments.   So   long  as
                                        Collateral   Agent   has  not   received
                                        written  notice  from the Agent  that an
                                        Event of  Default  has  occurred  and is
                                        continuing,     all    such    Permitted
                                        Investments shall be made in the name of
                                        Borrower, and after Collateral Agent has
                                        received  written notice from Agent that
                                        an Event of Default has  occurred and is
                                        continuing,     all    such    Permitted
                                        Investments shall be made in the name of
                                        the Agent on behalf of the Lenders or as
                                        otherwise   directed   by   the   Agent.
                                        Borrower  or the Agent,  as  applicable,
                                        shall  cause 

                                       39
<PAGE>

                                        all    income   or   other   gain   from
                                        investments  of Money  held in the Basic
                                        Carrying  Costs  Account to be deposited
                                        in  the  Basic  Carrying  Costs  Account
                                        immediately  upon  receipt  and any loss
                                        resulting from such investments shall be
                                        charged  to  the  Basic  Carrying  Costs
                                        Account.  Unless and until  title to the
                                        funds  therein  shall have vested in any
                                        Person  other  than  Borrower,  Borrower
                                        shall include all such income or gain on
                                        the  Basic  Carrying  Costs  Account  as
                                        income  of  Borrower   for  federal  and
                                        applicable state tax purposes.

                               (c)      EVENT OF DEFAULT. After Collateral Agent
                                        has  received  written  notice  from the
                                        Agent  that  an  Event  of  Default  has
                                        occurred  and is  continuing  and for so
                                        long  as  such   Event  of   Default  is
                                        continuing,   Borrower   shall   not  be
                                        permitted to make any  withdrawals  from
                                        the Basic Carrying Costs Account and the
                                        Collateral    Agent   at   the   written
                                        direction of the Agent may liquidate any
                                        Permitted  Investments  of the amount on
                                        deposit  in  the  Basic  Carrying  Costs
                                        Account,  withdraw  the proceeds of such
                                        liquidation   and  use  such  amount  on
                                        deposit  in  the  Basic  Carrying  Costs
                                        Account to make  payments  on account of
                                        the   Loan  in   accordance   with   the
                                        priorities set forth in SECTION 2.8.

        SECTION 2.14.      SECURITY AGREEMENT.
                               (a)      PLEDGE OF  ACCOUNT.  To secure  the full
                                        and punctual  payment and performance of
                                        all of the Indebtedness, Borrower hereby
                                        assigns,  conveys, pledges and transfers
                                        to the Lenders, to be held by Collateral
                                        Agent  on  behalf  of  the   Lenders  as
                                        agent/bailee,  and  grant  a  first  and
                                        continuing  security interest in and to,
                                        the  following  property,   whether  now
                                        owned or existing or hereafter  acquired
                                        or  arising  and   regardless  of  where
                                        located   (collectively,   the  "ACCOUNT
                                        COLLATERAL"):

                                        (i)    all of  Borrower's  right,  title
                                               and  interest  in the  Collection
                                               Account  and the  Basic  Carrying
                                               Costs  Account  and all Money and
                                               Permitted  Investments,  if  any,
                                               from  time to time  deposited  or
                                               held  in the  Collection  Account
                                               and  the  Basic   Carrying  Costs
                                               Account;

                                        (ii)   all of  Borrower's  right,  title
                                               and    interest   in    interest,
                                               dividends, Money, Instruments and
                                               other  property from time to time
                                               received, receivable or otherwise
                                               payable  in  respect  of,  or  in
                                               exchange    for,   any   of   the
                                               foregoing until such time as such
                                               items  are  disbursed   from  the
                                               Collection  Account and the Basic
                                               Carrying Costs Account; and

                                        (iii)  to  the  extent  not  covered  by
                                               CLAUSE  (i) or  (ii)  above,  all
                                               Borrower's   right,   title   and
                                               interest  in  Proceeds  of any or
                                               all of the foregoing.

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<PAGE>

                               (b)      COVENANTS. So long as any portion of the
                                        Indebtedness is outstanding and an Event
                                        of   Default   has   occurred   and   is
                                        continuing,  Borrower shall not open (or
                                        permit the  Manager to open) any account
                                        other than the  Collection  Account  for
                                        the  deposit of Rents or Money  received
                                        from   Accounts  or  under   Leases  and
                                        derived  from the REO  Property  and all
                                        Proceeds and payments and collections on
                                        the Mortgage  Loans to pay amounts owing
                                        hereunder,  other than any  account  for
                                        amounts required by law to be segregated
                                        by  Borrower.   The  Account  Collateral
                                        shall  be  subject  to  such  applicable
                                        laws, and such applicable regulations of
                                        the Board of  Governors  of the  Federal
                                        Reserve  System and of any other banking
                                        authority or Governmental  Authority, as
                                        may now or hereafter  be in effect,  and
                                        to the rules, regulations and procedures
                                        of Collateral  Agent  relating to demand
                                        deposit  accounts  from  time to time in
                                        effect.

                               (c)      FINANCING      STATEMENTS;       FURTHER
                                        ASSURANCES.   On   the   Closing   Date,
                                        Borrower  shall  execute  and deliver to
                                        the   initial   Lender   for   filing  a
                                        financing  statement  or  statements  in
                                        connection  with the Account  Collateral
                                        in the form required to properly perfect
                                        Collateral  Agent's security interest on
                                        behalf  of the  Lenders  in the  Account
                                        Collateral  to the extent that it may be
                                        perfected by such a filing. From time to
                                        time,   at  the  expense  of   Borrower,
                                        Borrower  shall  promptly   execute  and
                                        deliver  all  further  instruments,  and
                                        take all further action,  that the Agent
                                        may  reasonably  request,  in  order  to
                                        perfect   and  protect  the  pledge  and
                                        security  interest  granted or purported
                                        to  be  granted  hereby,  or  to  enable
                                        Collateral Agent to exercise and enforce
                                        Collateral  Agent's  rights and remedies
                                        hereunder  with  respect to, any Account
                                        collateral.  Collateral  Agent shall not
                                        be responsible for the  determination of
                                        the  financing   statements   and  other
                                        instruments  necessary  to perfect  such
                                        security  interest  or for the filing of
                                        such  financing   statements  and  other
                                        instruments  at the locations  necessary
                                        to perfect  such  security  interest and
                                        shall  rely on an  opinion of counsel to
                                        the  Borrower  as to the  perfection  of
                                        such security interest.

                               (d)      TRANSFERS  AND  OTHER  LIENS.   Borrower
                                        shall not sell or  otherwise  dispose of
                                        any of the Account Collateral other than
                                        pursuant to the terms hereof,  or create
                                        or permit to exist any Lien upon or with
                                        respect  to all  or  any of the  Account
                                        Collateral,  except for the Lien granted
                                        to    Collateral    Agent   under   this
                                        Agreement.

                               (e)      NO  WAIVER.   Every   right  and  remedy
                                        granted to  Collateral  Agent and/or the
                                        Lenders  under this  Agreement or by law
                                        may be exercised by Collateral  Agent at
                                        any time and from  time to time,  and as
                                        often as  Collateral  Agent  and/or  the
                                        Lenders may deem expedient.  Any and all
                                        of   Collateral   Agent's   and/or   the
                                        Lenders'  rights  with  respect  to  the
                                        pledge of and  security  interest in the
                                        Account   Collateral  granted  hereunder
                                        shall continue unimpaired,  and Borrower
                                        shall  be  and   remain   obligated   in
                                        accordance   with  the   terms   hereof,

                                       41
<PAGE>

                                        notwithstanding  (i) any  proceeding  of
                                        the  Borrower  under the  United  States
                                        Bankruptcy   Code  or  any   bankruptcy,
                                        insolvency  or  reorganization  laws  or
                                        statutes of any state,  (ii) the release
                                        or substitution of Account Collateral at
                                        any time,  or of any rights or interests
                                        therein or (iii) any delay, extension of
                                        time,   renewal,   compromise  or  other
                                        indulgence  granted by Collateral  Agent
                                        in the event of any Default with respect
                                        to the Account  Collateral  or otherwise
                                        hereunder. No delay or extension of time
                                        by Collateral  Agent in  exercising  any
                                        power of sale,  option or other right or
                                        remedy  hereunder,   and  no  notice  or
                                        demand  which  may be  given  to or made
                                        upon Borrower by Collateral Agent, shall
                                        constitute a waiver  thereof,  or limit,
                                        impair or prejudice  Collateral  Agent's
                                        right, without notice or demand, to take
                                        any  action   against   Borrower  or  to
                                        exercise any other power of sale, option
                                        or any other right or remedy.

                               (f)      AGENT    APPOINTED     ATTORNEY-IN-FACT.
                                        Borrower hereby irrevocably  constitutes
                                        and  appoints  Agent  as  its  true  and
                                        lawful   attorneys-in-fact,   with  full
                                        power of substitution, at any time after
                                        the    occurrence    and    during   the
                                        continuation of an Event of Default,  to
                                        execute,  acknowledge  and  deliver  any
                                        instruments  and to exercise and enforce
                                        every right, power,  remedy,  option and
                                        privilege  of Borrower  with  respect to
                                        the  Account  Collateral,  and do in the
                                        name,  place and stead of Borrower,  all
                                        such  acts,  things and deeds for and on
                                        behalf  of and in the  name of  Borrower
                                        with respect to the Account  Collateral,
                                        which  Borrower could or might do in the
                                        absence  of an Event of Default or which
                                        the Agent may deem reasonably  necessary
                                        or desirable to more fully vest in Agent
                                        the rights  and  remedies  provided  for
                                        herein  with   respect  to  the  Account
                                        Collateral   and   to   accomplish   the
                                        purposes   of   this   Agreement.    The
                                        foregoing   powers   of   attorney   are
                                        irrevocable    and   coupled   with   an
                                        interest.

                               (g)      CONTINUING       SECURITY      INTEREST;
                                        TERMINATION.  This  SECTION  2.14  shall
                                        create  a   continuing   pledge  of  and
                                        security   interest   in   the   Account
                                        Collateral  and  shall  remain  in  full
                                        force and effect  until  payment in full
                                        by  Borrower of the  Indebtedness.  Upon
                                        payment  in  full  by  Borrower  of  the
                                        Indebtedness, Borrower shall be entitled
                                        to the  return,  upon its request and at
                                        its  expense,  of  such  of the  Account
                                        Collateral  as shall  not have been sold
                                        or  otherwise  applied  pursuant  to the
                                        terms   hereof,    and,   upon   written
                                        notification  by the Agent to Collateral
                                        Agent  that  the  Indebtedness  has been
                                        paid in  full,  Collateral  Agent  shall
                                        release  any  funds  then  held by it in
                                        accounts  established  by Borrower  with
                                        Collateral   Agent   pursuant   to  this
                                        Agreement   and   shall   execute   such
                                        instruments  and  documents  as  may  be
                                        reasonably   requested  by  Borrower  to
                                        evidence   such   termination   and  the
                                        release of the  pledge and lien  hereof;
                                        PROVIDED, HOWEVER, -------- ------- that
                                        Borrower  shall  simultaneously  pay  on
                                        demand upon presentation of invoices all
                                        of   Collateral   Agent's   expenses  in
                                        connection      therewith     (including
                                        reasonable     attorneys'    fees    and
                                        disbursements).

                                       42
<PAGE>

                               (h)      RIGHT  OF  SET-OFF.   Collateral   Agent
                                        waives any and all rights it may have at
                                        law or  otherwise to set off or make any
                                        claim  against the  Account  Collateral,
                                        except,   with  respect  to  any  checks
                                        returned  for  insufficient  funds,  the
                                        payment of  Collateral  Agent's fees and
                                        expenses (including  reasonable attorney
                                        fees  and  disbursements),  and  for the
                                        maintenance of the Account collateral.

        SECTION 2.15.      MORTGAGE  RECORDING  TAXES. The Lien to be created by
the REO Mortgages is intended to encumber each REO Property described therein to
the full extent of the Loan Amount (or, in the case of any REO Property  located
in a State which imposes a tax on the  recordation of REO  Mortgages,  an amount
reasonably  acceptable to the Agent).  On each Advance  Closing  Date,  Borrower
shall have paid all state,  county and  municipal  recording and all other taxes
imposed and required to be paid upon the execution and recordation of each newly
executed REO Mortgage,  if any, and all other REO Mortgages dated on or prior to
the Advance  Closing Date for which any such taxes shall not have been paid,  if
any.

        SECTION 2.16.      GENERAL COLLATERAL AGENT PROVISIONS.
                               (a)      APPOINTMENT.    The    Lenders    hereby
                                        designate and appoint  LaSalle  National
                                        Bank as Collateral  Agent of each of the
                                        Lenders   under  this   Agreement,   and
                                        authorize   LaSalle  National  Bank,  as
                                        Collateral  Agent for  Lenders,  to take
                                        such  action on their  behalf  under the
                                        provisions  of  this  Agreement  and  to
                                        exercise  such powers and  perform  such
                                        duties  as are  expressly  delegated  to
                                        Collateral  Agent  by the  terms of this
                                        Agreement,   together  with  such  other
                                        powers  as  are  reasonably   incidental
                                        thereto.  Notwithstanding  any provision
                                        to  the   contrary   elsewhere  in  this
                                        Agreement,  Collateral  Agent  shall not
                                        have  any  duties  or  responsibilities,
                                        except those expressly set forth herein,
                                        or any fiduciary  relationship  with the
                                        Lenders,   and  no  implied   covenants,
                                        functions,   responsibilities,   duties,
                                        obligations or liabilities shall be read
                                        into this  Agreement  or any other  Loan
                                        Document  or  otherwise   exist  against
                                        Collateral Agent.

                               (b)      COLLATERAL AGENT'S RIGHT TO PERFORM.  If
                                        an Event of Default  shall have occurred
                                        and be continuing, Collateral Agent may,
                                        but shall have no obligation  to, itself
                                        perform,  or cause  performance of, such
                                        covenant  or  obligation  giving rise to
                                        such  Event  of  Default   after  giving
                                        Borrower at least five (5) Business Days
                                        prior written notice of such intent, and
                                        the  reasonable  fees  and  expenses  of
                                        Collateral  Agent incurred in connection
                                        therewith  shall be payable by  Borrower
                                        to   Collateral   Agent   upon   demand.
                                        Notwithstanding      the      foregoing,
                                        Collateral    Agent    shall   have   no
                                        obligation to send notice to Borrower of
                                        any such failure  unless  directed to do
                                        so by  Agent  in  writing,  except  that
                                        Collateral  Agent  shall  not  have  the
                                        right set forth in this SECTION  2.16(b)
                                        to perform  unless  such notice has been
                                        sent.

                               (c)      STANDARD OF CARE.  Beyond the observance
                                        of Accepted  Practices  and the exercise
                                        of  reasonable  care in the  custody  or
                                        disbursement  thereof,  Collateral Agent
                                        shall  not  have  any  duty  

                                       43
<PAGE>

                                        as to  any  Account  Collateral  or  any
                                        income  thereon  in  its  possession  or
                                        control or in the  possession or control
                                        of  any  agents  for,  or of  Collateral
                                        Agent,  or the  preservation  of  rights
                                        against  any  Person or  otherwise  with
                                        respect thereto.  Collateral Agent shall
                                        be deemed to have  exercised  reasonable
                                        care  in  the  custody  of  the  Account
                                        Collateral  in  its  possession  if  the
                                        Account Collateral is accorded treatment
                                        in   accordance    with   the   Accepted
                                        Practices.

                               (d)      EXCULPATORY     PROVISIONS.      Neither
                                        Collateral   Agent   nor   any   of  its
                                        officers, directors,  employees, agents,
                                        attorneys,      attorneys-in-fact     or
                                        Affiliates  shall be  responsible in any
                                        manner to the Lenders for any  recitals,
                                        statements,      representations      or
                                        warranties   made  by  Borrower  or  any
                                        officer   thereof   contained   in  this
                                        Agreement or any other Loan  Document or
                                        in any certificate, report, statement or
                                        other  document  referred to or provided
                                        for in, or received by Collateral  Agent
                                        under  or  in  connection   with,   this
                                        Agreement or any other Loan  Document or
                                        for the value, validity,  effectiveness,
                                        genuineness,      enforceability      or
                                        sufficiency of this Agreement,  the Note
                                        or any other  Loan  Document  or for any
                                        failure of  Borrower  to  perform  their
                                        obligations   hereunder  or  thereunder.
                                        Collateral  Agent shall not be under any
                                        obligation  to the Lenders to  ascertain
                                        or  to  inquire  as  to  the  agreements
                                        contained  in, or  conditions  of,  this
                                        Loan   Agreement   or  any  other   Loan
                                        Document,  or to inspect the properties,
                                        books or records of Borrower. Collateral
                                        Agent  shall not be required to take any
                                        discretionary  actions  hereunder except
                                        at the written  direction of Borrower or
                                        the  Agent,  it  being   understood  and
                                        agreed that  Collateral  Agent's  duties
                                        hereunder shall be wholly ministerial in
                                        nature  and  that the  Collateral  Agent
                                        shall not be responsible for calculating
                                        any financial  ratios or generating  any
                                        reports for the Lenders or the Borrower.
                                        In  connection  with  any  discretionary
                                        action   which   Borrower  is  permitted
                                        hereunder to direct  Collateral Agent to
                                        take, if  Collateral  Agent shall follow
                                        the   Agent's    directions    and   not
                                        Borrower's directions,  it shall have no
                                        liability  to Borrower  (or to any other
                                        Person)   for    following    any   such
                                        directions  of the  Agent  and  for  not
                                        following  such  directions  of Borrower
                                        (if   expressly    permitted    herein).
                                        Collateral  Agent shall not be under any
                                        obligation  or duty to  perform  any act
                                        which,   in   Collateral   Agent's  sole
                                        reasonable judgment, could involve it in
                                        expense or  liability or to institute or
                                        defend any suit in respect hereof, or to
                                        advance  any of its own  Moines,  unless
                                        the Agent or  Borrower,  as the case may
                                        be,  shall have  offered  to  Collateral
                                        Agent  reasonable  security or indemnity
                                        against such expense, liability, suit or
                                        advance.

                               (e)      INDEMNIFICATION.      Borrower     shall
                                        indemnify and hold Collateral Agent, and
                                        its  agents,  attorneys,  employees  and
                                        officers  harmless  from and against any
                                        loss, cost or damage (including, without
                                        limitation,  reasonable  attorneys' fees
                                        and    disbursements)     incurred    by
                                        Collateral  Agent in connection with the
                                        transactions     contemplated    hereby,
                                        excluding  any  loss,   

                                       44
<PAGE>

                                        cost  or  damage   (including,   without
                                        limitation,  reasonable  attorneys' fees
                                        and  disbursements)  arising as a result
                                        of Collateral  Agent's  failure to adopt
                                        and  follow  Accepted   Practices,   bad
                                        faith,  willful  misconduct or violation
                                        of applicable  law. The  indemnification
                                        set  forth  in  this   paragraph   shall
                                        survive the  satisfaction and payment of
                                        the  Indebtedness and the termination of
                                        this Agreement.

                               (f)      COLLATERAL AGENT'S RELIANCE.  Collateral
                                        Agent  shall be  entitled  to rely,  and
                                        shall be  fully  protected  in  relying,
                                        upon  any  note,  writing,   resolution,
                                        notice, consent, certificate, affidavit,
                                        letter, cablegram,  telegram, telescope,
                                        telex or  teletype  message,  statement,
                                        order  or  other   document   reasonably
                                        believed by it to be genuine and correct
                                        and to have been signed, sent or made by
                                        the proper  Person or  Persons  and upon
                                        advice and  statements  of legal counsel
                                        and other experts selected by Collateral
                                        Agent.  Collateral  Agent  may  deem and
                                        treat the payee of the Note as the owner
                                        thereof  for  all   purposes   unless  a
                                        written     notice    of     assignment,
                                        negotiation  or transfer  thereof  shall
                                        have been filed with  Collateral  Agent.
                                        Collateral    Agent   shall   be   fully
                                        justified in failing or refusing to take
                                        any action  under this  Agreement or any
                                        other  Loan  Document  unless  it  shall
                                        first receive such advice or concurrence
                                        of Lender as it deems  appropriate or it
                                        shall  first  be   indemnified   to  its
                                        satisfaction  by Lender  against any and
                                        all  liability  and expense which may be
                                        incurred  by it by  reason  of taking or
                                        continuing  to  take  any  such  action.
                                        Provided that the Collateral  Agent acts
                                        in accordance  with Accepted  Practices,
                                        Collateral  Agent  shall in all cases be
                                        fully   protected   in  acting,   or  in
                                        refraining   from  acting,   under  this
                                        Agreement in  accordance  with a request
                                        of  Lenders,  and such  request  and any
                                        action  taken or failure to act pursuant
                                        thereto  shall be binding  upon  Lenders
                                        and all future  holders of the Note. All
                                        requests  to the  Collateral  Agent  for
                                        wire  transfers of funds,  for transfers
                                        between accounts established pursuant to
                                        this Agreement or any other transfer not
                                        specifically described in this Agreement
                                        shall be in writing.

                               (g)      NOTICE  OF  DEFAULT.   Collateral  Agent
                                        shall not be deemed to have knowledge or
                                        notice of the  occurrence of any Default
                                        or Event  of  Default  hereunder  unless
                                        Collateral  Agent has  received  written
                                        notice from the Agent  referring to this
                                        Agreement,  describing  such  Default or
                                        Event of Default and  stating  that such
                                        notice   is  a  "notice   of   default."
                                        Collateral  Agent shall take such action
                                        with respect to such Default or Event of
                                        Default  as  shall  be  directed  by the
                                        Agent,  including  any action under this
                                        Agreement.

                               (h)      NONRELIANCE ON COLLATERAL AGENT. Neither
                                        Collateral   Agent   nor   any   of  its
                                        officers, directors,  employees, agents,
                                        attorneys,      attorneys-in-fact     or
                                        Affiliates has made any  representations
                                        or  warranties to the Lenders and no act
                                        by Collateral  Agent  hereinafter  taken
                                        (including  any review of the affairs of
                                        Borrower)  shall be deemed to constitute
                                        any   representation   or   

                                       45
<PAGE>

                                        warranty  by  Collateral  Agent  to  the
                                        Lenders. Except for notices, reports and
                                        other documents expressly required to be
                                        furnished  to the  Agent  by  Collateral
                                        Agent hereunder,  Collateral Agent shall
                                        not have any duty or  responsibility  to
                                        provide the  Lenders  with any credit or
                                        other    information    concerning   the
                                        business,     operations,      property,
                                        condition   (financial  or   otherwise),
                                        prospects   or    creditworthiness    of
                                        Borrower   which   may  come   into  the
                                        possession of Collateral Agent or any of
                                        its  officers,   directors,   employees,
                                        agents, attorneys,  attorneys-in-fact or
                                        Affiliates.

                               (i)      REMOVAL  AND   RESIGNATION.   Collateral
                                        Agent  shall have the right to resign as
                                        collateral  agent  hereunder  and  Agent
                                        shall   have   the   right   to   remove
                                        Collateral  Agent  as  collateral  agent
                                        hereunder, in each case upon thirty (30)
                                        days'   written   notice  to  the  other
                                        parties to this Agreement.  In the event
                                        of  such  resignation  or  removal,  the
                                        Agent   shall    appoint   a   successor
                                        Collateral  Agent  with the  consent  of
                                        Borrower   (such   consent   not  to  be
                                        unreasonably  withheld or  delayed).  No
                                        such  removal  of  or   resignation   by
                                        Collateral  Agent shall become effective
                                        until a successor Collateral Agent shall
                                        have  accepted  such   appointment   and
                                        executed an instrument by which it shall
                                        have  assumed  all  of  the  rights  and
                                        obligations    of    Collateral    Agent
                                        hereunder.    If   no   such   successor
                                        Collateral  Agent  is  appointed  within
                                        sixty  (60)  days (or,  if fees  payable
                                        under the Fee Letter have not been paid,
                                        thirty (30) days)  after  receipt of the
                                        resigning  Collateral  Agent's notice of
                                        resignation  or removal,  the  resigning
                                        Collateral  Agent may  petition  a court
                                        for  the   appointment  of  a  successor
                                        Collateral Agent. In connection with any
                                        removal of or  resignation by Collateral
                                        Agent,  (A)  the  removed  or  resigning
                                        Collateral Agent shall (at the sole cost
                                        and expense of the  Borrower in the case
                                        of a  removal  of the  Collateral  Agent
                                        without cause) (1) duly assign, transfer
                                        and deliver to the successor  Collateral
                                        Agent this  Agreement  and all Money and
                                        Permitted   Investments   held   by   it
                                        hereunder,  (2) execute  such  financing
                                        statements and other  instruments as may
                                        be necessary to assign to the  successor
                                        Collateral Agent the security  interests
                                        existing   in  favor  of  the   retiring
                                        Collateral  Agent   hereunder,   and  to
                                        otherwise give effect to such succession
                                        and (3) take such  other  actions as may
                                        be reasonably required by Borrower,  the
                                        Agent or the successor  Collateral Agent
                                        in connection with the foregoing and (B)
                                        the  successor  Collateral  Agent  shall
                                        establish in its name,  as agent for the
                                        Lenders,    as   secured   party,    the
                                        Collection  Account and Reserve  Account
                                        as  Borrower  is  required  to  maintain
                                        pursuant to the terms of this Agreement.

                               (j)      INDIVIDUAL  CAPACITY.  Collateral  Agent
                                        and its  Affiliates  may make  loans to,
                                        accept   deposits   from  and  generally
                                        engage  in any  kind  of  business  with
                                        Borrower  or any  Affiliate,  as  though
                                        Collateral  Agent  were  not  Collateral
                                        Agent hereunder, or under the other Loan
                                        Documents.

                                       46
<PAGE>

        SECTION 2.17.      EXTENSION OPTION.
                               (a)      Borrower  shall  have  the  option  (the
                                        "EXTENSION   OPTION"),   to  extend  the
                                        Maturity  Date  of  the  Loan  from  the
                                        Payment   Date  in   June,   2001   (the
                                        "ORIGINAL   MATURITY   DATE"),   to  the
                                        Payment   Date  in   June,   2002   (the
                                        "EXTENDED    MATURITY    DATE"),    upon
                                        satisfaction  of each  of the  following
                                        conditions (the "EXTENSION CONDITIONS"):

                                        (i)    Borrower shall have given written
                                               notice (an "EXTENSION NOTICE") to
                                               the  Agent and  Collateral  Agent
                                               not less  than  sixty  (60)  days
                                               prior  to the  Original  Maturity
                                               Date of its  election to exercise
                                               the Extension Option;

                                        (ii)   no  Default  or Event of  Default
                                               shall   have   occurred   and  be
                                               continuing    on   the   Original
                                               Maturity Date;

                                        (iii)  Borrower  shall  have paid to the
                                               Agent  for  the  benefit  of  the
                                               Lenders on the Original  Maturity
                                               Date a fee (an  "EXTENSION  FEE")
                                               equal to the product of 0.50% and
                                               the Principal Indebtedness; and

                                        (iv)   Borrower  shall have delivered to
                                               the  Agent   such   evidence   of
                                               corporate  and limited  liability
                                               company  authorization  and other
                                               documents    relating    to   the
                                               Extension  Option  as  the  Agent
                                               shall reasonably require.

                               (b)      Borrower may revoke any Extension Notice
                                        by written notice (or telephonic  notice
                                        promptly  confirmed  in  writing) to the
                                        Agent on  behalf of the  Lenders  and to
                                        the Collateral  Agent on or prior to the
                                        fifteenth  (15th)  Business Day prior to
                                        the Original  Maturity  Date;  PROVIDED,
                                        HOWEVER,  that  Borrower  shall  pay the
                                        reasonable  costs  incurred by the Agent
                                        and Collateral  Agent in connection with
                                        the giving of any  Extension  Notice and
                                        its revocation.  If the term of the Loan
                                        is extended  pursuant to the  provisions
                                        of this SECTION  ------- 2.17,  then all
                                        the  terms  and  conditions  of the Loan
                                        ----  Documents  shall  remain  in  full
                                        force and effect and unmodified,  except
                                        that  the  Maturity  Date  shall  be the
                                        Extended Maturity Date.

        SECTION 2.18.      DELIVERY AND CUSTODY OF MORTGAGE LOAN DOCUMENTS.
                               (a)      DELIVERY OF MORTGAGE LOAN DOCUMENTS. Not
                                        later than each Advance  Closing Date on
                                        which a Mortgage  Loan is being added to
                                        the  Collateral,  Borrower shall deliver
                                        or cause to be delivered  to  Collateral
                                        Agent  (including,  but not  limited to,
                                        through  an  escrow  arrangement),   the
                                        Mortgage  Note relating to such Mortgage
                                        Loan.  On each  Advance  Closing Date on
                                        which a Mortgage  Loan is being added to
                                        the Collateral,  Collateral  Agent shall
                                        deliver to Agent and Borrower an initial
                                        certification   in  the  form   attached
                                        hereto  as  EXHIBIT  R-1  (the  "INITIAL
                                        COLLATERAL  AGENT  CERTIFICATION")  with
                                        respect  to  possession  of the  related
                                        Mortgage  Note,  if  applicable.  On  or
                                        prior to each  Advance


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<PAGE>

                                        Closing Date on which a Mortgage Loan is
                                        being added to the Collateral,  Borrower
                                        shall  deliver or cause to be  delivered
                                        to   Collateral   Agent,   the  original
                                        Mortgage Loan Documents  (other than the
                                        Mortgage  Note) for such Mortgage  Loan,
                                        if   applicable.   From  time  to  time,
                                        Borrower may forward to Collateral Agent
                                        additional    original    documents   or
                                        additional  documents  relating  to  the
                                        Mortgage Loans.

                               (b)      CERTIFICATION  OF COLLATERAL  AGENT.  As
                                        soon as practicable  but in any event no
                                        later  than the date that is  forty-five
                                        (45)  days  immediately  succeeding  the
                                        date of  delivery of the  Mortgage  Loan
                                        Documents  by  Borrower  to   Collateral
                                        Agent, Collateral Agent shall review the
                                        Mortgage Loan Documents  delivered to it
                                        and shall  deliver to Agent and Borrower
                                        a final  certification  with  respect to
                                        the Mortgage Loan Documents specified in
                                        paragraphs   (A)   through  (M)  of  the
                                        definition of "Mortgage Loan Documents",
                                        in the form  attached  hereto as EXHIBIT
                                        R-2   (the   "FINAL   COLLATERAL   AGENT
                                        CERTIFICATION").    Any    defects    or
                                        exceptions  to the  foregoing  noted  by
                                        Collateral  Agent shall be  reflected on
                                        an  exception   list   attached  to  the
                                        certification.  Under  no  circumstances
                                        shall  Collateral  Agent be obligated to
                                        verify the authenticity of any signature
                                        on  any  of the  documents  received  or
                                        examined by it in  connection  with this
                                        Agreement  or the  authority or capacity
                                        of any  person to  execute  or issue any
                                        such  document.  Collateral  Agent shall
                                        not  be   responsible   for  the   form,
                                        substance,    sufficiency,     validity,
                                        perfection,  priority,  effectiveness or
                                        enforceability  of any of such documents
                                        nor for making any  determination  as to
                                        the    availability    of    alternative
                                        documents,    or    the    customs    or
                                        requirements of any  jurisdiction or any
                                        applicable  law.  Collateral  Agent  may
                                        accept but shall not be responsible  for
                                        examining or determining  the meaning or
                                        effect  of  any  document  that  is  not
                                        expressly described in the definition of
                                        Mortgage Loan Documents;  PROVIDED, that
                                        Collateral   Agent   --------  shall  be
                                        responsible to notify Agent and Borrower
                                        of the  existence of any such items.  On
                                        or  prior  to the  date  that is 30 days
                                        immediately  succeeding the date of such
                                        certification,  Borrower  shall  cure in
                                        all   material   respects  the  material
                                        defects or  exceptions  set forth on the
                                        exception    list   attached   to   such
                                        certification  with respect to which the
                                        Agent shall have  notified  the Borrower
                                        that  such  defect  or  exception  has a
                                        Material Adverse Effect.

                               (c)      OBLIGATIONS  OF COLLATERAL  AGENT.  With
                                        respect to each  Mortgage  Loan Document
                                        that is delivered to Collateral Agent or
                                        which  comes  into  the   possession  of
                                        Collateral  Agent,  Collateral  Agent is
                                        the  custodian for Agent and Borrower as
                                        their   interests  may  appear   herein.
                                        Collateral Agent shall hold all Mortgage
                                        Loan Documents for the exclusive use and
                                        benefit of Agent and  Borrower  as their
                                        interests may appear  herein,  and shall
                                        make   disposition   thereof   only   in
                                        accordance    with    this    Agreement.
                                        Collateral  Agent  shall  segregate  and
                                        maintain   continuous   custody  of  the
                                        Mortgage  Loan  


                                       48
<PAGE>

                                        Documents   in  secure   and   fireproof
                                        facilities in accordance  with customary
                                        standards for such custody.

                               (d)      RELEASE FOR SERVICING. From time to time
                                        as  appropriate  for the  administration
                                        and  servicing  of any  of the  Mortgage
                                        Loans,   Collateral   Agent  is   hereby
                                        authorized,  upon  written  receipt from
                                        Borrower (provided that no uncured Event
                                        of   Default   has   occurred   and   is
                                        continuing)  of a Request for Release in
                                        the form  attached  hereto to release to
                                        Borrower  or  its  agent,   the  related
                                        Mortgage Loan Documents. Agent may, from
                                        time  to  time  by  written   notice  to
                                        Borrower,      establish      reasonable
                                        limitations  on the aggregate  number or
                                        Market  Value  of  Mortgage  Loans as to
                                        which the Mortgage Loan Documents may be
                                        outside Collateral Agent's possession at
                                        any time.  To the extent  that  original
                                        Mortgage  Loan   Documents  need  to  be
                                        released   by   Collateral    Agent   to
                                        facilitate  legal  enforcement of rights
                                        or remedies  thereunder,  such  releases
                                        shall  be  made   directly   to  counsel
                                        pursuant to direct  agreements with such
                                        counsel to return the original  Mortgage
                                        Loan   Documents  to  Collateral   Agent
                                        within ten (10) Business Days after such
                                        counsel  determines  that  the  need for
                                        them no longer exists.  All documents so
                                        released  to Borrower or its agent shall
                                        be  held by  Borrower  or its  agent  in
                                        trust for the  benefit  of Agent and the
                                        Lenders.  Borrower  or its  agent  shall
                                        return to Collateral  Agent the Mortgage
                                        Loan  Documents or other such  documents
                                        within  ten  (10)  Business  Days  after
                                        Borrower  or its  agent  has  determined
                                        that the need thereof in connection with
                                        such   servicing  no  longer  exists  or
                                        (except to the extent the Mortgage  Loan
                                        Documents  or  other  documents  are  in
                                        custody  of  a  court  for  purposes  of
                                        enforcement  thereof)  within  ten  (10)
                                        Business Days after the earlier  request
                                        by Agent or  Collateral  Agent to return
                                        such  documents  to  Collateral   Agent.
                                        Borrower  shall be  responsible to Agent
                                        for the  reconstruction of any documents
                                        lost  while  released  pursuant  to this
                                        paragraph.

                               (e)      RELEASE  FOR   PAYMENT.   Upon  (i)  the
                                        payment  in  full  of  or  a  discounted
                                        payoff  in  full   satisfaction  of  any
                                        Mortgage  Loan or upon a Transfer of any
                                        Mortgage  Loan,  or (ii) the  payment in
                                        full of the Indebtedness  and, in either
                                        case,   written  receipt  by  Collateral
                                        Agent of a related  Request  for Release
                                        in the form attached hereto,  Collateral
                                        Agent shall promptly release the related
                                        Mortgage   Loan    Documents   and   the
                                        Collateral and any liens related thereto
                                        to Borrower or, to the extent  necessary
                                        to facilitate future savings of mortgage
                                        tax  in  states  that  impose   mortgage
                                        taxes,  assign  such  Liens as  Borrower
                                        shall  request,  provided  that any such
                                        assignments  shall be without  recourse,
                                        representation, or warranty of any kind,
                                        except  that Agent shall  represent  and
                                        warrant  that  such  Lien  has not  been
                                        previously    assigned.     Agent    and
                                        Collateral  Agent shall with  reasonable
                                        promptness   execute  any   document  or
                                        instrument  necessary to effectuate such
                                        release or assignment.

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<PAGE>

                               (f)      EXAMINATION OF MORTGAGE LOAN  DOCUMENTS.
                                        Upon   reasonable    prior   notice   to
                                        Collateral Agent,  Agent or Borrower and
                                        their agents, accountants, attorneys and
                                        auditors   shall  be  permitted   during
                                        normal  business  hours to  examine  the
                                        Mortgage  Loan   Documents,   documents,
                                        records   and   other   papers   in  the
                                        possession  of or under the  control  of
                                        Collateral  Agent relating to any or all
                                        of the Mortgage Loan Documents.

                               (g)      INSURANCE OF  COLLATERAL  AGENT.  At its
                                        own  expense,   Collateral  Agent  shall
                                        maintain   at  all  times   during   the
                                        existence of this  Agreement and keep in
                                        full   force   and    effect    fidelity
                                        insurance, theft of documents insurance,
                                        forgery   insurance   and   errors   and
                                        omissions insurance.  All such insurance
                                        shall  be  in  amounts,   with  standard
                                        coverage and subject to deductibles, all
                                        as is customary for insurance  typically
                                        maintained  by  banks  which  act  as  a
                                        custodian.

                                  ARTICLE III.
                              CONDITIONS PRECEDENT

        SECTION 3.1.       CONDITIONS PRECEDENT TO EFFECTIVENESS.
                  This Agreement shall become  effective on the date that all of
the following conditions shall have been satisfied (or waived in accordance with
SECTION  8.4) (the  "CLOSING  DATE"),  it being  understood  and agreed that the
funding of an Advance on each Advance Closing Date shall be deemed evidence that
all such  conditions  have  been  satisfied  or  waived  by the Agent as of such
Advance Closing Date:

                           (A)  LOAN AGREEMENT. Borrower shall have executed and
                  delivered this Agreement to the Agent.

                           (B)  GLOBAL NOTE.  Borrower  shall have  executed and
                  delivered to Agent the Global Note.

                           (C)  PLEDGE   AGREEMENT;    ENVIRONMENTAL   INDEMNITY
                  AGREEMENT;  GUARANTY OF NONRECOURSE  OBLIGATIONS;  GUARANTY OF
                  PAYMENT.  The partners of the Borrower shall have executed and
                  delivered  the Pledge  Agreement  to the Agent.  Borrower  and
                  Guarantor shall have executed and delivered the  Environmental
                  Indemnity  Agreement  to  the  Agent.   Guarantor  shall  have
                  executed and  delivered  to Agent the Guaranty of  Nonrecourse
                  Obligations and the Guaranty of Payment.

                           (D)  OPINIONS  OF COUNSEL.  Agent and the  Collateral
                  Agent shall have received  from  in-house  counsel to Borrower
                  and the Guarantor,  the legal opinions,  substantially  in the
                  form  attached  hereto as EXHIBIT F-2, with respect to limited
                  partnership matters.  Such legal opinions will be addressed to
                  Agent and  Collateral  Agent,  dated the Closing Date,  and in
                  form and substance  satisfactory to Agent and Collateral Agent
                  and their respective counsel.

                           (E)  ORGANIZATIONAL   DOCUMENTS.   Agent  shall  have
                  received  with respect to each of Borrower  and the  Guarantor
                  its certificate of formation,  certificate of incorporation or
                  certificate of limited  partnership,  as the case may be, each
                  as amended,  modified or  supplemented to the Closing Date, as
                  filed  with the  Secretary  of State  in the  jurisdiction  of
                  organization  and in effect on the Closing Date and  certified
                  to be true, correct and complete by the appropriate  Secretary
                  of State as of a date not more than ten (10) days prior to the
                  Closing Date,  together with a good standing  certificate from
                  such Secretary of State and a good standing  certificate  from
                  the  

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<PAGE>

                  Secretaries of State (or the equivalent thereof) of each other
                  State in which such  Person is  required  to be  qualified  to
                  transact business.

                           (F)  CERTIFIED  RESOLUTIONS,  ETC.  Agent  shall have
                  received a certificate of the general  partner of Borrower and
                  the Guarantor dated the Closing Date, certifying (i) the names
                  and true  signatures of its incumbent  officers  authorized to
                  sign the Loan  Documents to which Borrower or the Guarantor is
                  each a party, (ii) the Organization  Agreement of Borrower and
                  true and correct copies of the operating agreements,  by-laws,
                  partnership  agreements  or  other  applicable  organizational
                  documents of the Guarantor and such general  partner,  in each
                  case as in effect on the Closing Date,  (iii) the  resolutions
                  of Borrower and the  Guarantor  and such general  partner,  as
                  applicable,  approving and authorizing the execution, delivery
                  and  performance of the Loan Documents to which it is a party,
                  and (iv) with  respect  to  Borrower,  that there have been no
                  changes  in the  Organization  Agreement  since  the  date  of
                  execution thereof.

                           (G)  TRANSACTION COSTS.  Borrower shall have paid all
                  Transaction  Costs for which  bills  have  been  submitted  in
                  accordance with the provisions of SECTION 8.23.

                           (H)  ADDITIONAL   MATTERS.   The  Agent   shall  have
                  received  such other  certificates,  opinions,  documents  and
                  instruments  relating to the Loan as may have been  reasonably
                  requested by the Agent. All corporate and other organizational
                  proceedings,   all   other   documents   (including,   without
                  limitation, all documents referred to herein and not appearing
                  as exhibits  hereto) and all legal matters in connection  with
                  the  Loan  shall  be  reasonably   satisfactory  in  form  and
                  substance to the Agent.

                           (I)  NO DEFAULT OR EVENT OF DEFAULT.  No Default with
                  respect to the payment of money or Event of Default shall have
                  occurred and be continuing on the Closing Date.

                           (J)  NO INJUNCTION.  No law or regulation  shall have
                  been adopted, no order, judgment or decree of any Governmental
                  Authority shall have been issued,  and no litigation  shall be
                  pending or threatened, which in the good faith judgment of the
                  initial Lender would enjoin,  prohibit or restrain,  or impose
                  or result in the imposition of any material adverse  condition
                  upon, the making or repayment of the Loan or the  consummation
                  of the Transaction.

                           (K)  REPRESENTATIONS     AND     WARRANTIES.      The
                  representations  and  warranties  herein and in the other Loan
                  Documents shall be true and correct on the Closing Date.

        SECTION 3.2.       EXECUTION AND DELIVERY OF AGREEMENT.
                    The  execution  and  delivery by Borrower of this  Agreement
shall constitute a representation  and warranty by Borrower to Agent that all of
the conditions required to be satisfied under SECTION 3.1 have been satisfied or
waived in accordance with SECTION 8.4.

        SECTION 3.3.       PROCEDURE FOR  DISBURSEMENT  OF AN ADVANCE FOR AN REO
                           PROPERTY  ACQUISITION OR MORTGAGE LOAN ACQUISITION OR
                           ORIGINATION OR ADDITIONAL DISBURSEMENT.
                               (a)      REQUEST  FOR   ADVANCE.   In  the  event
                                        Borrower  wishes to  receive  an Advance
                                        for an acquisition of an REO Property or
                                        acquisition or origination of a Mortgage
                                        Loan  on  an   Advance   Closing   Date,
                                        Borrower  shall  submit  to  Agent,   on
                                        behalf of the Lenders, a written request
                                        for such Advance,  including therein (A)
                                        the amount of the  proposed  Advance and
                                        an  explanation  of how such  amount was
                                        derived;  (B) the  items  set  forth  in
                                        SECTION 3.4 below for such REO

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<PAGE>

                                        Property or Mortgage Loan or the related
                                        Mortgage  Property;   (C)  a  submission
                                        underwriting  memorandum describing such
                                        REO Property in reasonable  detail;  (D)
                                        in the  case of a  Mortgage  Loan  only,
                                        copies of loan documentation (including,
                                        without  limitation,  the  Mortgage  and
                                        related  Mortgage  Note);  and (E)  such
                                        other   documents,    deliveries,    and
                                        certificates  as  Agent  may  reasonably
                                        request.

                               (b)      GRANT OR  DENIAL.  Agent  shall,  in its
                                        sole discretion and subject to the terms
                                        of  this   Agreement,   grant   or  deny
                                        Borrower's  request for such  Advance in
                                        writing  (including  in  the  case  of a
                                        grant the amount of the related Advance)
                                        within ten (10)  Business Days after its
                                        receipt of all the information delivered
                                        pursuant to SECTION 3.3(A).

                               (c)      MAKING OF ADVANCE.  If Agent  approves a
                                        request for an Advance, an Advance shall
                                        be made on the date that the  conditions
                                        set forth in  SECTION  3.5  below  shall
                                        have  been   satisfied   (or  waived  in
                                        accordance with SECTION 8.4), which date
                                        shall be at Borrower's  option but on an
                                        Advance   Closing  Date  not  more  than
                                        fifteen (15) Business Days after Agent's
                                        approval has been given. On each Advance
                                        Closing Date, Borrower shall be required
                                        to satisfy or cause to be satisfied  the
                                        conditions set forth in SECTION 3.5 with
                                        respect to the  applicable  REO Property
                                        or  Mortgage  Loan  being  added  to the
                                        Collateral on such Advance Closing Date.

        SECTION 3.4.       INFORMATION DELIVERY REQUIREMENTS.
                  If Borrower  proposes to add an REO Property or Mortgage  Loan
to the  Collateral  on an Advance  Closing Date,  Borrower  shall be required to
satisfy the following information delivery requirements with respect to such REO
Property or the related  Mortgaged  Property,  unless such information  delivery
requirements shall be waived by the Agent in accordance with SECTION 8.4:

                           (A) SURVEY: APPRAISAL.  Agent shall have received the
                  Survey with respect to such REO Property or Mortgaged Property
                  and shall have received an Appraisal  with respect to such REO
                  Property or  Mortgaged  Property (or  notified  Borrower  that
                  Agent  shall  obtain an  Appraisal  after the REO  Property or
                  Mortgaged  Property is added to the  Collateral),  which shall
                  each be in form and substance satisfactory to Agent.

                           (B) ENGINEERING REPORT.  Agent shall have received an
                  Engineering  Report  with  respect  to such  REO  Property  or
                  Mortgaged  Property in form and substance  acceptable to Agent
                  in its sole discretion.

                           (C) ENVIRONMENTAL  MATTERS. Agent shall have received
                  an  Environmental  Report with respect to such REO Property or
                  Mortgaged  Property  prepared  by the  Environmental  Auditor,
                  which Environmental Report shall be acceptable to Agent in its
                  sole discretion.

                           (D) SITE INSPECTION.  Agent shall have performed,  or
                  caused to be performed on its behalf, an on-site due diligence
                  review of such REO Property or Mortgaged Property satisfactory
                  to Agent in its sole discretion.

                           (E) FINANCIAL INFORMATION.  Agent shall have received
                  acceptable financial information relating to such REO Property
                  or Mortgaged  Property.  Such  information  shall  include the
                  following,  to  the  extent  reasonably  available  and in the
                  possession of or capable of delivery by Borrower:

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<PAGE>

                  (i)    operating  statements  for the current year  (including
         actual to date information,  an annual budget and trailing twelve month
         data in hard  copy)  and for not  less  than  the two  preceding  years
         (including tenant  improvements  costs,  leasing  commissions,  capital
         reserves, major repairs,  replacement items and occupancy rates in hard
         copy),

                  (ii)   copies of Leases  with  respect to  commercial  tenants
         occupying such REO Property or Mortgaged Property,

                  (iii)  current  property  rent roll data on a tenant by tenant
         basis  in hard  copy  (including  name,  square  footage,  lease  term,
         expiration date, renewal options, base rent per square foot, additional
         rent clauses (including stops,  offsets, and other special provisions),
         escalation  clauses for  increase in  operating  expense,  maintenance,
         insurance,  real estate  taxes and  utilities,  assignment,  sublet and
         cancellation provisions and purchase options),

                  (iv)   current   prospective   property  leasing   information
         (including asking rent rates for available  retail/office space, amount
         of  current  vacant  commercial  space  out  for  signature  and  under
         negotiation,  typical  retail and office  tenant  improvement  cost per
         square foot (new versus renewal) and leasing  concessions  (free rent),
         leasing commissions (new versus renewal),

                  (v)    current real estate tax bills,

                  (vi)   insurance  certificates  indicating the type and amount
         of coverage, and

                  (vii)  the   most   recent   annual   consolidated   financial
         statements and unaudited quarterly consolidated financial statements.

                           (F) PRO-FORMA  FINANCIAL  STATEMENT.  The Agent shall
                  have  received the initial pro forma  financial  statement for
                  such REO  Property or  Mortgaged  Property  for the  following
                  twelve months  (including in the case of an REO Property on an
                  annual and  monthly  basis a  break-down  of  projected  Gross
                  Revenues, operating expenses (including Basic Carrying Costs),
                  Capital  Improvement Costs, and replacement reserve costs) and
                  a financial  statement that forecasts  projected  revenues and
                  operating expenses for not less than five years (including the
                  assumptions used in such forecast).

        SECTION 3.5.       CONDITIONS  PRECEDENT  TO  EACH  DISBURSEMENT  OF  AN
ADVANCE  FOR AN  REO  PROPERTY  ACQUISITION  OR  MORTGAGE  LOAN  ACQUISITION  OR
ORIGINATION.  An Advance shall be made on an Advance Closing Date only when each
of the  conditions  set forth  below  shall  have been  satisfied  (or waived in
accordance with SECTION 8.4):

                           (A)      REO PROPERTY OR MORTGAGE LOAN DOCUMENTS.

                                        (i)    REO MORTGAGE; ASSIGNMENT OF RENTS
                                               AND LEASES.  Borrower  shall have
                                               executed  and  delivered to Agent
                                               an REO Mortgage and an Assignment
                                               of Rents and Leases with  respect
                                               to each REO Property  being added
                                               to   the   Collateral   (or,   if
                                               approved by Agent,  an  amendment
                                               to an existing  REO  Mortgage and
                                               Assignment  of Rents and  Leases)
                                               and   such   REO   Mortgage   and
                                               Assignment  of Rents  and  Leases
                                               (or  amendment)  shall  have been
                                               filed    of    record    in   the
                                               appropriate  filing office in the
                                               jurisdiction  in  which  such REO
                                               Property     is     located    or
                                               irrevocably  delivered to a title
                                               agent for such recordation.

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<PAGE>

                                        (ii)   ASSIGNMENT      AND      SECURITY
                                               AGREEMENT;  COLLATERAL ASSIGNMENT
                                               OF      MORTGAGE;      COLLATERAL
                                               ASSIGNMENT   OF   ASSIGNMENT   OF
                                               LEASES.   Borrower   shall   have
                                               executed  and  delivered to Agent
                                               the   Assignment   and   Security
                                               Agreement.  Borrower  shall  have
                                               executed and delivered to Agent a
                                               Collateral Assignment of Mortgage
                                               and a  Collateral  Assignment  of
                                               Assignment of Leases with respect
                                               to each Mortgage Loan being added
                                               to  the   Collateral   and   such
                                               Collateral Assignment of Mortgage
                                               and   Collateral   Assignment  of
                                               Assignment  of  Leases  shall  be
                                               filed    of    record    in   the
                                               appropriate  filing office in the
                                               jurisdiction in which the related
                                               Mortgaged  Property is located or
                                               irrevocably  delivered to a title
                                               agent for such recordation.

                                        (iii)  FINANCING  STATEMENTS.   Borrower
                                               shall have executed and delivered
                                               to Agent all financing statements
                                               in the form  specified on Exhibit
                                               J  attached  hereto or such other
                                               form  as  is   required   by  the
                                               applicable  filing   jurisdiction
                                               and  such  financing   statements
                                               shall  have been  filed of record
                                               in the appropriate filing offices
                                               in   each   of  the   appropriate
                                               jurisdictions    or   irrevocably
                                               delivered  to a title  agent  for
                                               such recordation.

                                        (iv)   MANAGEMENT      AGREEMENT     AND
                                               MANAGEMENT  SUBORDINATION.   With
                                               respect  to  each  REO  Property,
                                               Agent  shall  have  received  the
                                               executed Management Agreement and
                                               Manager  shall have  executed and
                                               delivered     the      Management
                                               Subordination to Agent.

                                        (v)    MORTGAGE  LOAN  DOCUMENTS.   With
                                               respect  to  any  Mortgage  Loan,
                                               Borrower shall have delivered the
                                               other  Mortgage Loan Documents to
                                               the Collateral Agent, pursuant to
                                               SECTION   2.17  and  shall   have
                                               caused  the  Collateral  Agent to
                                               deliver  to  Agent  the   Initial
                                               Collateral Agent Certification.

                                        (vi)   CONTRACT ASSIGNMENT. With respect
                                               to each  REO  Property,  Borrower
                                               shall have executed and delivered
                                               to Agent a Contract Assignment.

                                       (vii)   JOINDER.  The applicable Borrower
                                               and the holders of the  ownership
                                               interests in such Borrower  shall
                                               have  executed  and  delivered to
                                               Agent a Joinder.

                           (B)      Opinions   of   Counsel.   The   Agent   and
                  Collateral  Agent  shall  have  received  from  counsel to the
                  Borrower and the Guarantor,  legal  opinions in  substantially
                  the form  attached  hereto as Exhibit F-1,  F-2 and F-3,  with
                  respect to limited partnership  matters, the enforceability of
                  the Loan Documents to which it is a party and related matters.
                  Such legal opinions shall be addressed to Agent and Collateral
                  Agent and their  successors  and  assigns,  dated the  Advance
                  Closing Date, and in form and substance  satisfactory to Agent
                  and its Collateral Agent and their respective Counsel.

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<PAGE>

                           (C)      ORGANIZATIONAL  DOCUMENTS.  The Agent  shall
                  have  received  with respect to the Borrower and the Guarantor
                  its certificate of formation,  certificate of incorporation or
                  certificate of limited  partnership,  as the case may be, each
                  as amended,  modified or  supplemented  to the Advance Closing
                  Date, as filed with the Secretary of State in the jurisdiction
                  of organization  and in effect on the Advance Closing Date and
                  certified to be true,  correct and complete by the appropriate
                  Secretary  of State as of a date not more  than ten (10)  days
                  prior  to  the  Advance  Closing  Date,  together  with a good
                  standing  certificate  from such Secretary of State and a good
                  standing  certificate  from the  Secretaries  of State (or the
                  equivalent  thereof) of each other State in which the Borrower
                  is required to be qualified to transact business.

                           (D)      CERTIFIED RESOLUTIONS,  ETC. The Agent shall
                  have received a certificate of the manager of the Borrower and
                  the Guarantor dated the Advance  Closing Date,  certifying (i)
                  the  names  and  true  signatures  of its  incumbent  officers
                  authorized  to sign the Loan  Documents  to which the Borrower
                  and  the  Guarantor  is  a  party,  (ii)  the   Organizational
                  Agreement of the  Borrower and true and correct  copies of the
                  operating agreements, by-laws, partnership agreements or other
                  applicable  organizational documents of the Guarantor, in each
                  case as in  effect  on the  Advance  Closing  Date,  (iii) the
                  resolutions  of the member of the Borrower and the  Guarantor,
                  approving  and   authorizing   the  execution,   delivery  and
                  performance of the Loan Documents to which it is a party,  and
                  (iv) in the case of the  Borrower,  that  there  have  been no
                  changes  in the  Organizational  Agreement  since  the date of
                  execution thereof.

                           (E)      INSURANCE.   Agent   shall   have   received
                  certificates of insurance  demonstrating insurance coverage in
                  respect of the REO Property or Mortgaged Property of types, in
                  amounts,  with insurers and  otherwise in compliance  with the
                  terms,  provisions  and conditions set forth in this Agreement
                  or the related Mortgage.  Such certificates  shall indicate in
                  the  case  of an REO  Property  only  that  Agent  is a  named
                  additional  insured and shall contain a loss payee endorsement
                  in  favor of  Agent  with  respect  to the  property  policies
                  required to be maintained under this Agreement.

                           (F)      TITLE  INSURANCE  POLICY.  Agent  shall have
                  received either (i) an  unconditional  commitment (in form and
                  substance reasonably satisfactory to Agent) to issue the Title
                  Insurance  Policy  covering  the  REO  Property  or  Mortgaged
                  Property (which may, in the case of a Mortgaged  Property,  be
                  the Title  Insurance  Policy  delivered in connection with the
                  original  funding  of the  Mortgage  Loan)  with an  amount of
                  insurance  reasonably  acceptable  to the  Agent,  or  (ii) an
                  endorsement to the existing Title Insurance Policy in favor of
                  Agent (in form and  substance  satisfactory  to  Agent)  which
                  amends the existing Title  Insurance  Policy by (x) adding the
                  legal description of the REO Property or Mortgaged Property to
                  Schedule  A  thereof,  (y) adding  Permitted  Encumbrances  to
                  Schedule B thereof,  if  applicable,  and (z) stating that the
                  amount  of  insurance   is  equal  to  an  amount   reasonably
                  acceptable to Agent.

                           (G)      LIEN  SEARCH   REPORTS.   Agent  shall  have
                  received  satisfactory reports of UCC (collectively,  the "UCC
                  SEARCHES"),  tax lien,  judgment and  litigation  searches and
                  title updates conducted by search firms and/or title companies
                  acceptable  to  Agent  with  respect  to the  Collateral,  the
                  Guarantor  and the Borrower  such  searches to be conducted in
                  each of the locations  set forth on EXHIBIT I attached  hereto
                  and such other locations as Agent shall reasonably require.

                           (H)      CONSENTS,  LICENSES,  APPROVALS,  ETC. Agent
                  shall  have  received  copies of all  consents,  licenses  and
                  approvals,  if any, required in connection with the execution,
                  delivery and  performance  by  Borrower,  and the validity and
                  enforceability,  of the Loan  Documents,  and  such  consents,
                  licenses and approvals shall be in full force and effect.

                           (I)      ADDITIONAL  REAL ESTATE  MATTERS.  The Agent
                  shall  have   received   such  other   real   estate   related
                  certificates and  documentation  relating to such REO Property
                  or Mortgaged Property as may have been reasonably requested by
                  the  Agent  all  of  which  shall  be in  form  and  

                                       55
<PAGE>

                  substance   acceptable  to  Agent.  Such  documentation  shall
                  include the following, to the extent reasonably available:

                  (i)    certificates  of  occupancy  issued by the  appropriate
         local  Governmental  Authority  of the  jurisdiction  in which such REO
         Property or Mortgaged Property is located reflecting the use of the REO
         Property or Mortgaged Property as of the Advance Closing Date,

                  (ii)   letters  from  the   appropriate   local   Governmental
         Authority of the  jurisdiction  in which such REO Property or Mortgaged
         Property is located,  certifying  that such REO  Property or  Mortgaged
         Property is in compliance  with all applicable  zoning laws,  rules and
         regulations,  or a zoning endorsement to the applicable Title Insurance
         Policy with  respect to the REO  Property or  Mortgaged  Property or an
         opinion of zoning counsel to such effect,

                  (iii)  abstracts  of the Leases in effect at the REO  Property
         or  Mortgaged  Property  and  copies of such of the Leases as Agent may
         request (in addition to the copies delivered above),

                  (iv)   tenant estoppel  certificates  from the tenants at such
         REO Property or Mortgaged Property,

                  (v)    certification  by  Borrower   satisfactory  to  initial
         Lender  that  such  REO  Property  is  served  by  adequate   utilities
         (including but not limited to electricity, heat and hot water),

                  (vi)   copies of major service contracts, and

                  (vii)  graphics (including interior and exterior  photographs,
         rental brochures and a competitive properties map).

                           (J)      FINANCIAL   STATEMENTS.   Agent  shall  have
                  received the audited  financial  statements  of Guarantor  and
                  Principal for the most recent Fiscal Year, commencing with the
                  Fiscal Year ending on December  31,  1998,  and the  unaudited
                  financial  statements of Borrower for the three-,  six-, nine-
                  and  twelve-month  periods ended on a date not more than three
                  (3) months  prior to the  Advance  Closing  Date.  All audited
                  financial  statements  must have been prepared by a "Big Four"
                  certified  public  accounting  firm or other  firm  reasonably
                  acceptable to Agent.

                           (K)      REPRESENTATIONS    AND    WARRANTIES.    The
                  representations  and  warranties  herein and in the other Loan
                  Documents  shall be true and correct in all material  respects
                  on such date both before and after giving effect to the making
                  of  the  Advance   (other  than  those   representations   and
                  warranties  which  are no  longer  true but are  either in the
                  process of being made true by Borrower or whose  falsity  does
                  not result in a Material Adverse Effect).

                           (L)      NO DEFAULT OR EVENT OF  DEFAULT.  No Default
                  with respect to the payment of money or Event of Default shall
                  have  occurred and be continuing on such date either before or
                  after giving effect to the making of the Advance.

                           (M)      NO  INJUNCTION.  No law or regulation  shall
                  have  been  adopted,  no  order,  judgment  or  decree  of any
                  Governmental   Authority  shall  have  been  issued,   and  no
                  litigation  shall be pending or threatened,  which in the good
                  faith judgment of Agent would enjoin, prohibit or restrain, or
                  impose or result in the  imposition  of any  material  adverse
                  condition  upon, the making or repayment of the Advance or the
                  Loan or the consummation of the Transaction.

                           (N)      TRANSACTION COSTS.  Borrower shall have paid
                  all Transaction  Costs for which bills have been submitted and
                  have not been previously paid.

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<PAGE>

                           (O)      BRING-DOWN  CERTIFICATES.  Agent  shall have
                  received a certificate  of the Borrower and  Guarantor,  dated
                  the   Advance   Closing   Date,   certifying   that   (i)  the
                  representations  and warranties herein are true and correct on
                  such Advance Closing Date as if made on such date by each such
                  Person (or,  alternatively,  indicating any  modifications  to
                  such  representations  with respect to the REO Property  being
                  acquired  with the  requested  Advance);  (ii) no Default with
                  respect to the payment of Money or Event of Default shall have
                  occurred and be continuing on such Advance Closing Date; (iii)
                  Borrower and Guarantor is in good  standing in its  respective
                  jurisdiction  of  organization  and (iv)  there  have  been no
                  changes in the  Organizational  Agreement  of any such Person,
                  since the date of the most recent certification thereof (or if
                  there have been changes, certifying as to the changes).

                           (P)      CLOSING  STATEMENT.  The  Agent  shall  have
                  received a detailed closing statement for such REO Property or
                  Mortgage Loan from Borrower in a form acceptable to the Agent,
                  which includes a complete  description  of Borrower's  sources
                  and uses of funds on the Advance Closing Date.

                           (Q)      MATERIAL ADVERSE CHANGE. With respect to any
                  REO Property for which  Advances are intended to be applied to
                  pay for Capital Improvement Costs and any proposed Advance for
                  such  Capital  Improvement  Costs  only,  there shall not have
                  occurred any change in the physical condition or the financial
                  results of such REO  Property  which is  reasonably  likely to
                  have a Material Adverse Effect as reasonably determined by the
                  Agent.

        SECTION 3.6.       ACCEPTANCE OF BORROWINGS.
                  The acceptance by Borrower of the proceeds of an Advance shall
constitute  a  representation  and warranty by Borrower to Agent that all of the
conditions  to be satisfied  under  SECTION 3.4 and 3.5 in  connection  with the
making of the Advance have been  satisfied or waived in accordance  with SECTION
8.4.

        SECTION 3.7.       FORM OF LOAN DOCUMENTS AND RELATED MATTERS.
                  All of the Loan Documents,  whether or not referred to in this
ARTICLE III, unless  otherwise  specified,  shall be delivered to the Agent, and
shall be  satisfactory in form and substance to the Agent in its sole discretion
(unless the form thereof is prescribed herein).

                                  ARTICLE IV.
                         REPRESENTATIONS AND WARRANTIES

        SECTION 4.1.       REPRESENTATIONS AND WARRANTIES AS TO THE BORROWER.
                  Borrower  represents  and warrants as of each Advance  Closing
Date:

                           (A)      ORGANIZATION.   Borrower   (i)   is  a  duly
                  organized,  validly  existing and in good  standing  under the
                  laws of the state of its formation or establishment,  (ii) has
                  the  requisite  power  and  authority  to own  its  properties
                  (including,  without limitation, each REO Property or Mortgage
                  Loan) and to carry on its business as now being  conducted and
                  is qualified to do business in the  jurisdiction in which each
                  REO Property is located,  and (iii) has the requisite power to
                  execute and deliver,  and perform its obligations  under, this
                  Agreement, the Global Note and all of the other Loan Documents
                  to which it is a party.

                           (B)      AUTHORIZATION;  NO  CONFLICT;  CONSENTS  AND
                  APPROVALS.  The execution and delivery by the Borrower of this
                  Agreement,  the  Global  Note  and  each  of  the  other  Loan
                  Documents  to  which  it  is  a  party,   performance  of  its
                  obligations  hereunder and  thereunder and the creation of the
                  security  interests and liens  provided for in this  Agreement
                  and the other Loan  Documents  to which it is a party (i) have
                  been duly  authorized by all requisite  action,  (ii) will not

                                       57
<PAGE>

                  violate any provision of any Legal Requirements,  any order of
                  any court or other  Governmental  Authority,  the Organization
                  Agreement  of  the  Borrower  or  any  indenture  or  material
                  agreement or other instrument to which the Borrower is a party
                  or by which the  Borrower  is bound,  and (iii) will not be in
                  conflict with,  result in a breach of, or constitute (with due
                  notice or lapse of time or both) a default under, or result in
                  the  creation  or   imposition  of  any  Lien  of  any  nature
                  whatsoever  upon any of the property or assets of the Borrower
                  pursuant  to, any such  indenture  or  material  agreement  or
                  instrument.  Other than those  previously  obtained  or filed,
                  Borrower is not  required to obtain any  consent,  approval or
                  authorization  from, or to file any  declaration  or statement
                  with, any Governmental Authority or other agency in connection
                  with  or  as  a  condition  to  the  execution,   delivery  or
                  performance  of this  Agreement,  the Global Note or the other
                  Loan Documents executed and delivered by it on or prior to the
                  Advance Closing Date.

                           (C)      ENFORCEABILITY.  This Agreement,  the Global
                  Note and each other Loan Document  executed by the Borrower in
                  connection with the Loan (including,  without limitation,  any
                  Collateral  Security  Instrument),  is the  legal,  valid  and
                  binding  obligation of the Borrower,  enforceable  against the
                  Borrower in accordance with its terms,  subject to bankruptcy,
                  insolvency,   and  other   limitations  on  creditors'  rights
                  generally and to equitable  principles.  This  Agreement,  the
                  Global Note and such other Loan  Documents  are not subject to
                  any right of rescission,  set-off,  counterclaim or defense by
                  the Borrower  (including  the defense of usury),  nor will the
                  operation  of any of the terms of this  Agreement,  the Global
                  Note and such other Loan  Documents,  or the  exercise  of any
                  right  thereunder,  render  any  such  document  unenforceable
                  against the  Borrower,  in whole or in part, or subject to any
                  right of rescission,  set-off,  counterclaim or defense by the
                  Borrower,  including  the  defense  of usury,  and no right of
                  rescission,  set-off,  counterclaim  or defense  with  respect
                  thereto has been asserted.

                           (D)      LITIGATION.   To  the  Actual  Knowledge  of
                  Borrower, there are no actions, suits or proceedings at law or
                  in equity by or before  any  Governmental  Authority  or other
                  agency  now  pending  and  served or  threatened  against  the
                  Borrower  or  any   Collateral,   which   actions,   suits  or
                  proceedings, if determined adversely, are reasonably likely to
                  result in a Material Adverse Effect.

                           (E)  `   AGREEMENTS.  Borrower  is not in  default in
                  the  performance,  observance  or  fulfillment  of  any of the
                  obligations,   covenants  or   conditions   contained  in  any
                  agreement  or  instrument  to  which it is a party or by which
                  such  Borrower or any  Collateral is bound which is reasonably
                  likely to have a Material  Adverse  Effect.  Borrower is not a
                  party  to  any  agreement  or  instrument  or  subject  to any
                  restriction  which is  reasonably  likely  to have a  Material
                  Adverse Effect.

                           (F)      NO  BANKRUPTCY   FILING.   Borrower  is  not
                  contemplating  either the filing of a petition by it under any
                  state  or  federal   bankruptcy  or  insolvency  laws  or  the
                  liquidation  of all  or a  major  portion  of  its  assets  or
                  property.  To the best  knowledge  of  Borrower,  no Person is
                  contemplating the filing of any such petition against it.

                           (G)      SOLVENCY.  Giving effect to the transactions
                  contemplated  hereby,  the fair  saleable  value of Borrower's
                  assets,  exceeds and will, immediately following the making of
                  the Loan,  exceed  Borrower's  total  liabilities  (including,
                  without limitation,  subordinated,  unliquidated, disputed and
                  contingent liabilities). The fair saleable value of Borrower's
                  assets is and will,  immediately  following  the making of the
                  Loan,  be  greater  than   Borrower's   probable   liabilities
                  (including the maximum amount of its contingent liabilities on
                  its  debts  as  such  debts  become   absolute  and  matured).
                  Borrower's assets do not and, immediately following the making
                  of the Loan will not, constitute unreasonably small capital to
                  carry out its  business  as  conducted  or as  proposed  to be
                  conducted.  Borrower  does not intend to, and does not believe
                  that it will, incur debts and liabilities (including,  without
                  limitation,  Contingent  Obligations  and  other  commitments)
                  beyond its  ability to pay such debts as they  mature  (taking
                  into  account  the timing  and  amounts to be payable on or in
                  respect of obligations of Borrower).

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<PAGE>

                           (H)      OTHER  DEBT.  Except for the debt  permitted
                  under  SECTION  6.1(c),  Borrower has not borrowed or received
                  other  debt  financing  whether  unsecured  or  secured by any
                  Collateral or any part thereof.

                           (I)      FULL AND ACCURATE  DISCLOSURE.  No statement
                  of fact made by or on behalf of Borrower in this  Agreement or
                  in  any  of the  other  Loan  Documents  contains  any  untrue
                  statement  of a material  fact or omits to state any  material
                  fact necessary to make statements  contained herein or therein
                  not misleading.  To the Actual Knowledge of Borrower, there is
                  no fact  which has not been  disclosed  to the Agent  which is
                  likely to result in a Material Adverse Effect.

                           (J)      FINANCIAL  INFORMATION.  All financial  data
                  concerning Borrower and any REO Property or Mortgage Loan that
                  has been delivered by Borrower to the Agent is true,  complete
                  and  correct  in all  material  respects;  PROVIDED,  that the
                  foregoing  representation  is made to the Actual  Knowledge of
                  Borrower  with respect to any data provided to the Borrower by
                  a third  party  (including,  but not limited to, a seller) and
                  subsequently  delivered  to the Agent.  Since the  delivery of
                  such data,  except as  otherwise  disclosed  in writing to the
                  Agent,  there has been no change in the financial  position of
                  Borrower  or, to the Actual  Knowledge  of  Borrower,  any REO
                  Property or Mortgage  Loan, or in the results of operations of
                  Borrower,  which  change is  reasonably  likely to result in a
                  Material  Adverse  Effect.   Borrower  has  not  incurred  any
                  obligation   or  liability,   contingent  or  otherwise,   not
                  reflected in such financial data which is reasonably likely to
                  have a Material Adverse Effect upon its business operations or
                  any REO Property or Mortgage Loan.

                           (K)      INVESTMENT   COMPANY  ACT;   PUBLIC  UTILITY
                  HOLDING  COMPANY  ACT.  Borrower  is not  (i)  an  "investment
                  company" or a company  "controlled" by an "investment company"
                  within the meaning of the  Investment  Company Act of 1940, as
                  amended, (ii) a "holding company" or a "subsidiary company" of
                  a "holding  company"  or an  "affiliate"  of either a "holding
                  company" or a "subsidiary  company"  within the meaning of the
                  Public  Utility  Holding  Company Act of 1935, as amended,  or
                  (iii)  subject to any other federal or state law or regulation
                  which  purports to restrict or regulate  its ability to borrow
                  money in accordance with this Agreement.

                           (L)      COMPLIANCE.  To the Actual  Knowledge of the
                  Borrower,  Borrower is in compliance with all applicable Legal
                  Requirements  (including,  without  limitation,  building  and
                  zoning  ordinances  and  codes) and all  applicable  Insurance
                  Requirements, except for noncompliance which is not reasonably
                  likely to have a Material  Adverse Effect.  Borrower is not in
                  default or violation of any order, writ, injunction, decree or
                  demand of any  Governmental  Authority  except for defaults or
                  violations which are not reasonably  likely to have a Material
                  Adverse Effect.

                           (M)      USE   OF   PROCEEDS;   MARGIN   REGULATIONS.
                  Borrower  will use the  proceeds of the Loan for the  purposes
                  described  in SECTION 2.2. No part of the proceeds of the Loan
                  will be used for the purpose of  purchasing  or acquiring  any
                  "margin stock" within the meaning of Regulation U of the Board
                  of  Governors of the Federal  Reserve  System or for any other
                  purpose which would be inconsistent  with such Regulation U or
                  any other  Regulations of such Board of Governors,  or for any
                  purposes prohibited by Legal Requirements.

                           (N)      SINGLE-PURPOSE ENTITY.

                  (i)    Borrower  at all times since its  formation  has been a
         duly  formed  and  existing  limited   liability   company  or  limited
         partnership and currently exists as a Single-Purpose  Entity.  Borrower
         is duly qualified,  if required, as a foreign limited liability company
         or limited partnership in the jurisdiction in which any REO Property is
         located.

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<PAGE>

                  (ii)   Borrower at all times since its  formation has complied
         with the provisions of its  Organization  Agreement and the laws of the
         State of Borrower's  formation relating to limited liability  companies
         or limited partnerships.

                  (iii)  All   customary   formalities   regarding  the  limited
         liability  company or limited  partnership  existence of Borrower  have
         been  observed  at all  times  since  the  Organization  Agreement  was
         executed and delivered.

                  (iv)   Borrower  has at all times  since it began  maintaining
         such items accurately maintained its financial  statements,  accounting
         records  and other  documents  separate  from  those of its  members or
         partners,  Affiliates  of its members or partners and any other Person.
         Borrower or partners has not at any time since its formation commingled
         its assets with those of its members or partners, any Affiliates of its
         members or  partners,  or any other  Person.  Borrower has at all times
         since establishing its own bank accounts accurately  maintained its own
         bank accounts and separate books of account.

                  (v)    Borrower  has at all times since  receiving  funds paid
         its own liabilities from its own separate assets.

                  (vi)   Borrower   has  at  all  times   since  its   formation
         identified  itself in all dealings with the public,  under its own name
         and as a separate and distinct entity and has not at any time since its
         formation  identified itself as being a division or a part of any other
         entity. Borrower has not at any time since its formation identified its
         members or  partners  or any  Affiliates  of its members or partners as
         being a division or part of the Borrower.

                  (vii)  Borrower   is  as  of  the   date   hereof   adequately
         capitalized in light of the nature of its business.

                  (viii) Borrower  has  not  at any  time  since  its  formation
         assumed or guaranteed  the  liabilities  of its members or partners (or
         any predecessor corporation, partnership or limited liability company),
         any Affiliates of its members or partners, or any other Persons, except
         for liabilities  relating to an REO Property and except as permitted by
         or pursuant to this  Agreement.  Borrower has not at any time since its
         formation acquired obligations or securities of its members or partners
         (or any  predecessor  corporation,  partnership  or  limited  liability
         company),  or any  Affiliates of its members or partners.  Borrower has
         not at any time  since  its  formation  made  loans to its  members  or
         partners  (or  any  predecessor  corporation,  partnership  or  limited
         liability company), or any Affiliates of its members or partners.

                  (ix)   Borrower  has  not  at any  time  since  its  formation
         entered into and was not a party to any transaction with its members or
         partners  (or  any  predecessor  corporation,  partnership  or  limited
         liability  company) or any Affiliates of its members or partners except
         in the ordinary course of business on terms which are no less favorable
         than would be obtained in a comparable arm's length transaction with an
         unrelated third party.

                           (O)      NO DEFAULTS.  No Default or Event of Default
                  exists under or with respect to any Loan Document.

                           (P)      PRE-CLOSING  DATE  ACTIVITIES.  Borrower has
                  not  conducted any business or other  activity,  other than in
                  connection with the  acquisition,  management and ownership of
                  an REO Property or Mortgage Loan.

                           (Q)      PLANS  AND  WELFARE  PLANS.  The  assets  of
                  Borrower  are  not  treated  as  "plan   assets"   under  U.S.
                  Department of Labor regulations  Section 2510.3-101  currently
                  promulgated  under  ERISA.  Each  Plan,  and,  to  the  Actual
                  Knowledge  of  Borrower,   each  Multiemployer   Plan,  is  in
                  compliance  in  all  material  respects  with,  and  has  been
                  administered in all material  respects in compliance with, its
                  terms and the applicable provisions of ERISA, the Code and any
                  other 

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                  federal or state law, and no event or  condition  has occurred
                  and is continuing  as to which the Borrower  would be under an
                  obligation   to  furnish  a  report  to  Agent  under  SECTION
                  5.1(U)(I).   Other  than  an   application   for  a  favorable
                  determination  letter  with  respect  to a Plan,  there are no
                  pending issues or claims before the Internal  Revenue Service,
                  the  United  States  Department  of  Labor  or  any  court  of
                  competent jurisdiction related to any Plan or Welfare Plan. No
                  event has  occurred,  and there  exists no condition or set of
                  circumstances,  in  connection  with any Plan or Welfare  Plan
                  under  which  the  Borrower  or,  to  the  best  knowledge  of
                  Borrower, any ERISA Affiliate, directly or indirectly (through
                  an  indemnification  agreement or  otherwise),  is  reasonably
                  likely to be subject to any material  risk of liability  under
                  Section 409 or 502(i) of ERISA or Section 4975 of the Code. No
                  Welfare  Plan  provides or will provide  benefits,  including,
                  without limitation,  death or medical benefits (whether or not
                  insured) with respect to any current or former employee of the
                  Borrower,  or, to the best  knowledge of  Borrower,  any ERISA
                  Affiliate beyond his or her retirement or other termination of
                  service other than (i) coverage  mandated by  applicable  law,
                  (ii)  death  or  disability  benefits  that  have  been  fully
                  provided  for by fully paid up  insurance  or (iii)  severance
                  benefits.

                           (R)      LOCATION  OF CHIEF  EXECUTIVE  OFFICES.  The
                  location of the  Borrower's  principal  place of business  and
                  chief  executive  office  is at the  address  set forth in the
                  opening paragraph of this Agreement.

                           (S)      NOT  FOREIGN  PERSON.   Borrower  is  not  a
                  "foreign  person" within the meaning of ss.  1445(f)(3) of the
                  Code.

                           (T)      LABOR  MATTERS.  Borrower  is not a party to
                  any collective bargaining agreements.

        SECTION 4.2.       REPRESENTATIONS  AND  WARRANTIES  AS TO THE  MORTGAGE
LOANS.  Borrower  hereby  represents  and warrants to the Agent that, as to each
Mortgage Loan, as of each Advance Closing Date for such Mortgage Loan:

                           (A)      OWNERSHIP  OF MORTGAGE  LOANS.  Borrower has
                  good and marketable title to, and is the sole owner and holder
                  of, such Mortgage  Loan,  free and clear of any and all liens,
                  encumbrances  and other  interests  on, in or to such Mortgage
                  Loan.

                           (B)      MORTGAGE LOAN  INFORMATION.  The information
                  in respect of the Mortgage Loan delivered to Agent is true and
                  correct in all material  respects,  and Borrower has delivered
                  to Agent all material  information  relating to such  Mortgage
                  Loan and the related Mortgagor.

                           (C)      PAYMENT RECORD. Such Mortgage Loan is not 30
                  days or more delinquent in respect of any debt service payment
                  required  thereunder,  without giving effect to any applicable
                  grace period.  Such Mortgage Loan has not been 30 days or more
                  delinquent  during the thirty-six months preceding the Advance
                  Closing Date  hereunder on account of such Mortgage  Loan, or,
                  if such  Mortgage  Loan was  originated  in the  twelve  month
                  period prior to such Advance,  since the date of  acquisition.
                  For purposes of the foregoing,  a Mortgage Loan is not 30 days
                  delinquent  until  a  payment  required  to  be  made  to  the
                  mortgagee is past due on the succeeding due date.

                           (D)      LIEN   PRIORITY.    The   related   Mortgage
                  constitutes a valid first lien upon the related  commercial or
                  multi-family  Mortgaged  Property,   including  all  buildings
                  located  thereon and all fixtures  attached  thereto,  subject
                  only to Permitted Encumbrances.  The Permitted Encumbrances do
                  not  materially  interfere  with the  security  intended to be
                  provided by the related Mortgage, the current use or operation
                  of the related  Mortgaged  Property or the current  ability of
                  the  Mortgaged  Property  to  generate  net  operating  income
                  sufficient  to  service  the  Mortgage   Loan.  The  Mortgage,
                  together  with  any  separate  security   agreement,   similar
                  agreement and UCC financing statement, if any, establishes and
                  creates a first priority,  perfected security interest, to the
                  extent  

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                  such security  interest can be perfected by the recordation of
                  a Mortgage and the filing of a UCC financing statement, in all
                  personal  property owned by the Mortgagor that is used in, and
                  is  reasonably  necessary  to, the  operation  of the  related
                  Mortgaged   Property.   There  exists  with  respect  to  such
                  Mortgaged   Property  an   assignment   of  leases  and  rents
                  provision,  whether as part of the  related  Mortgage  or as a
                  separate document or instrument, which establishes and creates
                  a first priority  security interest in and to leases and rents
                  arising in respect of the related Mortgaged Property,  subject
                  only to  Permitted  Encumbrances  and no Person other than the
                  related  Mortgagor owns any interest in any payments due under
                  such leases that is superior to or of equal  priority with the
                  mortgagee's interest therein.

                           (E)      TITLE  INSURANCE.  The  lien of the  related
                  Mortgage  is  insured  by an  ALTA  lender's  title  insurance
                  policy,  or  its  equivalent  as  adopted  in  the  applicable
                  jurisdiction,   issued  by  a  nationally   recognized   title
                  insurance  company,  insuring the  originator of such Mortgage
                  Loan,  its  successors  and assigns,  as to the first priority
                  lien of the Mortgage in the original  principal  amount of the
                  Mortgage Loan after all advances of principal, subject only to
                  Permitted  Encumbrances  (or, if a title insurance  policy has
                  not yet been issued in respect of the Mortgage  Loan, a policy
                  meeting the foregoing description is evidenced by a commitment
                  for title insurance  "marked-up" at the closing of such loan).
                  Each such title  policy (or,  if it has yet to be issued,  the
                  coverage to be  provided  thereby) is in full force and effect
                  and all premiums  thereon have been paid.  No claims have been
                  made  thereunder and no claims have been paid  thereunder.  No
                  holder of the related  Mortgage has done,  by act or omission,
                  anything that would materially  impair the coverage under such
                  title  policy.  The insurer  that issued such title  policy is
                  qualified  to do  business  in the state in which the  related
                  Mortgaged Property is located.  The Borrower or its successors
                  or  assigns is the sole named  insured  of such  policy.  Such
                  policy is  assignable  to the Agent without the consent of, or
                  any notification to, the insurer.

                           (F)      NO WAIVERS OF MATERIAL  DEFAULTS.  No holder
                  of such  Mortgage  or  Mortgage  Note has waived any  material
                  default,  breach,  violation or event of acceleration existing
                  under such Mortgage or Mortgage Note.

                           (G)      NO OFFSETS, DEFENSES OR COUNTERCLAIMS. There
                  is no valid offset,  defense or  counterclaim to such Mortgage
                  Loan.

                           (H)      CONDITION OF PROPERTY; CONDEMNATION.  Except
                  as  set  forth  in  the  Engineering  Report,  to  the  Actual
                  Knowledge of Borrower,  the related Mortgaged Property is free
                  and clear of any damage that would  materially  and  adversely
                  affect its value as security for such Mortgage Loan.  Borrower
                  has no Actual  Knowledge of the  commencement  of a proceeding
                  for the  condemnation  of all or any  material  portion of the
                  related Mortgaged Property.

                           (I)      COMPLIANCE  WITH LAWS.  Such  Mortgage  Loan
                  complied with all applicable  usury laws in effect at its date
                  of  origination,  and any subsequent  change in usury laws has
                  not caused such Mortgage Loan to become illegal,  invalid,  or
                  unenforceable,  in  whole  or  in  part.  Any  and  all  other
                  requirements  of  federal,  state and local  laws  (including,
                  without limitation,  truth-in-lending,  real estate settlement
                  procedures,  equal  credit  opportunity  or  disclosure  laws)
                  applicable to such Mortgage Loan have been complied with as of
                  the date of origination of such Mortgage Loan,  except for any
                  non-compliance  which  is  not  reasonably  likely  to  have a
                  Material Adverse Effect.

                           (J)      FULL DISBURSEMENT OF MORTGAGE LOAN PROCEEDS.
                  Except as disclosed to the Agent by the Borrower in connection
                  with the pledge of the related  Mortgage Loan  hereunder,  the
                  proceeds of such Mortgage  Loan have been fully  disbursed and
                  there is no requirement for future advances thereunder.

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<PAGE>

                           (K)      ENFORCEABILITY.  The related  Mortgage  Note
                  and  Mortgage  and  all  other   documents   and   instruments
                  evidencing,  guaranteeing, insuring or otherwise securing such
                  Mortgage  Loan  have been duly and  properly  executed  by the
                  parties  thereto,  and each is the  legal,  valid and  binding
                  obligation of the maker thereof  (subject to any  non-recourse
                  provisions  contained in any of the foregoing  agreements  and
                  any applicable state anti-deficiency legislation), enforceable
                  in accordance with its terms,  except as such  enforcement may
                  be  limited   by   bankruptcy,   insolvency,   reorganization,
                  receivership,   moratorium   or  other  laws  relating  to  or
                  affecting  the rights of  creditors  generally  and by general
                  principles of equity  (regardless of whether such  enforcement
                  is considered in a proceeding in equity or at law).

                           (L)      INSURANCE. All improvements upon the related
                  Mortgaged  Property  are  insured  against  loss by hazards of
                  extended  coverage  in  an  amount  (subject  to  a  customary
                  deductible)  at least  equal to the lesser of the  outstanding
                  principal  balance of such  Mortgage Loan and 100% of the full
                  replacement cost of the improvements located on such Mortgaged
                  Property  and the related  hazard  insurance  policy  contains
                  appropriate   endorsements   to  avoid  the   application   of
                  co-insurance  and  does  not  permit  reduction  in  insurance
                  proceeds for depreciation.  Each related Mortgaged Property is
                  also   covered  by   business   interruption   insurance   and
                  comprehensive general liability insurance in amounts generally
                  required by institutional  lenders for similar properties.  If
                  any portion of the related Mortgaged Property was, at the time
                  of  the   origination  of  such  Mortgage  Loan,  in  an  area
                  identified  in the  Federal  Register  by the Flood  Emergency
                  Management  Agency as having special flood hazards,  and flood
                  insurance was available,  a flood insurance policy meeting any
                  requirements  of the then  current  guidelines  of the Federal
                  Insurance   Administration  is  in  effect  with  a  generally
                  acceptable   insurance  carrier,  in  an  amount  representing
                  coverage  not  less  than  the  least  of (1) the  outstanding
                  principal   balance  of  such  Mortgage  Loan,  (2)  the  full
                  insurable  value of such Mortgaged  Property,  (3) the maximum
                  amount  of  insurance   available  under  the  National  Flood
                  Insurance  Act of  1968,  as  amended,  and  (4)  100%  of the
                  replacement cost of the improvements located on such Mortgaged
                  Property.  All premiums on such insurance premiums required to
                  be paid have been paid.  Each such insurance  policy  requires
                  prior notice to the holder of the Mortgage of  termination  or
                  cancellation,  and no such notice has been  received  that has
                  not been cured.  Each related  Mortgage  obligates the related
                  borrower  to  maintain  all  such   insurance   and,  at  such
                  borrower's  failure  to do so,  authorizes  the  mortgagee  to
                  maintain such insurance at the borrower's cost and expense and
                  to seek reimbursement therefor from such borrower.

                           (M)      ENVIRONMENTAL    CONDITION.    The   related
                  Mortgaged  Property  was subject to one or more  Environmental
                  Reports which were  performed on behalf of Borrower,  or as to
                  which such  Environmental  Report was delivered to Borrower in
                  connection   with  its  acquisition  or  origination  of  such
                  Mortgage  Loan:  and  Borrower,  having  made  no  independent
                  inquiry  other  than  reviewing  the  Environmental  Report(s)
                  and/or  employing an  environmental  consultant to perform the
                  assessment(s)  referenced  herein,  has no Actual Knowledge of
                  any  material   and  adverse   environmental   conditions   or
                  circumstance  affecting such  Mortgaged  Property that was not
                  disclosed  in the  Environmental  Report(s).  Borrower has not
                  received  any  actual  notice of a material  violation  of any
                  Environmental  Law  with  respect  to  the  related  Mortgaged
                  Property that was not disclosed in the Environmental Report.

                           (N)      NO CONNECTION WITH OTHER MORTGAGE LOANS. The
                  Mortgage Loan is not  cross-collateralized  or cross-defaulted
                  with any other loan or obligation of any Person (including the
                  Mortgagor under such Mortgage Loan),  except with any Mortgage
                  Loan previously or simultaneously made part of the Collateral.

                           (O)      WAIVERS AND MODIFICATIONS.  The terms of the
                  related Mortgage and the Mortgage Note have not been impaired,
                  waived, altered, modified, satisfied, cancelled,  subordinated
                  or rescinded,  except as specifically set forth in the related
                  Mortgage Loan Documents and the related Mortgaged Property has
                  not been released from the lien of the related 

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                  Mortgage in any manner which  materially  interferes  with the
                  security intended to be provided by such Mortgage.

                           (P)     TAXES AND  ASSESSMENTS.  Except as set forth
                  in the title  insurance  policy  referred to in SECTION 4.2(e)
                  above,  there are no delinquent  taxes,  ground  rents,  water
                  charges, sewer rents, assessments or other similar outstanding
                  charges affecting the related Mortgaged  Property which are or
                  may become a lien of priority equal to or higher than the lien
                  of the  related  Mortgage,  and no portion  of such  Mortgaged
                  Property  is  located  in any tax lot that  includes  any real
                  property other than such Mortgaged Property.

                           (Q)      MORTGAGOR'S  INTEREST IN MORTGAGED PROPERTY.
                  The interest of the related Mortgagor in the related Mortgaged
                  Property  consists  of a fee simple  estate in real  property,
                  except  where  Agent has  approved  a Ground  Lease that fully
                  complies with the requirements of this Agreement applicable to
                  Ground Leases.

                           (R)      WHOLE  LOAN.  The  Mortgage  Loan is a whole
                  loan and not a participation interest.

                           (S)      VALID ASSIGNMENT.  The Collateral Assignment
                  of Mortgage and related Collateral Assignment of Assignment of
                  Leases, if any, or assignment of any other agreement  executed
                  in connection  with such Mortgage Loan  constitutes the legal,
                  valid and binding assignment of such Mortgage from Borrower to
                  or for the  benefit of Agent,  and  validly  grants a security
                  interest in such  Mortgage Loan to or for the benefit of Agent
                  free and  clear of any  other  pledge,  lien,  encumbrance  or
                  security interest.

                           (T)      ESCROWS.  All escrow  deposits  relating  to
                  such Mortgage Loan that are required to be deposited  with the
                  mortgagee or its agent have been so deposited.

                           (U)      NO MECHANICS' OR MATERIALMEN'S  LIENS. As of
                  the date of  origination  of such  Mortgage Loan and as of the
                  Advance Closing Date, to the Actual Knowledge of Borrower, the
                  related  Mortgaged  Property  was and is free and clear of any
                  mechanics'  and  materialmen's  liens or  liens in the  nature
                  thereof  which  create  a lien  prior to or  equal  with  that
                  created by the related Mortgage except those which are insured
                  against by the lender's title insurance  policy referred to in
                  paragraph E.

                           (V)      NO  MATERIAL  ENCROACHMENTS.  To the  Actual
                  Knowledge  of  Borrower,  as of the  date of  origination,  no
                  improvement  that was included for the purpose of  determining
                  the appraised value of the related  Mortgaged  Property at the
                  time of  origination  of such  Mortgage  Loan lay  outside the
                  boundaries and building  restriction lines of such property to
                  any material extent (unless affirmatively covered by the Title
                  Policy),   and  no   improvements   on  adjoining   properties
                  encroached  upon  such  Mortgaged  Property  to  any  material
                  extent.  The  improvements  located on or forming part of such
                  Mortgaged  Property  comply  in  all  material  respects  with
                  applicable  zoning laws and  ordinances  (except to the extent
                  that they may constitute legal non-conforming uses).

                           (W)      ORIGINATOR   AUTHORIZED.   To   the   extent
                  required under  applicable law,  Borrower was authorized to do
                  business in the  jurisdiction  in which the related  Mortgaged
                  Property  is located  at all times  when it held the  Mortgage
                  Loan.

                           (X)      NO MATERIAL DEFAULT. To the Actual Knowledge
                  of  Borrower,  there  exists  no  default,  breach or event of
                  acceleration  under the related Mortgage or Mortgage Note, and
                  no event  (other  than  payments  due but not yet  delinquent)
                  that,  with  the  passage  of  time  or  with  notice  and the
                  expiration of any grace or cure period,  would constitute such
                  a default, breach or event of acceleration; provided, however,
                  that  this  representation  and  warranty  does not  cover any

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                  default,  breach or event of  acceleration  that  specifically
                  pertains to any matter  otherwise  covered or addressed by any
                  other representation and warranty made by Borrower therein.

                           (Y)      NO  EQUITY   PARTICIPATION   OR   CONTINGENT
                  INTEREST.  The Mortgage Loan contains no equity  participation
                  by the  lender  and does not  provide  for any  contingent  or
                  additional  interest in the form of  participation in the cash
                  flow  of the  related  Mortgaged  Property,  or  for  negative
                  amortization.

                           (Z)      NO   ADVANCES   OF  FUNDS.   To  the  Actual
                  Knowledge  of  Borrower,  no holder of the  Mortgage  Loan has
                  advanced funds or induced, solicited or knowingly received any
                  advance  of funds  from a party  other  than the  owner of the
                  related Mortgaged  Property,  directly or indirectly,  for the
                  payment  of any  amount  required  by the  Mortgage  Loan.  No
                  current or prior  holder of the  Mortgage  Loan is holding any
                  escrows,  impounds,   reserves,  or  other  cash  deposits  in
                  connection  with such Mortgage Loan other than as set forth in
                  the documents and schedules provided to Agent hereunder.

                           (AA)     LICENSES,   PERMITS,   ETC.  To  the  Actual
                  Knowledge of Borrower,  as of the date of  origination  of the
                  Mortgage Loan, the related  Mortgagor was in possession of all
                  licenses,   permits  and  other  authorizations   required  by
                  applicable laws for the ownership and operation of the related
                  Mortgaged  Property  as  it  was  then  operated,  except  for
                  authorizations  which,  if not  obtained,  are not  reasonably
                  likely to have a Material  Adverse Effect.  All such licenses,
                  permits  and  authorizations  are valid and in full  force and
                  effect.

                           (BB)     SERVICING.   The  servicing  and  collection
                  practices used with respect to the Mortgage Loan have complied
                  with   applicable  law  in  all  material   respects  and  are
                  consistent  with  those  employed  by  prudent   servicers  of
                  comparable mortgage loans.

                           (CC)     CUSTOMARY REMEDIES.  The related Mortgage or
                  Mortgage Note,  together with applicable  state law,  contains
                  customary   and   enforceable   provisions   (subject  to  the
                  exceptions  set forth in paragraph  (K)) such as to render the
                  rights and  remedies of the holders  thereof  adequate for the
                  practical  realization  against the related Mortgaged Property
                  of the  principal  benefits  of the  security  intended  to be
                  provided thereby.

                           (DD)     INSURANCE  AND  CONDEMNATION  PROCEEDS.  The
                  related   Mortgage   provides  that  insurance   proceeds  and
                  condemnation  proceeds  will be  applied  either to restore or
                  repair the Mortgaged Property (subject to normal and customary
                  disbursement   conditions   and   procedures,    including   a
                  requirement  that such proceeds be held by or on behalf of the
                  holder of the Mortgage Loan pending  disbursement and that any
                  shortfall  in  proceeds  be fully  funded  before  restoration
                  commences),  or to repay the principal of the Mortgage Loan or
                  otherwise at the option of the holder of the Mortgage.

                           (EE)     LEASEHOLD  ESTATE.  Each Mortgaged  Property
                  consists of the related  Mortgagor's fee simple estate in real
                  estate or, if the related Mortgage Loan is secured in whole or
                  in part by the  interest  of a Mortgagor  as a lessee  under a
                  ground lease of a Mortgaged  Property (a "GROUND  LEASE"),  by
                  the related  Mortgagor's  interest in the Ground Lease but not
                  by the related fee interest in such  Mortgaged  Property  (the
                  "FEE INTEREST") and, with respect to any such Ground Lease:

                  (a)    Such Ground Lease or a  memorandum  thereof has been or
         will be duly  recorded;  such  Ground  Lease (or the  related  estoppel
         letter or lender  protection  agreement  between the Seller and related
         lessor) permits the interest of the lessee  thereunder to be encumbered
         by the related Mortgage;  and, to the Actual Knowledge of the Borrower,
         there has been no material  change in the payment  terms of such Ground
         Lease since the  origination  of the related  Mortgage  Loan,  with the
         exception of material changes reflected in written instruments that are
         a part of the related Mortgage Loan Documents;

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<PAGE>

                  (b)    To the  Actual  Knowledge  of  Borrower,  the  lessee's
         interest  in  such  Ground  Lease  is  not  subject  to  any  liens  or
         encumbrances  superior  to,  or of equal  priority  with,  the  related
         Mortgage, other than Permitted Encumbrances;

                  (c)    The  Mortgagor's  interest  in  such  Ground  Lease  is
         assignable to the Agent and its  successors and assigns upon notice to,
         but without the consent of, the lessor  thereunder (or, if such consent
         is  required,  it has been  obtained)  and,  in the event that it is so
         assigned, is further assignable by Agent and its successors and assigns
         upon  notice to, but  without  the need to obtain the  consent of, such
         lessor;

                  (d)    Such  Ground  Lease is in full  force and  effect,  and
         Borrower  has  received no notice that an event of default has occurred
         thereunder,  and,  to  Borrower's  Actual  Knowledge,  there  exists no
         condition that, but for the passage of time or the giving of notice, or
         both,  would  result  in an event of  default  under  the terms of such
         Ground Lease;

                  (e)    Such  Ground  Lease,  or an  estoppel  letter  or other
         agreement,  requires  the lessor under such Ground Lease to give notice
         of any  default  by the  lessee  to the  mortgagee,  provided  that the
         mortgagee has provided the lessor with notice of its lien in accordance
         with the provisions of such Ground Lease,  and such Ground Lease, or an
         estoppel letter or other agreement,  further provides that no notice of
         termination  given under such  Ground  Lease is  effective  against the
         mortgagee unless a copy has been delivered to the mortgagee;

                  (f)    A  mortgagee  is  permitted  a  reasonable  opportunity
         (including, where necessary,  sufficient time to gain possession of the
         interest  of the lessee  under such  Ground  Lease) to cure any default
         under such Ground  Lease,  which is curable after the receipt of notice
         of any such default,  before the lessor  thereunder  may terminate such
         Ground Lease;

                  (g)    Such Ground Lease has an original term  (including  any
         extension  options set forth  therein)  which extends not less than ten
         years beyond the stated maturity date of the related Mortgage Loan;

                  (h)    Under the terms of such  Ground  Lease and the  related
         Mortgage,  taken together, any related insurance proceeds other than in
         respect  of a total or  substantially  total  loss or  taking,  will be
         applied  either  to the  repair  or  restoration  of all or part of the
         related Mortgaged  Property,  with the mortgagee or a trustee appointed
         by it having the right to hold and disburse such proceeds as the repair
         or  restoration  progresses  (except  in such cases  where a  provision
         entitling another party to hold and disburse such proceeds would not be
         viewed as commercially  unreasonable by a prudent  commercial  mortgage
         lender), or to the payment of the outstanding  principal balance of the
         Mortgage Loan together with any accrued interest thereon; and

                  (i)    Such Ground Lease does not impose any  restrictions  on
         subletting which would be viewed,  as of the date of origination of the
         related  Mortgage Loan, as  commercially  unreasonable by the Borrower;
         and such Ground Lease contains a covenant that the lessor thereunder is
         not  permitted,  in the absence of an uncured  default,  to disturb the
         possession, interest or quiet enjoyment of any subtenant of the lessee,
         or in any manner, which would adversely affect the security provided by
         the related Mortgage

                           (FF)     DEED OF TRUST. If the related  Mortgage is a
                  deed of trust, a trustee,  duly qualified under applicable law
                  to serve as such,  is properly  designated  and serving  under
                  such  Mortgage,  and  such  trustee  is  not  Borrower  or  an
                  Affiliate of Borrower.

                           (GG)     LIEN RELEASES.  Except in cases where either
                  (a) a  release  of a portion  of the  Mortgaged  Property  was
                  contemplated  at  origination  of the  Mortgage  Loan and such
                  portion  was  not   considered   material   for   purposes  of
                  underwriting  the Mortgage Loan or (b) release is  conditioned
                  upon  the  satisfaction  of  certain  underwriting  and  legal
                  requirements  (such that after the release the  Mortgage  Loan
                  will  continue to comply with all  applicable  representations
                  and   

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                  warranties in this Agreement  effective upon the  consummation
                  of such release) and the payment of a release price the effect
                  of which is to  increase  the  Loan to  Value  Ratio  for such
                  Mortgage Loan after  consummation of the release,  the related
                  Mortgage Note or Mortgage does not require the holder  thereof
                  to release all or any portion of the  Mortgaged  Property from
                  the lien of the related  Mortgage  except upon payment in full
                  of all amounts due under such Mortgage Loan.

                           (HH)     JUNIOR LIENS. The related Mortgaged Property
                  is not encumbered by any mortgage or other lien except for the
                  lien of the related Mortgage.

                           (II)     MORTGAGOR STATUS. The Mortgagor is a special
                  purpose bankruptcy remote entity with no liabilities or assets
                  (other than the Mortgage Loan and the Mortgaged  Property) and
                  is  not a  debtor  in  any  state  or  federal  bankruptcy  or
                  insolvency proceeding.

                           (JJ)     DUPLICATE NOTES. Only one original exists of
                  the promissory note (and  amendments and assignments  thereof)
                  secured  by  the  Mortgage  Loan.  No  duplicate   original(s)
                  exist(s)  of  any  such   promissory   note  or  amendment  or
                  assignment.

                           (KK)     MORTGAGOR REPRESENTATIONS AND WARRANTIES. To
                  the Actual Knowledge of the Borrower,  all representations and
                  warranties  made  by the  Mortgagor  in the  Mortgage  and all
                  related  Mortgage  Loan  Documents are true and collect in all
                  material aspects.

        SECTION 4.3.       REPRESENTATIONS   AND   WARRANTIES   AS  TO  THE  REO
PROPERTIES.  Borrower  hereby  represents  and warrants to the Agent that, as to
each REO Property and related REO Mortgage, as of each Advance Closing Date with
respect to such REO Property and REO Mortgage:

                           (A)      TITLE  TO THE REO  PROPERTY.  Borrower  owns
                  good,  marketable  and insurable  title to the  applicable REO
                  Property,  in fee simple (or where Borrower's  interest in the
                  Land is as lessee under a Ground Lease, in such Ground Lease),
                  free  and  clear  of  all  Liens,  other  than  the  Permitted
                  Encumbrances  applicable  to such REO  Property.  There are no
                  outstanding  options to purchase or rights of first refusal or
                  restrictions on transferability affecting such REO Property.

                           (B)      OTHER  DEBT.  Except for the debt  permitted
                  under  SECTION  6.1(C),  Borrower has not borrowed or received
                  other  debt  financing  whether  unsecured  or  secured by the
                  applicable REO Property or any part thereof.

                           (C)      CONDEMNATION.  No Taking has been  commenced
                  or, to the best of Borrower's knowledge,  is contemplated with
                  respect to all or any portion of the  applicable  REO Property
                  or for the relocation of roadways providing access to such REO
                  Property.

                           (D)      COMPLIANCE.   To  the  Actual  Knowledge  of
                  Borrower,  the applicable  REO Property is in compliance  with
                  all  applicable   Legal   Requirements   (including,   without
                  limitation,  building and zoning ordinances and codes) and all
                  applicable  Insurance  Requirements,  except for noncompliance
                  which is not  reasonably  likely  to have a  Material  Adverse
                  Effect.

                           (E)      ENVIRONMENTAL COMPLIANCE. Except for matters
                  set forth in the  Environmental  Reports delivered to Agent in
                  connection with the Advance (true, correct and complete copies
                  of which have been provided to the Agent by Borrower):

                                    (i)    To  the  Actual   Knowledge   of  the
                           Borrower,  Borrower and each REO Property are each in
                           compliance  with all  applicable  Environmental  Laws
                           (which  compliance  includes,  but is not limited to,
                           the  possession  of  all  environmental,  health  and
                           safety  permits,   licenses  and  other  governmental
                           authorizations   required  in  connection   with  the
                           ownership  and  operation of such REO Property  under
                           all  Environmental  Laws),  

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                           except  for  noncompliance  which  is not  reasonably
                           likely to have a Material Adverse Effect.

                  (ii)    There is no  Environmental  Claim  pending  or, to the
         Actual  Knowledge of  Borrower,  threatened,  and no penalties  arising
         under  Environmental  Laws have been  assessed with respect to such REO
         Property  against the Borrower or, to the Actual Knowledge of Borrower,
         against any Person  whose  liability  for any  Environmental  Claim the
         Borrower has or may have retained or assumed either contractually or by
         operation of law, and no  investigation or review is pending or, to the
         Actual Knowledge of Borrower, threatened by any Governmental Authority,
         citizens  group,  employee  or other  Person  with  respect to such REO
         Property or any alleged failure by the Borrower or such REO Property to
         have any  environmental,  health or  safety  permit,  license  or other
         authorization   required  under,  or  to  otherwise  comply  with,  any
         Environmental  Law or with respect to any alleged liability of Borrower
         for any Use or Release of any Hazardous Substances.

                  (iii)   There are no present  and, to the Actual  Knowledge of
         the Borrower,  have been no past  Releases of any  Hazardous  Substance
         that are reasonably likely to form the basis of any Environmental Claim
         against  the  Borrower or against any Person  whose  liability  for any
         Environmental  Claim the Borrower  has or may have  retained or assumed
         either contractually or by operation of law.

                  (iv)    Without  limiting the generality of the foregoing,  to
         the Actual Knowledge of the Borrower there is not present at, on, in or
         under such REO Property, 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.

                  (v)     No liens are presently  recorded with the  appropriate
         land records under or pursuant to any Environmental Law with respect to
         such REO Property and no Governmental  Authority has taken or is in the
         process of taking any action that could  subject  such REO  Property to
         Liens under any Environmental Law.

                  (vi)    There  have  been  no  environmental   investigations,
         studies,  audits, reviews or other analyses conducted by or that are in
         the  possession of Borrower in relation to such REO Property which have
         not been made available to the Agent.

                           (F)      REO MORTGAGE AND OTHER LIENS. The applicable
                  REO Mortgage  creates a valid and  enforceable  first priority
                  Lien  on  the  related  REO  Property  described  therein,  as
                  security for the repayment of the  Indebtedness,  subject only
                  to the Permitted Encumbrances applicable to such REO Property.
                  Each Collateral Security Instrument  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  Collateral  Security
                  Instrument  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
                  Collateral  Security  Instrument to the extent governed by the
                  UCC.

                           (G)      ASSESSMENTS. There are no pending or, to the
                  Actual  Knowledge of the Borrower,  proposed  special or other
                  assessments for public improvements or otherwise affecting the
                  applicable  REO  Property,  nor  are  there  any  contemplated
                  improvements  to such REO  Property  that may  result  in such
                  special or other assessments.

                           (H)      NO JOINT ASSESSMENT; SEPARATE LOTS. Borrower
                  has not suffered,  permitted or initiated the joint assessment
                  of the  applicable  REO  Property  (i)  with  any  other  real
                  property  constituting  a separate  tax lot, and (ii) with any
                  portion of such REO Property which may be deemed to constitute
                  personal property,  or any other procedure whereby the lien of
                  any taxes 

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                  which may be levied  against such personal  property  shall be
                  assessed or levied or charged to such REO Property as a single
                  lien.  Such REO Property is comprised of one or more  parcels,
                  each of which constitutes a separate tax lot and none of which
                  constitutes a portion of any other tax lot.

                           (I)     NO  PRIOR  ASSIGNMENT.   The  Agent  is  the
                  assignee of Borrower's interest under the Leases. There are no
                  prior assignments of the Leases or any portion of the Rent due
                  and payable or to become due and payable  which are  presently
                  outstanding.

                           (J)      PERMITS;  CERTIFICATE  OF OCCUPANCY.  To the
                  Actual Knowledge of Borrower, all Permits necessary to the use
                  and operation of each REO Property have been obtained, the use
                  being  made of such REO  Property  is in  conformity  with the
                  certificate of occupancy  and/or Permits for such REO Property
                  and any other restrictions,  covenants or conditions affecting
                  such REO Property,  and such REO Property is zoned as a matter
                  of right for its current use.

                           (K)      FLOOD  ZONE.  To  the  Actual  Knowledge  of
                  Borrower,  except as shown on the Survey,  the  applicable REO
                  Property is not  located in a flood  hazard area as defined by
                  the Federal Insurance Administration.

                           (L)      PHYSICAL CONDITION.  To the Actual Knowledge
                  of Borrower, the applicable REO Property is free of structural
                  defects and all building systems contained therein are in good
                  working order subject to ordinary wear and tear.

                           (M)      SECURITY  DEPOSITS.  To the Actual Knowledge
                  of  Borrower,   Borrower  is  in  compliance  with  all  Legal
                  Requirements relating to all security deposits with respect to
                  the applicable REO Property.

                           (N)      NO DEFAULTS.  No Default or Event of Default
                  exists under or with respect to any Loan Document.

                           (O)      INTELLECTUAL   PROPERTY.   To   the   Actual
                  Knowledge of  Borrower,  (i) all  material  trademarks,  trade
                  names and service marks that Borrower owns or has pending,  or
                  under  which  it  is  licensed,   are  in  good  standing  and
                  uncontested; (ii) there is no right under any trademark, trade
                  name or service mark  necessary to the business of Borrower as
                  presently conducted or as Borrower contemplates conducting its
                  business; (iii) Borrower has not infringed, is not infringing,
                  and has not received  notice of  infringement  with respect to
                  asserted trademarks,  trade names and service marks of others;
                  and (iv)  there  is no  infringement  by  others  of  material
                  trademarks, trade names and service marks of Borrower.

                           (P)      NO ENCROACHMENTS. To the Actual Knowledge of
                  the  Borrower,  except as shown on the Survey,  (i) all of the
                  Improvements  lie wholly  within the  boundaries  and building
                  restriction  lines of each REO Property,  (ii) no improvements
                  on adjoining properties encroach upon such REO Property, (iii)
                  no  easements  or other  encumbrances  upon such REO  Property
                  encroach  upon any of the  Improvements,  so as to affect  the
                  value or marketability of such REO Property except those which
                  are insured  against by title  insurance;  and (iv) all of the
                  Improvements  comply  with all  material  requirements  of any
                  applicable zoning and subdivision laws and ordinances.

                           (Q)      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.


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                           (R)      LEASES.

                  (i)     The  applicable  REO  Property  is not  subject to any
         Leases  other than the  applicable  Leases  described  in any rent roll
         delivered to the Agent in  connection  with the making of each Advance.
         The location and size of each leased premises and the  commencement and
         expiration  date and the rent  currently  payable  thereunder is in all
         material respects accurately set forth in such rent roll. To the Actual
         Knowledge of the Borrower, none of the applicable Leases referred to in
         such rent roll has been assigned, modified,  supplemented or amended in
         any way that would render inaccurate any material information contained
         in such rent  roll.  Except as set forth in such rent  roll,  no tenant
         under any such  Lease  has any right or option to renew or extend  such
         Lease.  Except as set forth in such rent roll, there are no "free rent"
         or other rental concessions under such existing Leases effective during
         the term of this Agreement.

                  (ii)    Except in connection  with the Loan,  the Borrower has
         not assigned,  pledged or hypothecated its right, title or interest in,
         to  or  under  the  Leases  of  any  REO  Property  or of  the  rentals
         thereunder. No tenant under any Lease has any right or option to cancel
         the Lease (other than pursuant to customary  casualty and  condemnation
         provisions).  To  the  Actual  Knowledge  of the  Borrower,  all of the
         construction  and other  obligations  to be  performed  by the landlord
         under the Leases have been satisfied, and any and all required payments
         to be made by the  landlord  under the Leases  for tenant  improvements
         have been  made.  No rent  under the Leases has been paid more than one
         month in advance.  No actions,  whether  voluntary or involuntary,  are
         pending  against any tenant under a Lease at any REO Property under the
         bankruptcy  or  insolvency  laws of the  United  States or any state or
         territory of the United  States.  The current  Leases are in full force
         and effect and there are no defaults  thereunder by either party and no
         conditions   which  with  the  passage  of  time  and/or  notice  would
         constitute  defaults  thereunder,  and there are no existing  defenses,
         offsets or counterclaims  held by any tenant of an REO Property against
         the enforcement of such Leases by Borrower.

                           (S)      UTILITIES AND PUBLIC  ACCESS.  To the Actual
                  Knowledge  of the  Borrower,  each REO  Property  has adequate
                  rights  of  access  to  public  ways and is  served  by water,
                  electric,  sewer,  sanitary sewer and storm drain  facilities,
                  all  public  utilities  necessary  to the  continued  use  and
                  enjoyment of such REO  Property as presently  used and enjoyed
                  are located in the public right-of-way  abutting the premises,
                  and all such  utilities  are connected so as to serve such REO
                  Property  without  passing over other property except for land
                  of the utility company providing such utility service.  To the
                  Actual Knowledge of the Borrower,  all roads necessary for the
                  full  utilization of such REO Property for its current purpose
                  have been  completed  and dedicated to public use and accepted
                  by all  Governmental  Authorities or are the subject of access
                  easements for the benefit of such REO Property.

                           (T)      LEASEHOLD ESTATE. Each REO Property consists
                  of the related Borrower's fee simple estate in real estate or,
                  if the related REO  Mortgage is secured in whole or in part by
                  the interest of a Borrower as a lessee under a Ground Lease of
                  an REO  Property,  by the related  Borrower's  interest in the
                  Ground  Lease but not by the related fee  interest in such REO
                  Property and, with respect to any such Ground Lease:

                               (a)      Such  Ground   Lease  or  a   memorandum
                                        thereof  has been  duly  recorded;  such
                                        Ground  Lease (or the  related  estoppel
                                        letter  or lender  protection  agreement
                                        between the seller and  related  lessor)
                                        permits  the   interest  of  the  lessee
                                        thereunder   to  be  encumbered  by  the
                                        related REO Mortgage; and, to the Actual
                                        Knowledge  of the  Borrower,  there  has
                                        been no  material  change in the payment
                                        terms  of  such   Ground   Lease   since
                                        recordation   with  the   exception   of
                                        material changes disclosed in writing to
                                        Agent;

                               (b)      To the Actual Knowledge of Borrower, the
                                        lessee's  interest in such Ground  Lease
                                        is  not   subject   to  any   liens   or

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                                        encumbrances  superior  to,  or of equal
                                        priority with, the related REO Mortgage,
                                        other than Permitted Encumbrances;

                               (c)      The  Borrower's  interest in such Ground
                                        Lease is assignable to the Agent and its
                                        successors  and assigns  upon notice to,
                                        but  without  the consent of, the lessor
                                        thereunder   (or,  if  such  consent  is
                                        required,  it has been obtained) and, in
                                        the  event  that it is so  assigned,  is
                                        further  assignable  by  Agent  and  its
                                        successors  and assigns  upon notice to,
                                        but  without  the  need  to  obtain  the
                                        consent of, such lessor;

                               (d)      Such  Ground  Lease is in full force and
                                        effect,  and  Borrower  has  received no
                                        notice  that an  event  of  default  has
                                        occurred thereunder,  and, to Borrower's
                                        Actual   Knowledge,   there   exists  no
                                        condition  that,  but for the passage of
                                        time or the giving of  notice,  or both,
                                        would  result  in an  event  of  default
                                        under the terms of such Ground Lease;

                               (e)      Such Ground Lease, or an estoppel letter
                                        or other agreement,  requires the lessor
                                        under such  Ground  Lease to give notice
                                        of  any  default  by the  lessee  to the
                                        mortgagee,  provided  that the mortgagee
                                        has  provided  the lessor with notice of
                                        its   lien  in   accordance   with   the
                                        provisions  of such  Ground  Lease,  and
                                        such Ground Lease, or an estoppel letter
                                        or  other  agreement,  further  provides
                                        that  no  notice  of  termination  given
                                        under  such  Ground  Lease is  effective
                                        against the mortgagee  unless a copy has
                                        been delivered to the mortgagee;

                               (f)      A mortgagee  is  permitted a  reasonable
                                        opportunity (including, where necessary,
                                        sufficient  time to gain  possession  of
                                        the  interest  of the lessee  under such
                                        Ground  Lease) to cure any default under
                                        such  Ground  Lease,  which  is  curable
                                        after the  receipt of notice of any such
                                        default,  before the  lessor  thereunder
                                        may terminate such Ground Lease;

                               (g)      Such Ground  Lease has an original  term
                                        (including  any  extension  options  set
                                        forth  therein)  which  extends not less
                                        than  ten  years   beyond   the   stated
                                        maturity   date  of  the   related   REO
                                        Mortgage;

                               (h)      Under the terms of such Ground Lease and
                                        the   related   REO   Mortgage,    taken
                                        together, any related insurance proceeds
                                        other  than in  respect  of a  total  or
                                        substantially total loss or taking, will
                                        be  applied  either  to  the  repair  or
                                        restoration   of  all  or  part  of  the
                                        related REO Property, with the mortgagee
                                        or a trustee  appointed by it having the
                                        right to hold and disburse such proceeds
                                        as the repair or restoration  progresses
                                        (except in such cases  where a provision
                                        entitling  another  party  to  hold  and
                                        disburse  such  proceeds  would  not  be
                                        viewed as commercially unreasonable by a
                                        prudent commercial  mortgage lender), or
                                        to  the   payment  of  the   outstanding
                                        principal  balance of the Loan  together
                                        with any accrued interest thereon;

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                               (i)      Such  Ground  Lease  does not impose any
                                        restrictions  on subletting  which would
                                        be viewed, as of the date of origination
                                        of the related Advance,  as commercially
                                        unreasonable  by the Borrower;  and such
                                        Ground  Lease  contains a covenant  that
                                        the lessor  thereunder is not permitted,
                                        in the absence of an uncured default, to
                                        disturb  the  possession,   interest  or
                                        quiet  enjoyment of any subtenant of the
                                        lessee,  or in any  manner,  which would
                                        adversely  affect the security  provided
                                        by the related REO Mortgage;

                               (j)      All Ground Rent due and payable  through
                                        and  including   the  related   Advanced
                                        Closing Date has been paid; and

                               (k)      Each Ground Lease requires the lessor to
                                        enter into a New  Ground  Lease upon the
                                        termination  of the Ground Lease for any
                                        reason,  including  the  rejection  of a
                                        Ground Lease in bankruptcy.

        SECTION 4.4.       SURVIVAL OF REPRESENTATIONS. Borrower agrees that (i)
all of the  representations  and warranties of Borrower set forth in SECTION 4.1
and in the other Loan Documents delivered on the Closing Date are made as of the
Closing Date, and (ii) all of the representations and warranties of Borrower set
forth in SECTION  4.2 and 4.3 and  elsewhere  in this  Agreement  (including  in
SECTION 4.1) and in the other Loan Documents are made, or reaffirmed, as of each
Advance Closing Date (subject to Section 3.5(O)),  and (iii) all representations
and  warranties  made by Borrower  shall survive the delivery of the Global Note
and making of the Loan and continue for so long as any amount  remains  owing to
the  Lenders  under this  Agreement,  the  Global  Note or any of the other Loan
Documents;  PROVIDED,  HOWEVER,  THAT the  representations  set forth in SECTION
4.2(m) and 4.3(e) shall survive in perpetuity. All representations,  warranties,
covenants and  agreements  made in this Agreement or in the other Loan Documents
shall be deemed to have been relied upon by the  Lenders  and  Collateral  Agent
notwithstanding  any  investigation  heretofore or hereafter made by the Lenders
and Collateral Agent or on their behalf.

                                   ARTICLE V.
                             AFFIRMATIVE COVENANTS

        SECTION 5.1.       AFFIRMATIVE COVENANTS.  Borrower covenants and agrees
that, from the date hereof and until payment in full of the Indebtedness:

                           (A)      EXISTENCE;     COMPLIANCE     WITH     LEGAL
                  REQUIREMENTS; INSURANCE. Borrower shall do or cause to be done
                  all things reasonably necessary to preserve, renew and keep in
                  full  force and effect its  existence  as a limited  liability
                  company or limited partnership,  all rights, licenses, Permits
                  and  franchises  necessary for the conduct of its business and
                  to  comply   with  all  Legal   Requirements   and   Insurance
                  Requirements applicable to it and each REO Property.  Borrower
                  shall  at  all  times  maintain,   preserve  and  protect  all
                  franchises  and trade names and preserve all the  remainder of
                  its  property  necessary  for  the  continued  conduct  of its
                  business and keep each REO  Property in good  repair,  working
                  order and condition,  except for reasonable  wear and use, and
                  from time to time make,  or cause to be made,  all  reasonably
                  necessary  repairs,  renewals,  replacements,  betterments and
                  improvements  thereto,  all as more fully  provided in the REO
                  Mortgages.  Borrower  shall keep or shall cause the Manager to
                  keep each REO Property  insured at all times,  by  financially
                  sound and reputable insurers,  to such extent and against such
                  risks, and maintain liability and such other insurance,  as is
                  more fully provided in this Agreement.

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<PAGE>

                           (B)      BASIC   CARRYING   COST  AND  OTHER  CLAIMS.
                  Borrower  shall pay and  discharge or cause Manager to pay and
                  discharge  all  Impositions,  as well as all lawful claims for
                  labor, materials and supplies or otherwise, which could become
                  a Lien,  all as more fully  provided  in,  and  subject to any
                  rights to contest  contained  in, any REO  Mortgage.  Borrower
                  shall pay all Basic  Carrying Costs with respect to itself and
                  each REO Property in accordance with the provisions of the REO
                  Mortgages,  subject,  however, to rights to contest payment of
                  Impositions  in  accordance   with  the  REO  Mortgages.   The
                  obligation  to pay  Basic  Carrying  Costs  pursuant  to  this
                  Agreement shall include, to the extent permitted by applicable
                  law,  Impositions  resulting  from future changes in law which
                  impose  upon the  Lenders an  obligation  to pay any  property
                  taxes on any REO Property or other Impositions.

                           (C)      LITIGATION.   Borrower   shall  give  prompt
                  written notice to the Agent of any litigation or  governmental
                  proceedings  pending or threatened (in writing) against either
                  Borrower or the Manager which is  reasonably  likely to have a
                  Material Adverse Effect.

                           (D)      ENFORCEMENT  OF  MORTGAGE  LOANS.   Borrower
                  shall with reasonable diligence and continuity enforce or seek
                  to enforce all  obligations  of Mortgagors  under the Mortgage
                  Loans,  except to the extent that Borrower,  in the reasonable
                  exercise of its reasonable business judgment, and with Agent's
                  approval,  such  approval not to be  unreasonably  withheld or
                  delayed, determines not to enforce such obligations.

                           (E)      PERFORMANCE  UNDER MORTGAGE LOANS.  Borrower
                  shall  timely  perform  all  its  obligations,  and  make  all
                  payments required, under the Mortgage Loan Documents and shall
                  not permit any of the foregoing to go into default, whether or
                  not any cure period or grace  period  shall have  commenced or
                  expired.  Borrower shall promptly provide Agent with a copy of
                  any  notice  of  default  and any  operating  budget  given or
                  received  by  Borrower  with  respect  to any  Mortgage  Loan.
                  Borrower  shall provide Agent with copies of any and all other
                  documentation  received by Borrower or  Collateral  Agent with
                  respect to any Mortgage Loan.

                           (F)      RESERVED.

                           (G)      RESERVED.

                           (H)      RESERVED.

                           (I)      ENVIRONMENTAL   INDEMNIFICATION.    Borrower
                  shall  indemnify,  reimburse,  defend,  and hold  harmless the
                  Agent,  each Lender,  the  Collateral  Agent and each of their
                  respective  parents,   partners,   shareholders,   principals,
                  subsidiaries,   Affiliates,  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 the Agent, the Lenders and the Collateral Agent)), 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 and except that
                  any Indemnified Party shall not be indemnified  against claims
                  resulting  from actions taken with respect to any REO Property
                  after the Agent forecloses its Lien or security  interest upon
                  such   REO   Property   unless   and   to  the   extent   such
                  indemnification relates to any of the following which occurred
                  while the Borrower owned such REO Property):

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<PAGE>

                               (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  the   Borrower's   or  any
                                        previous     owner's    or    operator's
                                        management,  use, control,  ownership or
                                        operation    of   such   REO    Property
                                        (including,   without  limitation,   all
                                        on-site    and    off-site    activities
                                        involving  Hazardous  Substances),   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 the 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 4.2(m), 4.3(e) or Article VI (or
                                        any  comparable  provisions)  of an  REO
                                        Mortgage, inclusive.

The provisions of and undertakings and indemnification set forth in this SECTION
5.1(I)  shall  survive  the  satisfaction  and payment of the  Indebtedness  and
termination of this Agreement.

                           (J)      GENERAL INDEMNITY.

                  (i)    Borrower  shall at its sole cost and expense,  protect,
         defend,  indemnify and hold harmless the  Indemnified  Parties from and
         against  any and all claims,  suits,  liabilities  (including,  without
         limitation,  strict  liabilities),  administrative and judicial actions
         and proceedings,  obligations, debts, damages, losses, costs, expenses,
         fines,  penalties,  charges,  fees,  expenses,  judgments,  awards, and
         litigation  costs,  of  whatever  kind or  nature  and  whether  or not
         incurred in connection with any judicial or administrative  proceedings
         (including,  but not limited to,  reasonable  attorneys' fees and other
         reasonable costs of defense) (the "LOSSES") imposed upon or incurred by
         or asserted  against any Indemnified  Parties (other than those arising
         from a state of facts that first came into existence  after the Lenders
         acquired title to any REO Property of the Borrower through  foreclosure
         or a deed in lieu  thereof  or  forecloses  its Lien upon the  Mortgage
         Loans or from the  Lenders'  bad  faith,  willful  misconduct  or gross
         negligence),  and directly or  indirectly  arising out of or in any way
         relating  to any one or more of the  following:  (a)  ownership  of the
         Global Note, the REO Mortgages,  any of the other Loan Documents or any
         REO Property or Mortgage  Loan of the Borrower or any interest  therein
         or receipt of any Rents, or Borrower's  acquisition of any REO Property
         or  Mortgage  Loan or any  claim  made by any  prior  owner of such REO
         Property or the related Mortgaged Property relating to such acquisition
         or any sums  that may be  payable  to such  prior  owner in  connection
         therewith; (b) any amendment to, or restructuring of, the Indebtedness,
         the  Global  Note or any of the other Loan  Documents;  (c) any and all
         lawful action that may be taken by the Lenders in  connection  with the
         enforcement of the provisions of this Agreement, the Global Note or any
         of the other Loan Documents, whether or not suit is filed in connection
         with same, or in  connection  with the Borrower or any Affiliate of the
         Borrower  becoming a party to a  voluntary  or  involuntary  federal or
         state bankruptcy,  insolvency or similar proceeding;  (d) any accident,
         injury  to or  death  of  persons  or loss  of or  damage  to  property
         occurring in, on or about any REO Property or Mortgaged Property or any
         part thereof or on the adjoining sidewalks, curbs, adjacent property or
         adjacent  parking  areas,  streets  or  ways;  (e) any use,  nonuse  

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         or condition in, on or about any REO Property or Mortgaged  Property or
         any  part  thereof  or on  the  adjoining  sidewalks,  curbs,  adjacent
         property or adjacent parking areas, streets or ways; (f) any failure on
         the part of the Borrower to perform or be in compliance with any of the
         terms  of  this  Agreement  or any of the  other  Loan  Documents;  (g)
         performance of any labor or services or the furnishing of any materials
         or other property in respect of any REO Property or Mortgaged  Property
         or any part thereof;  (h) the failure of any person to file timely with
         the Internal  Revenue  Service an accurate  Form 1099-B,  Statement for
         Recipients  of Proceeds  from Real Estate,  Broker and Barter  Exchange
         Transactions,  which may be required in connection with this Agreement;
         (i) any  failure of any REO  Property  or  Mortgaged  Property to be in
         compliance  with any  Legal  Requirement;  (j) the  enforcement  by any
         Indemnified  Party of the  provisions of this SECTION 5.1(J) or (k) any
         and all claims and demands whatsoever which may be asserted against the
         Lenders by reason of any alleged  obligations or  undertakings on their
         part to perform or discharge any of the terms, covenants, or agreements
         contained in any Lease. Any amounts payable to an Indemnified  Party by
         reason of the  application of this SECTION  5.1(J)(I)  shall become due
         and payable ten (10) days after  demand and shall bear  interest at the
         Default Rate from the tenth (10th) day after demand until paid.

                  (ii)   The  Borrower  shall,  at its sole  cost  and  expense,
         protect,  defend,  indemnify and hold harmless the Indemnified  Parties
         from and  against  any and all Losses  imposed  upon or  incurred by or
         asserted  against  any of  the  Indemnified  Parties  and  directly  or
         indirectly  arising  out of or in any  way  relating  to any tax on the
         making and/or  recording of this  Agreement,  the Global Note or any of
         the other Loan Documents (other than taxes imposed on the income of the
         Lenders).

                  (iii)  The  Borrower  shall,  at its sole  cost  and  expense,
         protect,  defend,  indemnify and hold harmless the Indemnified  Parties
         from and against any and all Losses  that the  Indemnified  Parties may
         incur,  directly  or  indirectly,  as a result of a  default  under the
         Borrower's  covenants with respect to ERISA and employee benefits plans
         contained herein.

                  (iv)   Promptly  after receipt by an  Indemnified  Party under
         this SECTION 5.1(j) or SECTION  5.1(i),  of notice of the making of any
         claim or the commencement of any action,  such Indemnified Party shall,
         if a claim in respect thereof is to be made by such  Indemnified  Party
         against  the  Borrower  under this  SECTION  5.1(j) or SECTION  5.1(i),
         notify the  Borrower  in  writing,  but the  omission  so to notify the
         Borrower will not relieve the Borrower from any liability  which it may
         have to any  Indemnified  Party  under this  SECTION  5.1(j) or SECTION
         5.1(i) , or otherwise  unless and to the extent that  neither  Borrower
         otherwise  possessed knowledge of such claim or action and such failure
         resulted in the  forfeiture by the Borrower of  substantial  rights and
         defenses.  In case any such claim is made or action is brought  against
         any Indemnified  Party and such  Indemnified  Party seeks or intends to
         seek  indemnity  from the  Borrower,  the Borrower  will be entitled to
         participate  in, and,  to the extent that they may wish,  to assume the
         defense  thereof with a single counsel  reasonably  satisfactory to the
         Lenders;  and,  upon  receipt  of  notice  from  the  Borrower  to such
         Indemnified  Party of their  election  so to assume the defense of such
         claim or action and only upon approval by the Indemnified Party of such
         counsel,  the  Borrower  will not be liable to such  Indemnified  Party
         under this  SECTION  5.1(j) or SECTION  5.1(i),  for any legal or other
         expenses  subsequently incurred by such Indemnified Party in connection
         with the defense thereof.  Notwithstanding the preceding sentence, each
         Indemnified Party will be entitled to employ counsel separate from such
         counsel  for the  Borrower  and from any other  party in such action if
         such  Indemnified  Party  reasonably  determines  that  a  conflict  of
         interest  exists which makes  representation  by counsel  chosen by the
         Borrower  not  advisable.  In  such  event,  the  reasonable  fees  and
         disbursements  of such  separate  counsel will be paid by the Borrower.
         The  Borrower  shall  not,  without  the prior  written  consent  of an
         Indemnified Party,  settle or compromise or consent to the entry of any
         judgment with respect to any pending or threatened claim,  action, suit
         or  proceeding  in  respect  of  which  indemnification  may be  sought
         hereunder  (whether  or not  such  Indemnified  Party is an  actual  or
         potential  party  to such  claim or  action)  unless  such  settlement,
         compromise  or  consent  includes  an  unconditional  release  of  each
         Indemnified Party from all liability arising out of such claim, action,
         suit or  proceeding.  Each  Indemnified  Party  shall not enter  into a
         settlement  of or consent to the entry of any judgment  with respect to
         or otherwise  compromise  any action,  claim,  suit or proceeding as to
         which  an  Indemnified  Party  would  be  entitled  to  indemnification
         hereunder  without the written  consent of the Borrower which shall not
         be unreasonably withheld or delayed.

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<PAGE>

The provisions of and undertakings and indemnification set forth in this SECTION
5.1(J)  shall  survive  the  satisfaction  and payment of the  Indebtedness  and
termination of this Agreement.

                           (K)      ACCESS  TO  REO  PROPERTY.   Borrower  shall
                  permit   or   shall   cause   Manager   to   permit    agents,
                  representatives  and  employees  of the Lenders to inspect the
                  respective  REO  Property  or  Mortgaged  Property or any part
                  thereof at such  reasonable  times as may be  requested by the
                  Agent  upon  reasonable   advance  written  notice,   subject,
                  however,  to the rights of the tenants of such REO Property or
                  Mortgaged  Property  and to the rights of the  Mortgagor  of a
                  Mortgaged Property.

                           (L)      NOTICE OF DEFAULT.  Borrower  shall promptly
                  advise  the  Agent  of any  change  in  Borrower's  condition,
                  financial or otherwise,  which is reasonably  likely to have a
                  Material  Adverse Effect,  or of the occurrence of any Default
                  or Event of Default.

                           (M)      COOPERATE  IN  LEGAL  PROCEEDINGS.  Borrower
                  shall  cooperate  fully  with the Agent  with  respect  to any
                  proceedings  before  any  Governmental   Authority  which  may
                  materially  affect the rights of the Lenders  hereunder or any
                  rights obtained by the Lenders under any of the Loan Documents
                  and, in connection  therewith,  not prohibit the Agent, at its
                  election, from participating in any such proceedings.

                           (N)      PERFORM  LOAN   DOCUMENTS.   Borrower  shall
                  observe,  perform and satisfy or cause the Manager to observe,
                  perform and satisfy all the terms,  provisions,  covenants and
                  conditions required to be observed,  performed or satisfied by
                  it or the Manager,  and shall pay when due all costs, fees and
                  expenses  required to be paid by it or the Manager,  under the
                  Loan  Documents  executed and delivered by the Borrower or its
                  Member and the Manager.

                           (O)      INSURANCE BENEFITS. Borrower shall cooperate
                  with the Agent in  obtaining  for the Lenders the  benefits of
                  any Insurance  Proceeds  lawfully or equitably  payable to the
                  Lenders or the Borrower in connection with any REO Property or
                  Mortgaged   Property,   respectively.   The  Agent   shall  be
                  reimbursed for any expenses  reasonably incurred in connection
                  therewith   (including    reasonable   attorneys'   fees   and
                  disbursements  and the payment by the  Borrower of the expense
                  of an  Appraisal  on  behalf of the Agent in case of a fire or
                  other  casualty  affecting  such  REO  Property  or  any  part
                  thereof,  but excluding internal overhead,  administrative and
                  similar  costs of the Agent) out of such  Insurance  Proceeds,
                  all as more specifically provided in this Agreement.

                           (P)      FURTHER   ASSURANCES.   Borrower  shall,  at
                  Borrower's sole cost and expense:

                  (i)    upon the Agent's reasonable request therefor given from
         time to time (but not more often than once during each six month period
         following  the Closing  Date),  pay for (a)  reports of UCC,  tax lien,
         judgment and  litigation  searches  with respect to the Borrower or any
         Mortgagor  and (b)  searches of title to any REO  Property or Mortgaged
         Property,  each such search to be conducted by search firms  designated
         by the Agent in each of the locations designated by the Agent;

                  (ii)   furnish  to  the  Agent  all  instruments,   documents,
         boundary surveys,  footing or foundation surveys,  certificates,  plans
         and specifications,  Appraisals,  title and other insurance reports and
         agreements, and each and every other document,  certificate,  agreement
         and  instrument  required to be furnished  pursuant to the terms of the
         Loan   Documents  or  reasonably   requested  by  Agent  in  connection
         therewith;

                  (iii)  execute  and  deliver  to  the  Agent  such  documents,
         instruments,  certificates, assignments and other writings, and do such
         other  acts  necessary,  to  evidence,   preserve  and/or  protect  the
         Collateral  at any time securing or intended to secure the Note, as the
         Agent may reasonably require (including, without limitation, amended or
         replacement  REO  Mortgages,  UCC  financing  statements  or Collateral
         Security Instruments);

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<PAGE>

                  (iv)   do  and  execute  all  and  such  further   lawful  and
         reasonable  acts,  conveyances  and  assurances for the better and more
         effective  carrying out of the intents and  purposes of this  Agreement
         and the other Loan  Documents,  as the Agent shall  reasonably  require
         from time to time; and

                  (v)    with  respect  to each  Mortgaged  Property  for  which
         Borrower  acquires  title  pursuant to a foreclosure or acceptance of a
         deed-in-lieu of foreclosure or otherwise,  Borrower shall (x) record an
         REO  Mortgage to secure the Loan from the Lender in an amount  equal to
         the Principal Indebtedness (or in those jurisdictions in which Borrower
         would be  responsible  for a mortgage tax or other similar tax measured
         by the  amount  of  debt  secured  and  no  value-based  allocation  is
         permitted,  in an amount reasonably acceptable to the Agent relating to
         such REO Property) together with all necessary UCC financing statements
         relating to the perfection of Liens on Personalty  situated on such REO
         Property,  and promptly provide  Collateral Agent, or such other Person
         as the Lender may designate,  certified copies of REO Mortgage and such
         financing  statements  with  evidence of recording or filing  indicated
         thereon  and (y)  concurrently  with the  recordation  of REO  Mortgage
         referred  to in  CLAUSE  (X)  above,  with  respect  to such  Mortgaged
         Property, provide to the Lender a marked up commitment to issue a Title
         Insurance  Policy  for the  benefit  of Agent on behalf of the  Lenders
         (showing no  exceptions to title other than those to which the original
         Mortgage  Loan was  subject)  in an amount not less than the  Allocated
         Loan  Amount  for such  Mortgaged  Property  and a legal  opinion  from
         counsel  satisfactory  to Agent and  addressed to Agent,  to the effect
         that such REO Mortgage is binding and  enforceable  in accordance  with
         its terms, in each case in form and substance  reasonably  satisfactory
         to Agent.

                           (Q)      MANAGEMENT   OF  REO   PROPERTY.   Each  REO
                  Property  shall be  managed  at all times by the  Manager or a
                  successor  manager  approved by Agent subject to the terms and
                  conditions  below  pursuant  to a  Management  Agreement  or a
                  successor  management  agreement  approved by Agent subject to
                  the terms and  conditions  below  until  terminated  as herein
                  provided. Pursuant to a Management Subordination,  the Manager
                  shall  agree that the  Management  Agreement  is  subject  and
                  subordinate  in all respects to the Lien of the applicable REO
                  Mortgage.  The  Management  Agreement may be terminated (1) by
                  Borrower at any time in accordance  with the provisions of the
                  Management  Agreement  so  long  as  a  successor  manager  as
                  specified  below shall have been  appointed and such successor
                  manager  has  (i)   entered   into  a   management   agreement
                  substantially in the form of the Management  Agreement entered
                  into by the  previous  Manager,  subject to any  modifications
                  approved  by  Agent,  and  (ii)  executed  and  delivered  the
                  Management  Subordination  to  Agent,  and (2) by  Agent  upon
                  thirty (30) days'  prior  written  notice to Borrower  and the
                  Manager (a) upon the occurrence and  continuation  of an Event
                  of Default or (b) if the  Manager  commits any act which would
                  permit termination under the Management  Agreement (subject to
                  any applicable notice,  grace and cure periods provided in the
                  Management Agreement).  Subject to the preceding sentence, the
                  Borrower may from time to time appoint a successor  manager to
                  manage  any  REO  Property  with  the  Agent's  prior  written
                  consent.  Notwithstanding the foregoing, any successor manager
                  selected hereunder by the Agent or Borrower to manage such REO
                  Property  shall  be  a  reputable  management  company  having
                  appropriate  experience in the  management of commercial  real
                  property in the  applicable  City and State of a similar type,
                  size  and  quality  as such  REO  Property  under  management.
                  Borrower  further   covenants  and  agrees  that  the  Manager
                  (including  any  successor  property  manager  serving  as the
                  Manager)  shall  at all  times  during  the  term of the  Loan
                  maintain  workers'  compensation   insurance  as  required  by
                  Governmental  Authorities.  The Borrower further covenants and
                  agrees that, with respect to the Management  Agreement and the
                  applicable  Management  Subordination  and the  applicable REO
                  Property, the Borrower shall: (i) promptly notify the Agent of
                  the occurrence of any default under the Management  Agreement;
                  and (ii) promptly  deliver to the Agent a copy of each written
                  financial statement, business plan, capital expenditures plan,
                  notice  and  report,  if any,  received  under the  Management
                  Agreement.

                           (R)      FINANCIAL REPORTING.

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                                    (i)    Borrower  shall keep and  maintain or
                           shall  cause  to be kept and  maintained  on a Fiscal
                           Year  basis  in  accordance  with  GAAP  consistently
                           applied,  books,  records and accounts  reflecting in
                           reasonable  detail  all of the  financial  affairs of
                           Borrower  and all  items of  income  and  expense  in
                           connection  with the  operation  of each REO Property
                           and  ownership of each Mortgage Loan and REO Property
                           and in  connection  with any  services,  equipment or
                           furnishings provided in connection with the operation
                           of such REO Property,  whether such income or expense
                           may be realized by such Person or by any other Person
                           whatsoever.  The Agent shall have the right from time
                           to time at all times  during  normal  business  hours
                           upon reasonable  prior written notice to examine such
                           books, records and accounts at the office of Borrower
                           or other Person  maintaining such books,  records and
                           accounts and to make such copies or extracts  thereof
                           as the Agent shall desire. After the occurrence of an
                           Event of  Default,  Borrower  shall pay any costs and
                           expenses   incurred  by  the  Agent  to  examine  the
                           accounting records with respect to such REO Property,
                           as  the  Agent  shall  reasonably   determine  to  be
                           necessary or  appropriate  in the  protection  of the
                           Lenders interest.

                                    (ii)   Borrower  shall  furnish to the Agent
                           annually,  within ninety (90) days  following the end
                           of  each  Fiscal  Year,   a  complete   copy  of  the
                           Guarantor's and the Principal's  financial  statement
                           audited by an Independent certified public accountant
                           acceptable  to the  Agent  in  accordance  with  GAAP
                           consistently  applied  covering  each  such  Person's
                           financial  position  and results of  operations,  for
                           such  Fiscal  Year  and  containing  a  statement  of
                           revenues  and  expenses,  a  statement  of assets and
                           liabilities  and a  statement  of each such  Person's
                           equity,  all of which shall be in form and  substance
                           acceptable  to the  Agent.  The Agent  shall have the
                           right  from  time  to  time to  review  the  auditing
                           procedures  used in the  preparation  of such  annual
                           financial   statements   and  to  consult   with  the
                           accountant with respect to such procedures.  Together
                           with the annual financial statements,  Borrower shall
                           furnish  to  the  Agent  an   Officer's   Certificate
                           certifying as of the date thereof (x) that the annual
                           financial  statements  present fairly in all material
                           respects  the  results of  operations  and  financial
                           condition  of Borrower  all in  accordance  with GAAP
                           consistently  applied, and (y) whether Borrower knows
                           of the  existence  of an Event of Default or Default,
                           and if such Event of Default or Default  exists,  the
                           nature thereof, the period of time it has existed and
                           the action then being taken to remedy same.

                                    (iii)  Borrower  shall furnish to the Agent,
                           within forty-five (45) days following the end of each
                           Fiscal Year quarter a quarterly  financial  statement
                           with  respect to each REO  Property  for that quarter
                           certified  by the  Borrower to be true,  complete and
                           correct.  Borrower  shall furnish to the Agent copies
                           of any  report  sent  to its  member  pursuant  to an
                           Organization Agreement. Borrower shall furnish to the
                           Agent  information  with respect to any change in the
                           ownership  interests of Borrower  promptly  after the
                           consummation  of any  such  transaction  (and  in any
                           event not later  than five  Business  Days  after the
                           related closing).

                                    (iv)   Borrower shall furnish or shall cause
                           the Manager to furnish to Lender, within fifteen (15)
                           Business  Days after  request,  such request to occur
                           not more often than once each calendar quarter,  such
                           further  information with respect to the operation of
                           each  REO  Property  or  Mortgaged  Property  and the
                           financial  affairs of Borrower  as may be  reasonably
                           requested by the Agent,  including all business plans
                           prepared for the Borrower.

                                    (v)    Borrower  shall furnish to the Agent,
                           within fifteen (15) Business Days after request, such
                           further    information    regarding   any   Plan   or
                           Multiemployer   Plan   and  any   reports   or  other
                           information  required  to be filed under ERISA as may
                           be reasonably requested by the Agent.

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                                    (vi)   Not later than each  Advance  Closing
                           Date for an acquisition and,  subsequently,  at least
                           thirty  (30)  days  prior  to  the  end  of  each  of
                           Borrower's  Fiscal  Years,  Borrower  shall submit or
                           cause  to be  submitted  to the  Agent  an  Operating
                           Budget  of  property  expenses,  Capital  Improvement
                           Costs (including  Leasing  Commissions and TI Costs),
                           replacement  reserve costs as well as projected Gross
                           Revenues  for the  next  Fiscal  Year  for  each  REO
                           Property.  Such draft  Operating  Budget shall not be
                           effective or  implemented  without the prior  written
                           approval   of  Agent,   such   approval   not  to  be
                           unreasonably  withheld or delayed.  Until so approved
                           by the  Agent for the  subsequent  Fiscal  Year,  the
                           Operating  Budget  approved  by  the  Agent  for  the
                           preceding  Fiscal  Year  shall  remain in effect  for
                           purposes of Section 2.12; PROVIDED,  that for so long
                           as such  prior  Operating  Budget  remains in effect,
                           amounts set forth in the prior Operating  Budget with
                           respect to  property  expenses,  TI Costs and Leasing
                           Commissions shall be deemed increased on a percentage
                           basis  by an  amount  equal  to the  increase  in the
                           Consumer  Price Index  (expressed as a percentage) as
                           measured  over  the  calendar  year  that  the  prior
                           Operating Budget was in effect.

                           (S)      CONDUCT  OF  BUSINESS.  The  Borrower  shall
                  cause the  operation  of each REO  Property to be conducted at
                  all  times in a manner  consistent  with at least the level of
                  operation  of such REO Property as of the  applicable  Advance
                  Closing Date for the related acquisition,  including,  without
                  limitation, the following:

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

                                    (ii)   to  operate  or cause to be  operated
                           such REO 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 such  REO
                           Property; and

                                    (iii)  to maintain or cause to be maintained
                           sufficient  Inventory  and  Equipment  of  types  and
                           quantities  at such REO  Property to enable it or the
                           Manager to operate such REO Property.

                           (T)      SINGLE-PURPOSE ENTITY.

                                    (i)    Borrower  at all times will  continue
                           to be a duly  formed  and  validly  existing  limited
                           liability  company or limited  partnership  under the
                           laws   of  the   State   of  its   formation   and  a
                           Single-Purpose Entity.

                                    (ii)   Borrower  shall at all  times  comply
                           with the provisions of its Organization Agreement and
                           the laws of the State of its  formation  relating  to
                           limited liability companies or limited partnerships.

                                    (iii)  Borrower  shall observe all customary
                           formalities regarding its existence.

                                    (iv)   Borrower  shall  accurately  maintain
                           its  financial  statements,  accounting  records  and
                           other corporate  documents separate from those of its
                           members or  partners,  Affiliates  of its  members or
                           partners  and any other  Person.  Borrower  shall not
                           commingle  its assets  with  those of its  members or
                           partners,  any Affiliates of its members or partners,
                           or any other Person and shall  continue to accurately
                           maintain its own bank accounts and separate  books of
                           account.

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<PAGE>

                                    (v)    Borrower  shall  continue  to pay its
                           own liabilities from its own separate assets.

                                    (vi)   Borrower  shall  continue to identify
                           itself in all dealings with the public, under its own
                           name or trade  names and as a separate  and  distinct
                           entity  and  shall  not  identify  itself  as being a
                           division or a part of any other entity. Borrower will
                           not   identify   its   members  or  partners  or  any
                           Affiliates  of its  members  or  partners  as being a
                           division or part of the Borrower.

                                    (vii)  Borrower   shall   continue   to   be
                           adequately  capitalized in light of the nature of its
                           business.

                                    (viii) Borrower    shall   not   assume   or
                           guarantee the  liabilities of its members or partners
                           (or  any  predecessor  corporation,   partnership  or
                           limited  liability  company),  any  Affiliates of its
                           members or partners or any other  Person,  except for
                           liabilities relating to an REO Property and except as
                           permitted by or pursuant to this Agreement.  Borrower
                           shall not acquire  obligations  or  securities of its
                           members or partners (or any predecessor  corporation,
                           partnership  or limited  liability  company),  or any
                           Affiliates of its members or partners. Borrower shall
                           not make  loans to its  members or  partners  (or any
                           predecessor   corporation,   partnership  or  limited
                           liability company),  or any Affiliates of its members
                           or partners.

                                    (ix)   Borrower shall not enter into or be a
                           party to any transaction with its members or partners
                           (or  any  predecessor  corporation,   partnership  or
                           limited  liability  company) or any Affiliates of its
                           members  or  partners,  except  for in  the  ordinary
                           course  of  business  on  terms  which  are  no  less
                           favorable  than  would be  obtained  in a  comparable
                           arm's  length  transaction  with an  unrelated  third
                           party (other than in connection with the execution of
                           the Management Agreement).

                           (U)      ERISA.  Borrower  shall deliver to the Agent
                  as soon as  possible,  and in any event  within  fifteen  (15)
                  Business  Days after the Borrower  knows or has reason to know
                  that any of the  events or  conditions  specified  below  with
                  respect  to any Plan or  Multiemployer  Plan has  occurred  or
                  exists,  an  Officer's   Certificate   setting  forth  details
                  respecting  such event or  condition  and the action,  if any,
                  that the Borrower or its ERISA Affiliate proposes to take with
                  respect  thereto (and a copy of any report or notice  required
                  to be filed with or given to PBGC by the  Borrower or an ERISA
                  Affiliate with respect to such event or condition):

                                    (i)    any reportable  event,  as defined in
                           Section 4043(b) of ERISA and the  regulations  issued
                           thereunder,  with respect to a Plan, as to which PBGC
                           has  not by  regulation  waived  the  requirement  of
                           Section  4043(a) of ERISA that it be notified  within
                           thirty  (30)  days of the  occurrence  of such  event
                           (provided that a failure to meet the minimum  funding
                           standard of Section 412 of the Code or Section 302 of
                           ERISA, including,  without limitation, the failure to
                           make on or before its due date a required installment
                           under Section 412(m) of the Code or Section 302(e) of
                           ERISA,  shall be a reportable event regardless of the
                           issuance of any waivers in accordance  with Section 4
                           12(d)  of the  Code);  and any  request  for a waiver
                           under Section 4 12(d) of the Code for any Plan;

                                    (ii)   the  distribution  under Section 4041
                           of ERISA of a notice of intent to terminate  any Plan
                           or any  action  taken  by the  Borrower  or an  ERISA
                           Affiliate to terminate any Plan;

                                    (iii)  the    institution    by    PBGC   of
                           proceedings  under  Section  4042  of  ERISA  for the
                           termination  of, or the  appointment  of a trustee to
                           administer,  any Plan, or the 

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                           receipt by the Borrower or any ERISA Affiliate of the
                           Borrower of a notice from a  Multiemployer  Plan that
                           such  action has been  taken by PBGC with  respect to
                           such Multiemployer Plan;

                                    (iv)   the  complete  or partial  withdrawal
                           from a  Multiemployer  Plan  by the  Borrower  or any
                           ERISA  Affiliate  of the  Borrower  that  results  in
                           material  liability  under  Section  4201  or 4204 of
                           ERISA (including the obligation to satisfy  secondary
                           liability as a result of a purchaser  default) or the
                           receipt by the Borrower or any ERISA Affiliate of the
                           Borrower of notice from a Multiemployer  Plan that it
                           is  in  reorganization  or  insolvency   pursuant  to
                           Section  4241 or 4245 of ERISA or that it  intends to
                           terminate or has  terminated  under  Section 4041A of
                           ERISA;

                                    (v)    the  institution of a proceeding by a
                           fiduciary  (within  the  meaning of Section 3(2 1) of
                           ERISA) of any Multiemployer Plan against the Borrower
                           or any ERISA  Affiliate  of the  Borrower  to enforce
                           Section  515  of  ERISA,   which  proceeding  is  not
                           dismissed within thirty (30) days;

                                    (vi)   the  adoption of an  amendment to any
                           Plan that, pursuant to Section 401(a)(29) of the Code
                           or Section 307 of ERISA,  would result in the loss of
                           tax-exempt  status of the trust of which such Plan is
                           a part if the  Borrower or an ERISA  Affiliate of the
                           Borrower fails to timely provide security to the Plan
                           in accordance  with the  provisions of said Sections;
                           and

                                    (vii)  the  imposition of a lien pursuant to
                           Section  302(f)  of ERISA or  Section  4 12(h) of the
                           Code in connection with a Plan.

                           (V)      ASSIGNMENT OR  PARTICIPATION OF NOTE. In the
                  event that the Agent notifies Borrower that a secondary market
                  sale  (an  "ASSIGNMENT")  of,  or a  sale  of a  participation
                  interest  (a  "Participation")  in, the Global Note to another
                  party is a  desirable  course of action  with  respect  to the
                  Loan,  then Borrower shall  cooperate  with the Agent,  in the
                  preparation  of  any  information   reasonably   necessary  or
                  incidental to such Assignment or Participation with respect to
                  the  Collateral  which is reasonably  within the possession or
                  control of Borrower or is  obtainable by Borrower and shall in
                  good faith enter into any amendments to this Agreement  and/or
                  the other Loan  Documents and execute and deliver a new Global
                  Note or Global  Notes to the  assignee,  all as  necessary  to
                  accomplish the Assignment or Participation; PROVIDED, HOWEVER,
                  that such  cooperation  shall be conditioned upon (a) Borrower
                  incurring no additional liability or obligation as a result of
                  such Assignment or Participation  and (b) all costs related to
                  such cooperation,  and all costs incurred by Agent as a result
                  of such  Assignment or  Participation,  shall be paid by Agent
                  (including,  without limitation,  all reasonable out of pocket
                  costs incurred by Borrower related thereto).

                           (W)      MISCELLANEOUS.  BORROWER SHALL:
                  (i)    notify the Agent in writing of any full  repayment of a
         Mortgage Loan promptly upon receipt of the related funds; and

                  (ii)   to the  extent  not  previously  delivered,  cause  any
         Mortgage Loan Documents that come into its possession after the related
         Mortgage  Loan is  collaterally  assigned to the Agent  hereunder to be
         delivered to the Collateral Agent.

                           (X)      INSURANCE.

                                    (i)    Borrower,   at  its  sole   cost  and
                           expense,  shall keep the  Improvements  and Equipment
                           with respect to each REO Property insured (including,
                           but  not  limited  to,  any  period  of   renovation,
                           alteration  and/or  construction)  during the term of
                           the  Loan  with  

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<PAGE>

                           the coverage and in the amounts  required  under this
                           Agreement  for the mutual  benefit of  Borrower,  the
                           Agent for the benefit of the Lenders  against loss or
                           damage  by fire and  against  loss or damage by other
                           risks and  hazards  covered  by a  standard  extended
                           coverage   insurance   policy   (including,   without
                           limitation,  riot  and  civil  commotion,  vandalism,
                           malicious  mischief,  burglary,  collapse,  theft and
                           such other coverages as may be reasonably required by
                           the Agent on the special form  (formerly  known as an
                           all risk form).  Such insurance shall be in an amount
                           (i) equal to at least then full  replacement  cost of
                           the Improvements and Equipment (exclusive of the cost
                           of foundations and footings),  without  deduction for
                           physical depreciation, and (ii) such that the insurer
                           would  not deem  Borrower  a  co-insurer  under  said
                           policies.   The  policies  of  insurance  carried  in
                           accordance with this SECTION 5.1(X) shall be paid not
                           less  than  thirty  (30)  days in  advance  and shall
                           contain the  "Replacement  Cost  Endorsement"  with a
                           waiver of depreciation.

                                    (ii)   Borrower,   at  its  sole   cost  and
                           expense,  for the mutual  benefit of Borrower and the
                           Agent,  shall also obtain and maintain or cause to be
                           obtained and maintained during the entire term of the
                           Loan the following policies of insurance for each REO
                           Property:

                                           (1)   flood insurance, if any part of
                                                 such REO Property is located in
                                                 an  area   identified   by  the
                                                 Federal  Emergency   Management
                                                 Agency   as  an   area   having
                                                 special  flood  hazards  and in
                                                 which flood  insurance has been
                                                 made   available    under   the
                                                 National Flood Insurance Act of
                                                 1968  (and  any   amendment  or
                                                 successor  act  thereto)  in an
                                                 amount  at  least  equal to the
                                                 maximum   limit   of   coverage
                                                 available  with  respect to the
                                                 Improvements    and   Equipment
                                                 under said Act;

                                           (2)   commercial   general  liability
                                                 insurance, including broad form
                                                 property    damage,     blanket
                                                 contractual     and    personal
                                                 injuries    (including    death
                                                 resulting therefrom) coverages,
                                                 liquor law  liability  coverage
                                                 and  containing  minimum limits
                                                 of  $1,000,000  per  occurrence
                                                 aggregate  and  excess/umbrella
                                                 liability  coverage  containing
                                                 minimum limits of $20,000,000;

                                           (3)   business interruption insurance
                                                 (including  rental value) in an
                                                 amount  equal to the  estimated
                                                 Gross  Revenues from the Leases
                                                 of    such     REO     Property
                                                 (including, without limitation,
                                                 the  loss  of  all   Rents  and
                                                 additional Rents payable by all
                                                 of the lessees under the Leases
                                                 (whether or not such Leases are
                                                 terminable  in the  event  of a
                                                 fire   or   casualty)),    such
                                                 insurance to cover losses for a
                                                 period  of at  least  one  year
                                                 after  the  date of the fire or
                                                 casualty in question  and to be
                                                 increased  or   decreased,   as
                                                 applicable,  from  

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                                                 time to time during the term of
                                                 the Loan  (but  not  more  than
                                                 once  in any 12  month  period)
                                                 if,   and   when,   the   Gross
                                                 Revenues  from  the  Leases  of
                                                 such  REO  Property  materially
                                                 increase   or   decrease,    as
                                                 applicable (including,  without
                                                 limitation,  increases from new
                                                 Leases   and   renewal   Leases
                                                 entered into in accordance with
                                                 the  terms of this  Agreement),
                                                 to reflect all  increased  Rent
                                                 and increased  additional  Rent
                                                 payable  by all of the  lessees
                                                 under such  renewal  Leases and
                                                 all  Rent and  additional  Rent
                                                 payable  by all of the  lessees
                                                 under such new Leases;

                                           (4)   insurance   against   loss   or
                                                 damage   from  (x)  leakage  of
                                                 sprinkler   systems   and   (y)
                                                 explosion of steam boilers, air
                                                 conditioning  equipment,   high
                                                 pressure piping,  machinery and
                                                 equipment,  pressure vessels or
                                                 similar    apparatus   now   or
                                                 hereafter   installed   in  the
                                                 Improvements (without exclusion
                                                 for  explosions),  in an amount
                                                 reasonably   required   by  the
                                                 Agent;

                                           (5)   workers' compensation insurance
                                                 coverage  (in  amounts not less
                                                 than the statutory minimums for
                                                 all  persons  employed  by  the
                                                 Borrower,   if   any,   and  in
                                                 compliance   with   all   other
                                                 requirements    of   applicable
                                                 local,  state and federal  law)
                                                 and    "Employers    Liability"
                                                 insurance  in amounts  not less
                                                 than required by statute;

                                           (6)   earthquake  damage insurance in
                                                 an amount and form satisfactory
                                                 to the Agent in the event  that
                                                 one or more REO  Properties  is
                                                 located  in an area with a high
                                                 degree  of  seismic   activity,
                                                 provided    that     earthquake
                                                 insurance      coverage      is
                                                 reasonably         commercially
                                                 available; and

                                           (7)   such  other  insurance  as  may
                                                 from time to time be reasonably
                                                 required  by the Agent in order
                                                 to protect its  interests  with
                                                 respect  to the  Loan  and such
                                                 REO Property.

                                    (iii)  All   policies  of   insurance   (the
                           "POLICIES")  required pursuant to this SECTION 5.1(X)
                           (i) shall be issued by an insurer  which has a claims
                           paying  ability  rating  of not less than "A" (or the
                           equivalent) by Standard & Pool's and one other Rating
                           Agency  satisfactory  to the Agent or A:XII or better
                           as to claims  paying  ability by AM Best  (other than
                           the  policies  described  in SECTION  5.1(X)(II)(6)),
                           (ii) other than with respect to workers' compensation
                           insurance  coverage,  shall name the  Agent,  for the
                           benefit of the  Lenders,  as  additional  insureds as
                           their  interests  may appear  and  contain a standard

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<PAGE>

                           noncontributory  mortgagee  clause  naming  the Agent
                           (and/or such other party as may be  designated by the
                           Agent)  as the party to which  all  payments  made by
                           such insurance  company shall be paid, (iii) shall be
                           maintained  throughout  the term of the Loan  without
                           cost to the Agent, (iv) shall contain such provisions
                           as the Agent deems reasonably  necessary or desirable
                           to   protect   its   interest   (including,   without
                           limitation,  endorsements  providing that neither the
                           Borrower,  the Agent nor any other  party  shall be a
                           co-insurer  under  said  Policies  and that the Agent
                           shall receive at least thirty (30) days prior written
                           notice   of   any    modification,    reduction    or
                           cancellation),   (v)   shall   contain  a  waiver  of
                           subrogation  against  the  Agent  and  (vi)  shall be
                           reasonably  satisfactory in form and substance to the
                           Agent  and  reasonably  approved  by the  Agent as to
                           amounts,  form,  risk  coverage,   deductibles,  loss
                           payees and insureds.  Borrower shall pay the premiums
                           for such Policies as the same become due and payable.
                           Copies  of  said  Policies,  certified  as  true  and
                           correct  by  Borrower,   or  insurance   certificates
                           thereof,  shall be delivered to the Agent.  Not later
                           than  fifteen  (15)   Business   Days  prior  to  the
                           expiration  date of each  of the  Policies,  Borrower
                           will  deliver to the Agent  satisfactory  evidence of
                           the renewal of each Policy.  The  insurance  coverage
                           required  under this  SECTION  5.1(X) may be effected
                           under a blanket policy or policies  covering such REO
                           Property   and  other   property   and   assets   not
                           constituting  a part of such REO  Property;  provided
                           that any such blanket  policy shall  provide at least
                           the same  amount  and form of  protection  as would a
                           separate    policy    insuring   the   REO   Property
                           individually, which amount shall not be less than the
                           amount required pursuant to this SECTION 5.1(AA), and
                           which shall in any case comply in all other  respects
                           with the requirements of this SECTION 5.1 (AA).

                                    (iv)   If any REO Property  shall be damaged
                           or  destroyed,  in whole or in part, by fire or other
                           casualty,  Borrower  shall give prompt notice thereof
                           to the Agent.

                                           (1)   In  case  of  loss  covered  by
                                                 Policies,  the Agent may either
                                                 (A) jointly  with the  Borrower
                                                 settle  and adjust any claim or
                                                 (B) allow the Borrower to agree
                                                 with the  insurance  company or
                                                 companies  on the  amount to be
                                                 paid upon the  loss;  PROVIDED,
                                                 that the  Borrower  may  adjust
                                                 losses   aggregating   not   in
                                                 excess of the greater of (x) 3%
                                                 of the related  Allocated  Loan
                                                 Amount  and  (y)  $100,000,  if
                                                 such  adjustment is carried out
                                                 in  a  commercially  reasonable
                                                 and  timely  manner,  PROVIDED,
                                                 FURTHER, that if at the time of
                                                 the  settlement of such claim a
                                                 monetary  Event of Default  has
                                                 occurred  and  is   continuing,
                                                 then the Agent shall settle and
                                                 adjust  such claim  without the
                                                 consent of the Borrower. In any
                                                 such case the  Agent  shall and
                                                 is hereby authorized to collect
                                                 and   receipt   for  any   such
                                                 Insurance  Proceeds  subject to
                                                 and to the extent  provided for
                                                 in    this    Agreement.    The
                                                 reasonable expenses incurred by
                                                 the Agent in the adjustment and
                                                 collection     of     Insurance
                                                 Proceeds  shall  become part of
                                                 the Indebtedness and be secured
                                                 by the applicable  Mortgage and
                                                 shall be reimbursed by Borrower
                                                 to  the   Agent   upon   demand
                                                 therefor.

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<PAGE>

                                           (2)   In the  event  of  any  insured
                                                 damage to or  destruction of an
                                                 REO   Property   or  any   part
                                                 thereof   (herein   called   an
                                                 "INSURED  Casualty")  where the
                                                 aggregate  amount  of the loss,
                                                 as reasonably  determined by an
                                                 Independent insurance adjuster,
                                                 is less than ten percent  (10%)
                                                 of the related  Allocated  Loan
                                                 Amount,    and   if,   in   the
                                                 reasonable   judgment   of  the
                                                 Agent, such REO Property can be
                                                 restored   within  twelve  (12)
                                                 months  of  settlement  of  the
                                                 claim and at least  twelve (12)
                                                 months  prior  to the  Maturity
                                                 Date to a  condition  at  least
                                                 equal to the condition  thereof
                                                 that   existed   prior  to  the
                                                 Insured  Casualty,  or  if  the
                                                 Agent otherwise elects to allow
                                                 the  Borrower  to restore  such
                                                 REO Property, then, if no Event
                                                 of Default  shall have occurred
                                                 and    be    continuing,    the
                                                 Insurance    Proceeds    (after
                                                 reimbursement of any reasonable
                                                 expenses  incurred by the Agent
                                                 in    connection    with    the
                                                 collection  of  any  applicable
                                                 Insurance  Proceeds)  shall  be
                                                 made  available  to  pay  or to
                                                 reimburse  the Borrower for the
                                                 cost of  restoring,  repairing,
                                                 replacing  or  rebuilding  such
                                                 REO  Property  or part  thereof
                                                 subject    to    the    Insured
                                                 Casualty,   as   provided   for
                                                 below.      Borrower     hereby
                                                 covenants    and    agrees   to
                                                 commence  and   diligently   to
                                                 prosecute    such    restoring,
                                                 repairing,     replacing     or
                                                 rebuilding;    PROVIDED,   that
                                                 Borrower  shall  pay all  costs
                                                 (and if  required by the Agent,
                                                 Borrower   shall   deposit  the
                                                 total thereof with the Agent in
                                                 advance)  of  such   restoring,
                                                 repairing,     replacing     or
                                                 rebuilding  in  excess  of  the
                                                 Insurance     Proceeds     made
                                                 available pursuant to the terms
                                                 hereof     (the      "DEFICIENT
                                                 Amount").

                                           (3)   Except as provided  above,  the
                                                 Insurance   Proceeds  collected
                                                 upon any Insured Casualty shall
                                                 be held in an Eligible  Account
                                                 by the Agent and shall,  at the
                                                 option of the Agent in its sole
                                                 discretion,  be  applied to the
                                                 payment of the  Indebtedness as
                                                 provided in SECTION  2.12(F) of
                                                 this  Agreement  or  applied to
                                                 the    cost    of    restoring,
                                                 repairing,     replacing     or
                                                 rebuilding such REO Property or
                                                 part  thereof  subject  to  the
                                                 Insured Casualty, in the manner
                                                 set forth below.

                                           (4)   In  the  event  that  Insurance
                                                 Proceeds  (after  reimbursement
                                                 of  any   reasonable   expenses

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<PAGE>

                                                 incurred   by  the   Agent   in
                                                 connection  with the collection
                                                 of  any  applicable   Insurance
                                                 Proceeds),  if  any,  shall  be
                                                 made  available to the Borrower
                                                 for the  restoring,  repairing,
                                                 replacing or rebuilding of such
                                                 REO   Property,   the  Borrower
                                                 covenants  to restore,  repair,
                                                 replace or rebuild  the same to
                                                 be of at least comparable value
                                                 as  prior  to  such  damage  or
                                                 destruction, all to be effected
                                                 in   accordance    with   Legal
                                                 Requirements   and   plans  and
                                                 specifications    approved   in
                                                 advance  by  the  Agent,   such
                                                 approval not to be unreasonably
                                                 withheld   or   delayed.    The
                                                 Borrower  shall  pay all  costs
                                                 (and if  required by the Agent,
                                                 the Borrower  shall deposit the
                                                 total thereof with the Agent in
                                                 advance)  of  such   restoring,
                                                 repairing,     replacing     or
                                                 rebuilding  in  excess  of  the
                                                 Insurance     Proceeds     made
                                                 available pursuant to the terms
                                                 hereof.

                                           (5)   In the  event the  Borrower  is
                                                 entitled   to  the  use  of  or
                                                 reimbursement  out of Insurance
                                                 Proceeds  held  by  the  Agent,
                                                 such    proceeds    shall    be
                                                 disbursed  from  time  to  time
                                                 upon  the   Agent  (or  at  the
                                                 Agent's      election,      the
                                                 Collateral     Agent)     being
                                                 furnished   with  (A)  evidence
                                                 reasonably  satisfactory  to it
                                                 of  the   estimated   cost   of
                                                 completion of the  restoration,
                                                 repair,     replacement     and
                                                 rebuilding,  (B) funds,  or, at
                                                 the Agent's option,  assurances
                                                 reasonably  satisfactory to the
                                                 Agent   that  such   funds  are
                                                 available  and   sufficient  in
                                                 addition   to   the   Insurance
                                                 Proceeds   to   complete    the
                                                 proposed  restoration,  repair,
                                                 replacement and rebuilding, and
                                                 (C)      such       architect's
                                                 certificates,  waivers of lien,
                                                 contractor's  sworn statements,
                                                 title  insurance  endorsements,
                                                 bonds  and other  evidences  of
                                                 cost,  payment and  performance
                                                 of   the   foregoing    repair,
                                                 restoration,   replacement   or
                                                 rebuilding  as  the  Agent  may
                                                 reasonably require and approve.
                                                 The Agent  may,  in any  event,
                                                 require   that  all  plans  and
                                                 specifications     for     such
                                                 restoration,            repair,
                                                 replacement  and  rebuilding be
                                                 submitted  to and  approved  by
                                                 the Agent prior to commencement
                                                 of work,  such  approval not to
                                                 be  unreasonably   withheld  or
                                                 delayed. All proceeds of rental
                                                 or    business     interruption
                                                 insurance shall be administered
                                                 in   accordance   with  SECTION
                                                 2.12(a) of this Agreement.  The
                                                 Agent may retain a 

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<PAGE>

                                                 construction    consultant   to
                                                 inspect  such  work and  review
                                                 the   Borrower's   request  for
                                                 payments   and   the   Borrower
                                                 shall,  on demand by the Agent,
                                                 reimburse  the  Agent  for  the
                                                 reasonable       fees       and
                                                 disbursements      of      such
                                                 consultant.   No  payment  made
                                                 prior to the  final  completion
                                                 of  the  restoration,   repair,
                                                 replacement    and   rebuilding
                                                 shall  exceed  ninety   percent
                                                 (90%) of the  value of the work
                                                 performed  from  time  to  time
                                                 (except for restoration work on
                                                 a trade by trade basis in which
                                                 event,  payment  may be made in
                                                 full  upon  the  completion  of
                                                 such  work);  funds  other than
                                                 Insurance   Proceeds  shall  be
                                                 disbursed prior to disbursement
                                                 of such  proceeds;  and, at all
                                                 times, the undisbursed  balance
                                                 of such  proceeds  remaining in
                                                 the   accounts  of  the  Agent,
                                                 together  with funds  deposited
                                                 for that purpose or irrevocably
                                                 committed  to the  repayment of
                                                 the  Agent by or on  behalf  of
                                                 the Borrower for that  purpose,
                                                 shall be at least sufficient in
                                                 the reasonable  judgment of the
                                                 Agent  to pay for  the  cost of
                                                 completion of the  restoration,
                                                 repair,      replacement     or
                                                 rebuilding,  free and  clear of
                                                 all liens or  claims  for lien,
                                                 except      for       Permitted
                                                 Encumbrances. Any surplus which
                                                 may  remain  out  of  Insurance
                                                 Proceeds   held  by  the  Agent
                                                 after  payment of such costs of
                                                 restoration,            repair,
                                                 replacement or rebuilding shall
                                                 be paid to the Borrower so long
                                                 as  no  Event  of  Default  has
                                                 occurred and is continuing.

                                    (v)    Borrower  shall  not  carry  separate
                           insurance, concurrent in kind or form or contributing
                           in the  event of loss,  with any  insurance  required
                           under  this  Agreement;   PROVIDED,   HOWEVER,   that
                           notwithstanding  the  foregoing,  Borrower  may carry
                           insurance  not required  under this  Agreement if any
                           such  insurance  affecting such REO Property shall be
                           for the mutual benefit of Borrower and the Agent,  as
                           their respective  interests may appear,  and shall be
                           subject  to all  other  provisions  of  this  SECTION
                           5.1(X).

                           (Y)      CONDEMNATION.

                                    (i)    Borrower   shall  promptly  give  the
                           Agent  written  notice of the  actual  or  threatened
                           commencement of any proceeding for a Taking and shall
                           deliver  to the Agent  copies  of any and all  papers
                           served in connection with such proceedings. The Agent
                           is  hereby   irrevocably   appointed  as   Borrower's
                           attorney-in-fact,  coupled  with  an  interest,  with
                           exclusive  power to  collect,  receive and retain any
                           Condemnation  Proceeds for said Taking.  With respect
                           to any  compromise or  settlement in connection  with
                           such proceeding, the Agent will jointly with Borrower
                           compromise and reach settlement unless at the time of
                           such Taking a monetary Event of Default has occurred,
                           in which event the Agent shall  compromise  and reach
                           settlement   without   the   consent   of   Borrower.
                           Notwithstanding  the  foregoing  provisions  of  this
                           Section 5.1(Y),  Borrower is authorized 

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                           to   negotiate,   compromise   and  settle,   without
                           participation by the Agent,  Condemnation Proceeds of
                           up to 1 % of the  related  Allocated  Loan  Amount in
                           connection  with  any  Taking.   Notwithstanding  any
                           Taking,   Borrower   shall   continue   to  pay   the
                           Indebtedness  at the time and in the manner  provided
                           for in this  Agreement  and the other Loan  Documents
                           and the  Indebtedness  shall not be reduced except in
                           accordance therewith.

                                    (ii)   Borrower shall cause the Condemnation
                           Proceeds to be paid directly to the Agent as provided
                           in SECTION 2.12(f) of this Agreement.  The Agent may,
                           in  its   reasonable   discretion,   apply  any  such
                           Condemnation  Proceeds to the  reduction or discharge
                           of the  Indebtedness  (whether  or not  then  due and
                           payable). If Condemnation Proceeds in respect of such
                           Taking are applied to the payment of the Indebtedness
                           as provided for in this Agreement,  Borrower shall be
                           relieved of any duty to restore,  repair,  replace or
                           rebuild the applicable REO Property.

                                    (iii)  With  respect  to a  Taking  in part,
                           which  shall  mean any  Taking  which does not render
                           such  REO   Property   physically   or   economically
                           unsuitable  in the  reasonable  judgment of the Agent
                           for the use to  which  it was  devoted  prior  to the
                           Taking,   Borrower   shall  cause  the   Condemnation
                           Proceeds  to be paid to the Agent or  deposited  into
                           the applicable  account pursuant to the provisions of
                           this  Agreement,   to  be  applied  to  the  cost  of
                           repairing,  replacing,  restoring or rebuilding  such
                           REO Property as follows:

                                           (1)   Provided   that    Condemnation
                                                 Proceeds    shall    be    made
                                                 available  to Borrower  for the
                                                 restoring, repairing, replacing
                                                 or   rebuilding   of  such  REO
                                                 Property,    Borrower    hereby
                                                 covenants  to restore,  repair,
                                                 replace or rebuild  the same to
                                                 be of at least comparable value
                                                 and, to the extent commercially
                                                 practicable,  of  substantially
                                                 the same  character as prior to
                                                 the Taking,  all to be effected
                                                 in accordance  with  applicable
                                                 law     and      plans      and
                                                 specifications    approved   in
                                                 advance  by  the  Agent,   such
                                                 approval not to be unreasonably
                                                 withheld or  delayed.  Borrower
                                                 shall  pay  all  costs  (and if
                                                 required by the Agent, Borrower
                                                 shall deposit the total thereof
                                                 with the Agent in  advance)  of
                                                 such   restoring,    repairing,
                                                 replacing  or   rebuilding   in
                                                 excess   of  the   Condemnation
                                                 Proceeds     made     available
                                                 pursuant to the terms hereof.

                                           (2)   The Condemnation  Proceeds held
                                                 by the  Agent  shall be held in
                                                 an  Eligible  Account and shall
                                                 be disbursed  from time to time
                                                 upon  the   Agent  (or  at  the
                                                 Agent's      election,      the
                                                 Collateral     Agent)     being
                                                 furnished   with  (A)  evidence
                                                 reasonably  satisfactory  to it
                                                 of  the   estimated   cost   of
                                                 completion of the  restoration,
                                                 repair,     replacement     and
                                                 rebuilding,  (B) funds,  or, at
                                                 the Agent's option,  assurances
                                                 satisfactory  to the Agent that
                                                 such  funds are  available  and
                                                 sufficient  in  addition to the
                                                 Condemnation     Proceeds    to

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                                                 complete      the      proposed
                                                 restoration,            repair,
                                                 replacement and rebuilding, and
                                                 (C)      such       architect's
                                                 certificates,  waivers of lien,
                                                 contractor's  sworn statements,
                                                 title  insurance  endorsements,
                                                 bonds  and other  evidences  of
                                                 cost,  payment and  performance
                                                 of   the   foregoing    repair,
                                                 restoration,   replacement   or
                                                 rebuilding  as  the  Agent  may
                                                 reasonably require and approve.
                                                 The Agent  may,  in any  event,
                                                 require   that  all  plans  and
                                                 specifications     for     such
                                                 restoration,            repair,
                                                 replacement  and  rebuilding be
                                                 submitted  to and  approved  by
                                                 the Agent prior to commencement
                                                 of work,  which  approval shall
                                                 not be unreasonably withheld or
                                                 delayed. The Agent may retain a
                                                 construction    consultant   to
                                                 inspect  such  work and  review
                                                 the   Borrower's   request  for
                                                 payments   and   the   Borrower
                                                 shall,  on demand by the Agent,
                                                 reimburse  the  Agent  for  the
                                                 reasonable       fees       and
                                                 disbursements      of      such
                                                 consultant.   No  payment  made
                                                 prior to the  final  completion
                                                 of  the  restoration,   repair,
                                                 replacement    and   rebuilding
                                                 shall  exceed  ninety   percent
                                                 (90%)  of  the   value  of  the
                                                 construction   work   performed
                                                 from time to time;  funds other
                                                 than   Condemnation    Proceeds
                                                 shall  be  disbursed  prior  to
                                                 disbursement  of such proceeds;
                                                 and   at   all    times,    the
                                                 undisbursed   balance  of  such
                                                 proceeds remaining in the hands
                                                 of  the  Agent,  together  with
                                                 funds    deposited   for   that
                                                 purpose     or      irrevocably
                                                 committed  to the  repayment of
                                                 the  Agent by or on  behalf  of
                                                 the Borrower for that  purpose,
                                                 shall be at least sufficient in
                                                 the reasonable  judgment of the
                                                 Agent  to pay for  the  cost of
                                                 completion of the  restoration,
                                                 repair,      replacement     or
                                                 rebuilding,  free and  clear of
                                                 all liens or  claims  for lien.
                                                 Any  surplus  which may  remain
                                                 out  of  Condemnation  Proceeds
                                                 held by the Agent after payment
                                                 of such  costs of  restoration,
                                                 repair,      replacement     or
                                                 rebuilding shall be paid to the
                                                 Borrower so long as no Event of
                                                 Default  has  occurred  and  is
                                                 continuing.

                                           (3)   If such REO  Property  is sold,
                                                 through      foreclosure     or
                                                 otherwise, prior to the receipt
                                                 by  the   Agent   of  any  such
                                                 Condemnation  Proceeds to which
                                                 it is entitled  hereunder,  the
                                                 Agent  shall  have  the  right,
                                                 whether  or  not  a  deficiency
                                                 judgment on the Note shall have
                                                 been   sought,   recovered   or
                                                 denied, to 

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<PAGE>

                                                 have     reserved     in    any
                                                 foreclosure  decree  a right to
                                                 receive  said award or payment,
                                                 or a portion thereof sufficient
                                                 to pay the Indebtedness.  In no
                                                 case shall any such application
                                                 reduce or postpone any payments
                                                 otherwise  required pursuant to
                                                 this Agreement,  other than the
                                                 final payment on the Note.

                           (Z)      LEASES AND RENTS.

                                    (i)    Borrower        absolutely        and
                           unconditionally  assigns  to  the  Agent,  Borrower's
                           right,  title and  interest in all current and future
                           Leases and Rents,  it being intended by Borrower that
                           this  assignment  constitutes  a  present,   absolute
                           assignment  and  not  an  assignment  for  additional
                           security only. Such assignment to the Agent shall not
                           be construed to bind the Agent to the  performance of
                           any  of  the  covenants,   conditions  or  provisions
                           contained in any such Lease or  otherwise  impose any
                           obligation upon the Agent. Borrower shall execute and
                           deliver to the Agent such additional instruments,  in
                           form and  substance  reasonably  satisfactory  to the
                           Agent,  as may hereafter be  reasonably  requested in
                           writing by the Agent to further  evidence and confirm
                           such assignment.  Nevertheless,  subject to the terms
                           of this SECTION 5.1(Z),  the Agent grants to Borrower
                           a license to lease, own, maintain, operate and manage
                           each REO Property  and to collect,  use and apply the
                           Rent,  which license is revocable upon the occurrence
                           of an Event of  Default  under  this  Agreement.  Any
                           portion of the Rents held by  Borrower  shall be held
                           in trust for the  benefit of the Agent for use in the
                           payment of the  Indebtedness.  Upon the occurrence of
                           an  Event  of  Default  and  during  the  continuance
                           thereof, the license granted to Borrower herein shall
                           automatically   be  revoked,   and  the  Agent  shall
                           immediately  be entitled to  possession of all Rents,
                           whether or not the Agent enters upon or takes control
                           of such REO Property. The Agent is hereby granted and
                           assigned by Borrower the right,  at its option,  upon
                           revocation of the license  granted  herein,  to enter
                           upon  such REO  Property  in  person,  by agent or by
                           court-appointed  receiver to collect  the Rents.  Any
                           Rents  collected  after the revocation of the license
                           shall be applied toward  payment of the  Indebtedness
                           in the priority and  proportions set forth in SECTION
                           2.8  hereof  or   otherwise   as  the  Agent  in  its
                           discretion shall deem proper.

                                    (ii)   All  Leases   entered   into  by  the
                           Borrower 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  in similar
                           condition.  With  respect  to any Lease for more than
                           10%  of  the  rentable   square  footage  of  an  REO
                           Property,  Borrower  shall  not  enter  into any such
                           Leases,  without  the prior  written  consent  of the
                           Agent,  such consent not to be unreasonably  withheld
                           or delayed. Borrower shall furnish the Agent with (1)
                           detailed  term  sheets in  advance in the case of any
                           Leases,  modifications,  amendments  or renewals  for
                           which Agent's consent is required and (2) in the case
                           of any other Leases,  executed  copies of such Leases
                           upon written  request.  All renewals or amendments or
                           modifications  of  Leases  which do not  satisfy  the
                           requirements  of the first  sentence of this  SECTION
                           5.1 (Z)(ii) shall be subject to the prior approval of
                           the Agent.  All Leases executed after the date hereof
                           shall  provide  that  they  are  subordinate  to  the
                           applicable  Mortgage  and that the  lessee  agrees to
                           attorn  to the  Agent.  The  Agent  shall,  upon  the
                           request  of any tenant  occupying  space in excess of
                           10%  of  the  rentable   square  footage  of  an  REO
                           Property,   execute  and  deliver  a  non-disturbance
                           agreement  in  form  reasonably  satisfactory  to the
                           Agent.  Borrower (i) shall observe and perform all of
                           the  material  obligations  imposed  upon the  lessor
                           under  the  Leases  and  shall not do or permit to be
                           done anything to  materially  impair the value of the
                           Leases as security for the 

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                           Indebtedness;  (ii) shall promptly send copies to the
                           Agent  of  all  written   notices  of  default  which
                           Borrower  shall  send or  receive  thereunder;  (iii)
                           shall  enforce all of the material  terms,  covenants
                           and conditions  contained in the Leases upon the part
                           of the lessee  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 such
                           REO Property  would enforce such terms  covenants and
                           conditions or effect such  termination  or diminution
                           in the ordinary  course of  business;  (iv) shall not
                           collect  any of the Rents  more than one (1) month in
                           advance;  (v) shall not execute any other  assignment
                           of lessor's interest in the Leases or Rents; and (vi)
                           shall not  convey or  transfer  or suffer or permit a
                           conveyance or transfer of such REO Property or of any
                           interest  therein  so as to  effect a  merger  of the
                           estates and rights of, or a termination or diminution
                           of the obligations of, lessees thereunder.

                                    (iii)  Borrower   shall   deposit   security
                           deposits  of lessees  which are turned over to or for
                           the benefit of Borrower or otherwise  collected by or
                           on behalf of Borrower,  into an Eligible Account with
                           the same name as the Collection Accounts. Any bond or
                           other  instrument  which the Borrower is permitted to
                           hold  in lieu of cash  security  deposits  under  any
                           applicable Legal  Requirements shall be maintained in
                           full  force  and  effect  unless   replaced  by  cash
                           deposits  as   hereinabove   described,   shall,   if
                           permitted  pursuant to Legal  Requirements,  name the
                           Agent  as payee or  mortgagee  thereunder  (or at the
                           Agent's option, be fully assignable to the Agent) and
                           shall,  in all respects,  comply with any  applicable
                           Legal   Requirements   and  otherwise  be  reasonably
                           satisfactory  to  the  Agent.  Borrower  shall,  upon
                           request,  provide the Agent with evidence  reasonably
                           satisfactory   to  the   Agent   of  the   Borrower's
                           compliance  with the  foregoing.  Upon the occurrence
                           and during the  continuance  of any Event of Default,
                           Borrower  shall,   upon  the  Agent's   request,   if
                           permitted by any applicable Legal Requirements,  turn
                           over to the  Agent  the  security  deposits  (and any
                           interest  theretofore earned thereon) with respect to
                           all or any portion of such REO  Property,  to be held
                           by the Agent subject to the terms of the Leases.

                           (AA)     MAINTENANCE OF REO PROPERTY.  Borrower shall
                  cause each REO  Property to be  maintained  in a good and safe
                  condition  and  repair,  subject  to wear and tear and  damage
                  caused by casualty or  condemnation.  The Improvements and the
                  Equipment shall not be removed,  demolished or altered (except
                  for (a) normal replacement of the Equipment or (b) pursuant to
                  Leases  in  effect  from  time to  time  or (c) for  removals,
                  demolition or  alterations  that cost up to $250,000)  without
                  the consent of the Agent,  such consent not to be unreasonably
                  withheld  or  delayed.  Except  with  respect  to  an  Insured
                  Casualty  which shall be governed by the terms and  conditions
                  provided herein, Borrower shall (or, in the case of commercial
                  tenants, shall cause such tenants to) promptly repair, replace
                  or rebuild any part of such REO Property that becomes damaged,
                  worn or  dilapidated.  Borrower  shall  or shall  cause  their
                  tenants to complete  and pay for any  structure at any time in
                  the process of  construction  or repair on the Land.  Borrower
                  shall not  initiate,  join in, or consent to any change in any
                  private  restrictive  covenant,  zoning law or other public or
                  private  restriction,  limiting or defining the uses which may
                  be made of such  REO  Property  or any part  thereof,  without
                  consent of the Agent. If under  applicable  zoning  provisions
                  the use of all or any portion of such REO Property is or shall
                  become a nonconforming  use, Borrower will not cause or permit
                  such nonconforming use to be discontinued or abandoned without
                  the express written consent of the Agent,  such consent not to
                  be  unreasonably  withheld or delayed.  Borrower shall not (i)
                  change  the use of the  Land  in any  material  respect,  (ii)
                  permit or suffer to occur any waste on or to such REO Property
                  or to any portion  thereof or (iii) take any steps  whatsoever
                  to convert such REO  Property,  or any portion  thereof,  to a
                  condominium or cooperative form of ownership or management.

                           (BB)     BORROWER'S  RIGHT TO  PREPAY.  In the  event
                  that either (x) the Agent or any Lender  intends to enter into
                  an  Assignment  transaction  with any real  estate  investment
                  trust  which has  

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<PAGE>

                  publicly  offered  shares in such  entity and whose  principal
                  activity is holding  mortgages secured by real property (other
                  than  a  repurchase   agreement   transaction   or  any  other
                  Assignment  effected by a secured party  foreclosing  upon the
                  Global  Note  in  the  exercise  of  remedies  pursuant  to  a
                  repurchase  agreement  transaction or other secured  financing
                  after a default  thereunder  by any  Lender)  or (y) the Agent
                  shall  have   determined   that  the   outstanding   Principal
                  Indebtedness is greater than 86.25% of the Market Value of the
                  REO Properties and Mortgage  Loans,  the Agent or such Lender,
                  as applicable, shall notify the Borrowers of the proposed sale
                  or such  determination.  The Borrower shall have the right, in
                  its sole  discretion,  to prepay the Loan  pursuant to Section
                  2.6  (without  payment of any  Repayment  Fee) in a  principal
                  amount  equal  to  the   principal   amount  of  the  proposed
                  Assignment  (in the case of clause  (x)  above) or the  entire
                  Principal  Indebtedness  (in the case of  clause  (y)  above);
                  PROVIDED,  HOWEVER,  that the Borrower shall have notified the
                  Agent  or  such  Lender,  as  applicable,  in  writing  of its
                  intention to prepay the Loan within five (5) Business  Days of
                  receipt of such notice and shall make such  prepayment  of the
                  Loan  within  fifteen  (15)  Business  Days of receipt of such
                  notice (in the case of clause (x) above) or with  ninety  (90)
                  calendar days of receipt of such notice (in the case of clause
                  (y) above).  In the event the  Borrower  notifies the Agent or
                  such Lender of its  intention  to prepay the Loan (in the case
                  of clause (x) above) and fails to make such payment within the
                  required time period,  then the Repayment Fee on the principal
                  amount of the  proposed  Assignment  shall be  payable  on the
                  Payment Date immediately following the end of such time period
                  as if such  prepayment  had been made pursuant to Section 2.6.
                  Failure  to  make  the   payment   of  the  entire   Principal
                  Indebtedness  on the applicable date in the case of clause (y)
                  above shall be an immediate Event of Default.

                           (CC)     CONVERSION   RIGHT.   The  Borrower   hereby
                  acknowledges  and agrees  that the Agent shall have a one-time
                  right during the term of the Loan to  bifurcate  the Loan into
                  (a) a senior loan secured by the first priority Liens upon all
                  collateral  (modified  as necessary  in  connection  with such
                  bifurcation)  (the "FIRST  MORTGAGE LOAN") and (b) a mezzanine
                  loan to Guarantor  secured by a pledge of the entire ownership
                  interests  in the  Borrower  pursuant  to a  pledge  agreement
                  substantially in the form of EXHIBIT L (the "MEZZANINE LOAN"),
                  PROVIDED  that  the  effective  interest  rate  on  the  First
                  Mortgage  Loan and the  Mezzanine  Loan  shall not  exceed the
                  existing rate on the Loan. The Borrower  agrees that it shall,
                  and it shall cause the Guarantor to, cooperate in all respects
                  with the  Agent  in the  bifurcation  of the Loan  (including,
                  without limitation, amending this Agreement and the other Loan
                  Documents,   and  executing  such  additional  documents,   as
                  reasonably  may be required by the Agent);  PROVIDED  that all
                  reasonable costs incurred by the Borrower (including,  without
                  limitation,  legal fees and expenses) in so  cooperating  with
                  the Agent shall be borne by the Agent.

                           (DD)     POST-CLOSING DATE AFFIRMATIVE COVENANTS.

                                    (i)    Not  later  than   thirty  (30)  days
                           following  the  Closing  Date,  Borrower  shall  have
                           delivered  with  respect  to the  Mortgaged  Property
                           referred to as "Cortez  Plaza" in Bradenton,  Florida
                           to the Agent an update to the Survey  provided  prior
                           to the Closing  Date,  which update is  sufficient to
                           remove the limited  survey  exception  in the related
                           Title Insurance  Policy,  such update to be certified
                           to and otherwise acceptable to Agent.

                                    (ii)   Promptly  following the Closing Date,
                           Borrower shall use commercially reasonable efforts to
                           provide  to the Agent a letter  from the  appropriate
                           Governmental  Authority certifying that the Mortgaged
                           Property  referred to as "Cortez Plaza" in Bradenton,
                           Florida is in compliance  with all applicable  zoning
                           laws, rules and regulations.

                                    (iii)  If at any time during the term of the
                           Loan,  the Lenders shall  release the Guarantor  from
                           its  obligations  under the Guaranty of Payment,  the
                           Borrower  shall,  within ten (10)  Business Days from
                           the date of any such  release,  deliver  to the Agent
                           from  counsel  to  Borrower  and  Guarantor  a  legal
                           opinion  addressed  to the Agent  and the  

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                           Collateral   Agent   and  in   form   and   substance
                           satisfactory  to  the  Agent  and  its  counsel  with
                           respect  to the  non-consolidation  under  applicable
                           bankruptcy  laws of the Borrower and the Guarantor in
                           the event of the  bankruptcy  of the Guarantor or the
                           Principal; PROVIDED, that in the event counsel to the
                           Borrower and the  Guarantor is unable to deliver such
                           opinion  unless  certain  of the REO  Properties  are
                           released  as  Collateral  for  the  Loan,   then  the
                           Borrower shall have the right to enter into a Capital
                           Event with an Affiliate of the Borrower  with respect
                           to  such  REO  Properties  in  accordance   with  the
                           procedure set forth in SECTION 2.7(a) prior to and in
                           order to permit the  delivery  of such  opinion  (the
                           Agent agreeing  hereby to deliver the consent to such
                           Capital Event required under SECTION 2.7(a)).

                  (EE)     GROUND LEASES.

                  (i)      Borrower  shall pay,  promptly  when due and  payable
         (before the commencement of any "cure" or "grace"  period),  all Ground
         Rent.  Upon notice from Agent,  simultaneously  with the making of each
         and every  payment of Ground Rent  payable  after the  delivery of such
         notice,  Borrower shall  simultaneously  deliver to Agent a copy of the
         check in the amount of such payment delivered to the payee.

                  (ii)     Borrower  shall  perform  and  observe   (before  the
         commencement of any "cure" or "grace" period) all terms, covenants, and
         conditions  that  Borrower is required to perform and observe under the
         applicable Ground Lease and do everything  necessary to preserve and to
         keep  unimpaired  and in full force and effect  the  applicable  Ground
         Lease.  Borrower  shall not permit any Ground  Lease to go into default
         (whether or not any cure period in the Ground Lease has expired).

                  (iii)    Borrower   shall  enforce  the   obligations  of  the
         applicable  lessor under each Ground Lease so that  Borrower may at all
         times  enjoy  all  its  rights,   benefits  and  privileges  under  the
         applicable Ground Leases.

                  (iv)     Borrower shall not, without Agent's  consent,  cause,
         agree to, permit, or suffer to occur any Ground Lease  Impairment.  Any
         Ground Lease  Impairment  made without  Agent's  consent shall be null,
         void, and of no force or effect.

                  (v)      Borrower shall not, without Agent's  consent,  refuse
         to consent or  consent  to any  action  that any lessor  under a Ground
         Lease or any third party takes or desires to take under or with respect
         to any Ground Lease.

                  (vi)     Borrower  shall  promptly  deliver to Agent a copy of
         any notice of default or termination,  or demand for performance (other
         than routine  bills for current  Ground Rent) that it receives from any
         lessor  under a Ground  Lease.  Borrower  shall  furnish  to Agent  all
         information  that Agent may request  from time to time  concerning  the
         Ground  Leases  and  Borrower's  compliance  with  the  Ground  Leases.
         Borrower,  immediately  upon  learning  that any lessor  under a Ground
         Lease has failed to perform the terms and  provisions  under any Ground
         Lease (including by reason of a rejection or disaffirmance or purported
         rejection or  disaffirmance  of such Ground Lease pursuant to any state
         or federal bankruptcy law), shall notify Agent thereof.  Promptly after
         the Closing Date, and again  promptly after  execution of any amendment
         to the related leasehold Mortgage, Borrower shall notify the applicable
         Ground Lessor of the  execution  and delivery of the related  leasehold
         REO Mortgage or such amendment.  Such notice shall set forth, verbatim,
         in a  form  satisfactory  to  Agent,  all  provisions  of  the  related
         leasehold REO Mortgage relating to Ground Lease Impairments.

                  (vii)    Borrower shall  promptly  notify Agent of any request
         that any party to a Ground Lease makes for arbitration or other dispute
         resolution   procedure  pursuant  to  such  Ground  Lease  and  of  the
         institution  of any such  arbitration or dispute  resolution.  Borrower
         hereby  authorizes  Agent to  participate  in any such  arbitration  or
         dispute  resolution.  Such  participation may, at Agent's option, be to
         the  exclusion of, 

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         and in place of, the Borrower.  The Borrower shall promptly  deliver to
         Agent a copy of the  determination  of each such arbitration or dispute
         resolution mechanism.

                  (viii)   If Agent or its  designee  shall  acquire or obtain a
         New Ground Lease, then Borrower shall have no right,  title or interest
         whatsoever  in or to such New Ground  Lease,  or any proceeds or income
         arising  from the  estate  arising  under  any such New  Ground  Lease,
         including  from  any sale or other  disposition  thereof.  Agent or its
         designee  shall hold such New Ground  Lease free and clear of any right
         or claim of Borrower.

                                   ARTICLE VI.
                               NEGATIVE COVENANTS

        SECTION 6.1.       NEGATIVE  COVENANTS.  Borrower  covenants  and agrees
that,  until payment in full of the  Indebtedness,  it will not do,  directly or
indirectly  (and,  as to a  Transfer  of  interests  in  Borrower,  no direct or
indirect  owner of such  interests  shall do), any of the  following  unless the
Agent consents thereto in writing:

                           (A)  LIENS ON THE  COLLATERAL.  Except  as  expressly
                  permitted by or pursuant to the REO Mortgages,  incur, create,
                  assume,  become or be liable in any manner with respect to, or
                  permit to exist,  any Lien with respect to any  Mortgage  Loan
                  or,  except as  expressly  permitted by or pursuant to the REO
                  Mortgages, any REO Property, except: (i) Liens in favor of the
                  Lenders and (ii) the Permitted Encumbrances.

                           (B)  OWNERSHIP  AND  TRANSFER.  Except  as  expressly
                  permitted  by  or  pursuant  to  this  Agreement  or  the  REO
                  Mortgages,  own any property other than the Mortgage Loans and
                  the REO Properties or Transfer or permit to be Transferred any
                  Mortgage  Loan  or REO  Property  or any  portion  thereof  or
                  interest therein or any direct or indirect ownership interests
                  in the Borrower.

                           (C)  OTHER BORROWINGS.  Incur, create, assume, become
                  or be liable in any manner with  respect to Other  Borrowings,
                  except  that  the  Borrower  may (i)  with  respect  to an REO
                  Property  only,   incur  secured  or  unsecured   indebtedness
                  relating   solely  to   financing  of  trade   payables,   the
                  acquisition of goods,  services and supplies  (including,  but
                  not limited to reasonable  attorney's  fees and costs) used in
                  the ordinary course of Borrower's  business or the acquisition
                  or  leasing  of  Equipment  used  in the  ordinary  course  of
                  Borrower's  business,  to the extent that such loans or leases
                  are  ordinary  and  customary  in the  industry  of  operating
                  properties  similar to an REO  Property,  and the  proceeds of
                  which are not distributed to Borrower except as  reimbursement
                  for monies expended by Borrower to pay for trade payables, the
                  acquisition  of goods,  services  and supplies and to fund the
                  financing,  acquisition  or  leasing of such  Equipment,  (ii)
                  incur loans from its  members or partners or their  respective
                  Affiliates;  provided that (a) such loans are  subordinate  to
                  the Loan and  unsecured,  (b) the terms of such loans  provide
                  that such  member or partner  shall not take any  judicial  or
                  non-judicial  action to commence  any  foreclosure  proceeding
                  with  respect  thereto for so long as any of the  Indebtedness
                  remains  outstanding,  (c) the proceeds of such loans are used
                  by Borrower to pay expenses (including  operating expenses) or
                  closing costs relating to an REO Property or Mortgage Loan, to
                  fund the Account  Collateral,  to acquire Equipment or to make
                  interest payments on the Loan, and (d) such loans are on terms
                  satisfactory  to the Agent on behalf of the Lenders,  or (iii)
                  incur other indebtedness  previously  approved by the Agent in
                  its reasonable discretion.

                           (D)  DISSOLUTION; MERGER OR CONSOLIDATION.  Dissolve,
                  terminate,  liquidate,  merge with or consolidate into another
                  Person.

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                           (E)  CHANGE IN BUSINESS. Cease to be a Single-Purpose
                  Entity,  or make any material change in the scope or nature of
                  its business objectives,  purposes or operations, or undertake
                  or participate in activities other than the continuance of its
                  present business.

                           (F)  DEBT  CANCELLATION.  Cancel or otherwise forgive
                  or release any  material  claim or debt owed to such Person by
                  any other Person, except for adequate  consideration or in the
                  ordinary  course  of its  business,  or  cancel  or  otherwise
                  forgive or release  any  obligations  owed under any  Mortgage
                  Loan.

                           (G)  AFFILIATE  TRANSACTIONS.  Enter  into,  or  be a
                  party to, any  transaction  with an Affiliate of the Borrower,
                  except in the  ordinary  course of business and on terms which
                  are fully  disclosed  to the Agent in advance  and are no less
                  favorable  to  the  Borrower  than  would  be  obtained  in  a
                  comparable  arm's length  transaction  with an unrelated third
                  party.

                           (H)  CREATION  OF  EASEMENTS.   Except  as  expressly
                  permitted by or pursuant to an REO Mortgage or this  Agreement
                  or  required  by a  Mortgage  Loan,  create,  or permit an REO
                  Property or  Mortgaged  Property or any part thereof to become
                  subject to, any  easement,  license or  restrictive  covenant,
                  other than a Permitted  Encumbrance (the Agent agreeing not to
                  unreasonably  withhold  or  delay  any  consent  requested  by
                  Borrower pursuant to this Section 6.1(h)).

                           (I)  MISAPPLICATION OF FUNDS. Distribute any Rents or
                  Moneys  received from Accounts in violation of the  provisions
                  of Section  2.12,  or fail to deliver any security  deposit to
                  the Manager, or misappropriate any security deposit or portion
                  thereof.

                           (J)  CERTAIN  RESTRICTIONS.  Enter into any agreement
                  which   expressly   restricts   its   ability  to  enter  into
                  amendments,  modifications  or  waivers  of any  of  the  Loan
                  Documents or (other than pursuant to the Loan  Documents)  any
                  of the Mortgage Loans.

                           (K)  ASSIGNMENT  OF LICENSES AND  PERMITS.  Assign or
                  transfer any of its interest in any Permits  pertaining  to an
                  REO  Property,  or  assign,  transfer  or remove or permit any
                  other  Person  to  assign,  transfer  or  remove  any  records
                  pertaining to such REO Property, except as otherwise permitted
                  hereunder.

                           (L)  PLACE OF  BUSINESS.  Change its chief  executive
                  office or its principal  place of business  without giving the
                  Agent at least fifteen (15) days' prior written notice thereof
                  and promptly providing the Agent such information as the Agent
                  may reasonably request in connection therewith.

                           (M)  LEASES.  Enter  into,  amend or  cancel  Leases,
                  except as permitted by or pursuant to this Agreement.

                           (N)  MANAGEMENT  AGREEMENT.  (i)  Terminate or cancel
                  the  Management  Agreement  except  in  accordance  with  this
                  Agreement, (ii) consent to either the reduction of the term of
                  or the assignment of the Management Agreement,  (iii) increase
                  or consent to the increase of the amount of any charges  under
                  the Management  Agreement,  or (iv) otherwise modify,  change,
                  supplement,  alter or amend,  or waive or  release  any of its
                  rights and remedies  under,  the  Management  Agreement in any
                  material  respect;  PROVIDED,  HOWEVER,  that if a  Management
                  Agreement  is  terminated  and  a  successor  manager  is  not
                  appointed to manage the REO  Property  within three (3) months
                  of the date of  termination,  then the  Agent  may  appoint  a
                  successor manager.

                           (O)  PLANS AND WELFARE PLANS. Knowingly (i) engage in
                  or  permit  any  transaction  in  connection  with  which  the
                  Borrower or any ERISA  Affiliate  is  reasonably  likely to be
                  subject to either a  material  civil  penalty or tax  assessed
                  pursuant to Section  502(i) or 502(1) of ERISA or Section 4975
                  of the Code, (ii) permit any Welfare Plan to provide  benefits
                  (including,  without 

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<PAGE>

                  limitation,  medical benefits (whether or not insured)),  with
                  respect to any of its current or former  employees  beyond his
                  or her  retirement or other  termination of service other than
                  (a)  coverage   mandated  by  applicable  law,  (b)  death  or
                  disability  benefits that have been fully provided for by paid
                  up insurance or otherwise  or (c)  severance  benefits,  (iii)
                  permit  its  assets  to  become  "plan  assets",   whether  by
                  operation of law or under regulations  promulgated under ERISA
                  or (iv) adopt,  amend (except as may be required by applicable
                  law or to  maintain  tax  qualified  status) or  increase  the
                  amount of any benefit or amount payable  under,  or permit any
                  ERISA Affiliate to adopt,  amend (except as may be required by
                  applicable  law  or  to  maintain  tax  qualified  status)  or
                  increase  the amount of any benefit or amount  payable  under,
                  any Plan or Welfare Plan,  except for normal  increases in the
                  ordinary  course of  business  consistent  with past  practice
                  that, in the aggregate,  do not result in a material  increase
                  in its benefits expense to Borrower or any ERISA Affiliate.

                           (P)  COLLATERAL IMPAIRMENTS; GROUND LEASE IMPAIRMENT.
                  Cause or permit the occurrence of any Collateral Impairment or
                  Ground Lease Impairment.

                                  ARTICLE VII.
                                EVENT OF DEFAULT

        SECTION 7.1.       EVENT OF DEFAULT.  The  occurrence  of one or more of
the following events shall be an "EVENT OF DEFAULT" hereunder:

                                        (i)      if  on  any  Payment  Date  the
                                                 Borrower   fails   to  pay  any
                                                 accrued and unpaid  interest on
                                                 the Loan or any other principal
                                                 amount  referred  to in SECTION
                                                 2.12(b) then due and payable in
                                                 accordance  with the provisions
                                                 hereof;

                                        (ii)     if  Borrower  fails  (a) to pay
                                                 the outstanding Indebtedness on
                                                 the  Maturity  Date or the fees
                                                 payable to the Collateral Agent
                                                 on  any  Payment  Date,  (b) to
                                                 deposit  into  the   Collection
                                                 Account,  the  amount  required
                                                 pursuant  to SECTION  2.7(a) or
                                                 2.7(b),  respectively or (c) to
                                                 reduce     the      outstanding
                                                 Principal  Indebtedness  by the
                                                 amount  payable on any  Payment
                                                 Date or Business  Day  pursuant
                                                 to  SECTION  2.7(a) or  2.7(b),
                                                 respectively;

                                        (iii)    if  Borrower  fails  to pay any
                                                 other amount  payable  pursuant
                                                 to this  Agreement or any other
                                                 Loan   Document  when  due  and
                                                 payable in accordance  with the
                                                 provisions  hereof or  thereof,
                                                 as the  case  may be,  and such
                                                 failure  continues for ten (10)
                                                 Business  Days  after the Agent
                                                 delivers written notice thereof
                                                 to Borrower;

                                        (iv)     if   any    representation   or
                                                 warranty  made herein or in any
                                                 other Loan Document,  or in any
                                                 report, certificate,  financial
                                                 statement or other  Instrument,
                                                 agreement or document furnished
                                                 by the  Borrower  or its member
                                                 or the  Manager  in  connection
                                                 with this  Agreement,  the Note
                                                 or  any  other  Loan   Document

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<PAGE>

                                                 executed  and  delivered by any
                                                 such Person,  shall be false as
                                                 of the date such representation
                                                 or warranty  was made and shall
                                                 continue to be false sixty (60)
                                                 days  after   notice  from  the
                                                 Agent;

                                        (v)      if the Borrower,  the Guarantor
                                                 or  the   general   partner  of
                                                 Borrower or Guarantor  makes an
                                                 assignment  for the  benefit of
                                                 creditors;

                                        (vi)     if a  receiver,  liquidator  or
                                                 trustee  shall be appointed for
                                                 the  Borrower or the  Guarantor
                                                 or  the   general   partner  of
                                                 Borrower or Guarantor or if the
                                                 Borrower  or the  Guarantor  or
                                                 the general partner of Borrower
                                                 or    Guarantor     shall    be
                                                 adjudicated   a   bankrupt   or
                                                 insolvent,  or if any  petition
                                                 for bankruptcy,  reorganization
                                                 or   arrangement   pursuant  to
                                                 federal  bankruptcy law, or any
                                                 similar  federal  or state law,
                                                 shall be  filed by or  against,
                                                 consented  to, or acquiesced in
                                                 by,   the   Borrower   or   the
                                                 Guarantor    or   the   general
                                                 partner    of    Borrower    or
                                                 Guarantor, or if any proceeding
                                                 for    the    dissolution    or
                                                 liquidation  of the Borrower or
                                                 the  Guarantor  or the  general
                                                 partner    of    Borrower    or
                                                 Guarantor  shall be instituted;
                                                 PROVIDED, HOWEVER, that if such
                                                 appointment,      adjudication,
                                                 petition  or   proceeding   was
                                                 involuntary  and not  consented
                                                 to  by  the   Borrower  or  the
                                                 Guarantor    or   the   general
                                                 partner    of    Borrower    or
                                                 Guarantor,  upon  the  same not
                                                 being  discharged,   stayed  or
                                                 dismissed   within  sixty  (60)
                                                 days, or if the Borrower or the
                                                 Guarantor    or   the   general
                                                 partner    of    Borrower    or
                                                 Guarantor  shall  generally not
                                                 be  paying  its  debts  as they
                                                 become due;

                                        (vii)    except in accordance  with this
                                                 Agreement,   if  the   Borrower
                                                 attempts   to   delegate    its
                                                 obligations   or   assign   its
                                                 rights  under  this  Agreement,
                                                 any of the other Loan Documents
                                                 or  any   interest   herein  or
                                                 therein,  or  if  any  Transfer
                                                 occurs;

                                        (viii)   if   any    provision   of   an
                                                 Organization          Agreement
                                                 affecting the purpose for which
                                                 the   Borrower   is  formed  is
                                                 amended or modified in a manner
                                                 which is  reasonably  likely to
                                                 have a Material Adverse Effect,
                                                 the Agent or Collateral  Agent,
                                                 or if  the  Borrower  fails  to
                                                 perform    or    enforce    the
                                                 provisions        of        the
                                                 Organizational   Agreement  and
                                                 such   failure  is   reasonably
                                                 likely   to  have  a   Material
                                                 Adverse  Effect or  attempts to
                                                 dissolve     without    Agent's
                                                 consent;

                                        (ix)     if  an  Event  of   Default  as
                                                 defined  or  described  in  the
                                                 Global Note,  the  Mortgages or
                                                 any other Loan Document  occurs
                                                 (whether as to the  Borrower or
                                                 any REO Property or any portion
                                                 thereof); or

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<PAGE>

                                        (x)      if a Market  Value Test Default
                                                 occurs;

                                        (xi)     if  any  Collateral  Impairment
                                                 occurs; or

                                        (xii)    if the Borrower  shall continue
                                                 to be in  Default  under any of
                                                 the other  terms,  covenants or
                                                 conditions  of this  Agreement,
                                                 the  Global  Note or the  other
                                                 Loan   Documents   (other  than
                                                 SECTION  6.1(p)),   for  thirty
                                                 (30) days after notice from the
                                                 Agent  or  its   successors  or
                                                 assigns,  in  the  case  of any
                                                 other Default (unless otherwise
                                                 provided   herein  or  in  such
                                                 other Loan Document); PROVIDED,
                                                 HOWEVER,     that    if    such
                                                 non-monetary     Default     is
                                                 susceptible  of cure but cannot
                                                 reasonably be cured within such
                                                 thirty  (30) day period and the
                                                 Borrower  shall have  commenced
                                                 to  cure  such  Default  within
                                                 such thirty (30) day period and
                                                 thereafter    diligently    and
                                                 expeditiously  proceeds to cure
                                                 the same,  such thirty (30) day
                                                 period shall be extended for an
                                                 additional   reasonable  period
                                                 not to exceed  sixty  (60) days
                                                 in total.

then,  upon  the  occurrence  of any  such  Event  of  Default  and at any  time
thereafter,  the Agent or any  Lender or its  successors  or  assigns,  may,  in
addition  to any other  rights or  remedies  available  to it  pursuant  to this
Agreement, the Global Note and the other Loan Documents, or at law or in equity,
take such action,  without further notice or demand,  as the Agent or any Lender
or its successors or assigns,  deems advisable to protect and enforce its rights
against Borrower and in and to all or any portion of any Collateral  (including,
without limitation,  declaring the entire Indebtedness to be immediately due and
payable)  and may  enforce  or avail  itself of any or all  rights  or  remedies
provided  in the Loan  Documents  against  the  Borrower  and/or any  Collateral
(including,  without  limitation,  all rights or remedies available at law or in
equity).

                  Notwithstanding  anything  to the  contrary  herein  or in the
other Loan Documents,  if a Default or Event of Default shall occur hereunder or
under  another Loan Document  because a  representation,  warranty,  affirmative
covenant,  negative covenant or other provision hereunder or thereunder shall be
breached or violated as it affects a particular  REO Property or Mortgage  Loan,
(x) such Default or Event of Default may be cured, (y) any related  acceleration
of the Loan shall be rescinded and (z) any other remedy relating to such Default
or Event of  Default,  other than any  indemnification  to which an  Indemnified
Party may be entitled hereunder,  shall cease to apply upon the Borrower causing
a Capital  Event with respect to such REO Property or Mortgage Loan to occur and
the payment to the Collection  Account of the Release Price of such REO Property
or Mortgage Loan, in which event all Liens on such REO Property or Mortgage Loan
and the Collateral  related  thereto  created  hereunder or under the other Loan
Documents  shall be deemed to be released and  terminated.  Such a Capital Event
shall occur within 30 Business Days of any  acceleration  of the Loan.  The only
condition precedent to the Borrower's right to cause such Capital Event to occur
shall be the payment of the Release Price as set forth above in this paragraph.

        SECTION 7.2.       REMEDIES.
                                        (a)      Upon the occurrence of an Event
                                                 of  Default,  all or any one or
                                                 more  of  the  rights,  powers,
                                                 other remedies available to the
                                                 Agent  or the  Lenders  against
                                                 Borrower  or any  other  Person
                                                 under   this   Agreement,   the
                                                 Global Note or any of the other
                                                 Loan  Documents or at law or in
                                                 equity  may  be   exercised  by
                                                 Lenders  at any  time  and from
                                                 time to  time,  whether  or not
                                                 all  or  any   portion  of  the
                                                 Indebtedness  shall be declared
                                                 due and payable, and whether or
                                                 not  the   Agent   shall   have
                                                 commenced    any    foreclosure
                                                 proceeding  or other action for
                                                 the  enforcement  of its rights
                                                 and  remedies  under any of the
                                                 Loan  Documents with

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<PAGE>

                                                 respect  to all or any  portion
                                                 of  the  Collateral.  Any  such
                                                 actions   taken  by  the  Agent
                                                 shall   be    cumulative    and
                                                 concurrent  and may be  pursued
                                                 independently,          singly,
                                                 successively,    together    or
                                                 otherwise,  at such time and in
                                                 such  order  as the  Agent  may
                                                 determine     in    its    sole
                                                 discretion,   to  the   fullest
                                                 extent    permitted   by   law,
                                                 without  impairing or otherwise
                                                 affecting  the other rights and
                                                 remedies  of the  Agent and the
                                                 Lenders   permitted   by   law,
                                                 equity  or  contract  or as set
                                                 forth  herein  or in the  other
                                                 Loan Documents.

                                        (b)      In the event of the foreclosure
                                                 or other action by the Agent or
                                                 any  Lender  to   enforce   its
                                                 remedies in connection with all
                                                 or  any   portion  of  the  REO
                                                 Properties,   the  Agent  shall
                                                 apply all Net Proceeds received
                                                 to repay  the  Indebtedness  in
                                                 accordance  with  SECTION  2.8,
                                                 the   Indebtedness   shall   be
                                                 reduced  to the  extent of such
                                                 Net Proceeds and the  remaining
                                                 portion  of  the   Indebtedness
                                                 shall  remain  outstanding  and
                                                 secured by the Loan  Documents,
                                                 it being  understood and agreed
                                                 by  the   Borrower   that   the
                                                 Borrower is liable,  subject to
                                                 SECTION 8.24, for the repayment
                                                 of  all  the  Indebtedness  and
                                                 that any  "excess"  foreclosure
                                                 proceeds   are   part   of  the
                                                 cross-collateralized        and
                                                 cross-defaulted        security
                                                 granted  to the  Agent  for the
                                                 benefit of the Lenders pursuant
                                                 to    the    Loan    Documents;
                                                 PROVIDED,   HOWEVER,  that  the
                                                 Global  Note shall be deemed to
                                                 have been  accelerated  only to
                                                 the extent of the Net  Proceeds
                                                 actually received by Agent with
                                                 respect to the  Collateral  and
                                                 applied  in  reduction  of  the
                                                 Indebtedness  evidenced  by the
                                                 Global Note in accordance  with
                                                 the  provisions  of the  Global
                                                 Note, after payment by Borrower
                                                 of all  Transaction  Costs  and
                                                 costs of enforcement.

                                        (c)      Upon the  occurrence and during
                                                 the continuance of any Event of
                                                 Default,  Agent  shall have the
                                                 right, in addition to any other
                                                 rights  or  remedies  of  Agent
                                                 hereunder  or under  the  other
                                                 Loan  Documents,  but  not  the
                                                 obligation,  in its own name or
                                                 in the  name  of  Borrower,  to
                                                 enter into possession of all or
                                                 any    portion   of   the   REO
                                                 Properties, to perform all work
                                                 necessary   to   complete   the
                                                 construction,   reconstruction,
                                                 maintenance  or  renovation  of
                                                 the   REO   Properties   or  to
                                                 operate  all or any  portion of
                                                 the  REO   Properties   and  to
                                                 employ   watchmen   and   other
                                                 safeguards  to protect  the REO
                                                 Properties.   Borrower   hereby
                                                 appoints     Agent    as    its
                                                 attorney-in-fact,    if   Agent
                                                 elects  to do so,  at any  time
                                                 upon the  occurrence and during
                                                 the continuance of any Event of
                                                 Default,  (i) to use such  sums
                                                 as are  necessary  to make such
                                                 alteration,     repairs     and
                                                 renovations   to   all  or  any
                                                 portion  of the REO  Properties
                                                 and to employ such  architects,
                                                 engineers  and  contractors  as
                                                 may be required for the purpose
                                                 of completing any construction,
                                                 reconstruction,  maintenance or
                                                 renovation   of   all   or  any
                                                 portion  of the REO  Properties
                                                 or for the operation of the REO
                                                 Properties   or   any   portion
                                                 thereof,  (iii) to endorse  the
                                                 name of  Borrower on any checks
                                                 or drafts representing proceeds
                                                 of the  insurance  policies  or
                                                 condemnation  awards,  or other
                                                 checks or  instruments  payable
                                                 to the Borrower with respect to
                                                 the REO 

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                                                 Properties,  (iv)  to do  every
                                                 act   with   respect   to   the
                                                 alteration,      repair      or
                                                 renovation     of    or     the
                                                 construction,           repair,
                                                 maintenance  and  operation  of
                                                 the  REO   Properties   or  any
                                                 portion  thereof which Borrower
                                                 otherwise  may  do,  and (v) to
                                                 prosecute  or defend any action
                                                 or  proceeding  incident to the
                                                 REO       Properties.       The
                                                 power-of-attorney       granted
                                                 hereby is a power  coupled with
                                                 an interest and is irrevocable.
                                                 Agent shall have no  obligation
                                                 to   undertake   any   of   the
                                                 foregoing actions, but if Agent
                                                 should do so, it shall  have no
                                                 liability  to Borrower  for the
                                                 sufficiency  or adequacy of any
                                                 such  actions  taken by  Agent,
                                                 except    with    respect    to
                                                 liability  arising from Agent's
                                                 gross    negligence,    willful
                                                 misconduct or failure to comply
                                                 with    Legal     Requirements.
                                                 Notwithstanding  the foregoing,
                                                 it is expressly understood that
                                                 Agent  assumes no  liability or
                                                 responsibility      for     (i)
                                                 performance  of any  duties  of
                                                 the Borrower hereunder or under
                                                 any of the  Loan  Documents  or
                                                 (ii)    any    other    matters
                                                 pertaining  to control over the
                                                 management  and  affairs of the
                                                 Borrower,   nor  by  any   such
                                                 action shall Agent be deemed to
                                                 create a  partnership  or joint
                                                 venture with the Borrower.

        SECTION 7.3.       REMEDIES CUMULATIVE.  The rights, powers and remedies
of the Agent or any Lender  under this  Agreement  shall be  cumulative  and not
exclusive of any other right,  power or remedy which the Agent or any Lender may
have against  Borrower or any other Person  pursuant to this Agreement or any of
the other Loan Documents or existing at law or in equity or otherwise. The Agent
or any Lender's rights, powers and remedies may be pursued singly,  concurrently
or  otherwise,  at such time and in such order as the Agent may determine in the
Agent'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 any Default or Event of Default shall not be construed to
be a waiver of any  subsequent  Default  or Event of  Default  or to impair  any
remedy,  right or power consequent thereon.  Notwithstanding any other provision
of this Agreement,  the Agent for the benefit of the Lenders  reserves the right
to seek a deficiency judgment or preserve a deficiency claim, in connection with
the  foreclosure  of an REO Mortgage on any of the REO  Property,  to the extent
necessary to foreclose on other parts of the Collateral.

        SECTION 7.4.       DEFAULT  ADMINISTRATION  FEE.  At any  time  after an
Event of Default  shall have  occurred and has been  continuing  for thirty (30)
days,  as   reimbursement   and   compensation   for  the  additional   internal
expenditures,  administrative  expenses,  fees and other costs  associated  with
actions to be taken in connection with such Event of Default,  and regardless of
whether the Agent shall have commenced the exercise of any remedies  pursuant to
Section 7.2, the Default  Administration Fee shall be payable by Borrower to the
Agent for the benefit of the Lenders  upon  demand;  provided,  that the Default
Administration  Fee and interest thereon shall not be payable in connection with
any repayment or prepayment of the Principal  Indebtedness  after the occurrence
of such Event of Default and prior to its cure, in the event the Borrower  shall
be paying the Repayment Fee together with such repayment or prepayment.

        SECTION 7.5.       WAIVER OF AUTOMATIC  STAY.  IN THE EVENT THE BORROWER
OR ITS MEMBER SHALL (i) FILE A PETITION WITH ANY COURT OF COMPETENT JURISDICTION
OR BE THE SUBJECT OF ANY PETITION UNDER THE BANKRUPTCY CODE, (ii) BE THE SUBJECT
OF ANY ORDER FOR RELIEF ISSUED UNDER THE BANKRUPTCY  CODE,  (iii) FILE OR BE THE
SUBJECT OF ANY PETITION SEEKING ANY  REORGANIZATION,  ARRANGEMENT,  COMPOSITION,
READJUSTMENT,  LIQUIDATION,  DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR
FUTURE FEDERAL OR 

                                       100
<PAGE>

STATE ACT OR LAW RELATING TO BANKRUPTCY,  INSOLVENCY, OR OTHER RELIEF, (iv) HAVE
SOUGHT  OR  CONSENTED  TO OR  ACQUIESCED  IN THE  APPOINTMENT  OF  ANY  TRUSTEE,
RECEIVER, CONSERVATOR, OR LIQUIDATOR FOR ALL OR SUBSTANTIALLY ALL OF ITS ASSETS,
OR (v) BE THE SUBJECT OF ANY ORDER,  JUDGMENT, OR DECREE ENTERED BY ANY COURT OF
COMPETENT  JURISDICTION  APPROVING A PETITION  FILED AGAINST THE BORROWER OR ANY
MEMBER  FOR  ANY   REORGANIZATION,   ARRANGEMENT,   COMPOSITION,   READJUSTMENT,
LIQUIDATION,  DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR FUTURE FEDERAL
OR STATE LAW  RELATING  TO  BANKRUPTCY,  INSOLVENCY  OR  REORGANIZATION  FOR THE
BORROWER OR ITS MEMBER,  THEN,  AGENT SHALL  THEREUPON BE ENTITLED TO OBTAIN AND
THE BORROWER OR ITS MEMBER,  AS THE CASE MAY BE, TO THE FULLEST EXTENT PERMITTED
BY LAW, IRREVOCABLY AND UNCONDITIONALLY  CONSENT TO GRANT AGENT IMMEDIATE RELIEF
FROM ANY  AUTOMATIC  STAY  IMPOSED BY SECTION  362 OF THE  BANKRUPTCY  CODE,  OR
OTHERWISE,  ON OR AGAINST THE  EXERCISE OF THE RIGHTS AND  REMEDIES  WHICH WOULD
OTHERWISE BE AVAILABLE TO AGENT AS PROVIDED IN THIS  AGREEMENT OR ANY OTHER LOAN
DOCUMENTS AND AS OTHERWISE  PROVIDED BY LAW, AND BORROWER AND THE MEMBER, AS THE
CASE  MAY  BE,  TO  THE  EXTENT   PERMITTED  BY  LAW,  HEREBY   IRREVOCABLY  AND
UNCONDITIONALLY WAIVE THEIR RIGHT TO OBJECT TO SUCH RELIEF.

                                 ARTICLE VIII.
                                 MISCELLANEOUS

        SECTION 8.1.       SURVIVAL.   This   Agreement   and   all   covenants,
agreements,  representations  and warranties made herein and in the certificates
delivered  pursuant  hereto  shall  survive the  execution  and delivery of this
Agreement,  the  making  by the  initial  Lender of the Loan  hereunder  and the
execution and delivery by Borrower to the initial Lender of the Global Note, and
shall  continue  in  full  force  and  effect  so  long  as any  portion  of the
Indebtedness  is outstanding  and unpaid.  Whenever in this Agreement any of the
parties  hereto is referred  to, such  reference  shall be deemed to include the
successors and assigns of such party. All covenants,  promises and agreements in
this  Agreement  contained,  by or on behalf  of  Borrower,  shall  inure to the
benefit of the  respective  successors and assigns of the Agent and each Lender.
Nothing in this  Agreement  or in any other Loan  Document,  express or implied,
shall give to any Person  other  than the  parties  and the holder of the Global
Note and the other Loan Documents,  and their legal representatives,  successors
and  assigns,  any  benefit  or any legal or  equitable  right,  remedy or claim
hereunder.

        SECTION 8.2.       AGENT'S   DISCRETION.   Whenever   pursuant  to  this
Agreement,  Lenders  exercise any right given to approve or  disapprove,  or any
arrangement  or term is to be  satisfactory  to the Agent,  the  decision of the
Agent to approve or disapprove or to decide  whether  arrangements  or terms are
satisfactory  or not  satisfactory  shall  (except as is otherwise  specifically
herein  provided) be in the sole  discretion of the Agent and shall be final and
conclusive.

        SECTION 8.3.       GOVERNING LAW.
                                        (a)      This  Agreement was  negotiated
                                                 in New  York,  and  made by the
                                                 Lenders    and    accepted   by
                                                 Borrower  in the  State  of New
                                                 York,  and the  proceeds of the
                                                 Note delivered  pursuant hereto
                                                 were  disbursed  from New York,
                                                 which State the  parties  agree
                                                 has a substantial  relationship
                                                 to  the   parties  and  to  the
                                                 underlying transaction embodied
                                                 hereby,  and  in  all  respects
                                                 (including, without limitation,
                                                 matters    of     construction,
                                                 validity and performance), this
                                                 Agreement  and the  obligations
                                                 arising   hereunder   shall  be
                                                 governed  by, and  construed in
                                                 accordance  with,  the  laws of
                                                 the    State    of   New   York
                                                 applicable  to  contracts

                                       101
<PAGE>

                                                 made  and   performed  in  such
                                                 State and any applicable law of
                                                 the United States of America.

                                        (b)      Any  legal   suit,   action  or
                                                 proceeding  against the Lenders
                                                 or  Borrower  arising out of or
                                                 relating   to  this   Agreement
                                                 shall  be   instituted  in  any
                                                 federal  or state  court in New
                                                 York, New York. Borrower hereby
                                                 (i) irrevocably  waives, to the
                                                 fullest  extent   permitted  by
                                                 applicable  law, any  objection
                                                 which  it may now or  hereafter
                                                 have to the  laying of venue of
                                                 any  such   suit,   action   or
                                                 proceeding  brought  in  such a
                                                 court  and any  claim  that any
                                                 such proceeding brought in such
                                                 a court has been  brought in an
                                                 inconvenient  forum,  and  (ii)
                                                 irrevocably   submits   to  the
                                                 jurisdiction  of any such court
                                                 in any  such  suit,  action  or
                                                 proceeding.

        SECTION 8.4.       MODIFICATION,  WAIVER IN  WRITING.  No  modification,
amendment, extension, discharge,  termination or waiver of any provision of this
Agreement,  the  Global  Note or any other  Loan  Document,  or  consent  to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in a writing  signed by the party against whom  enforcement  is sought,
and then  such  waiver  or  consent  shall  be  effective  only in the  specific
instance,  and for the purpose,  for which given.  Except as otherwise expressly
provided  herein,  no notice to or demand on Borrower shall entitle  Borrower to
any  other  or  future   notice  or  demand  in  the  same,   similar  or  other
circumstances.

        SECTION 8.5.       DELAY NOT A WAIVER. Neither any failure nor any delay
on the part of any Lender in  insisting  upon  strict  performance  of any term,
condition,  covenant or agreement,  or exercising  any right,  power,  remedy or
privilege hereunder, or under the Global Note, or of any other Loan Document, or
any other instrument given as security therefor,  shall operate as or constitute
a waiver thereof,  nor shall a single or partial  exercise  thereof preclude any
other future  exercise,  or the exercise of any other  right,  power,  remedy or
privilege.  In particular,  and not by way of limitation,  by accepting  payment
after the due date of any amount payable under this  Agreement,  the Global Note
or any other Loan  Document,  each Lender shall not be deemed to have waived any
right either to require  prompt  payment when due of all other amounts due under
this  Agreement,  the Global Note or the other Loan  Documents,  or to declare a
default for failure to effect prompt payment of any such other amount.

        SECTION 8.6.       NOTICES.   All  notices,   consents,   approvals  and
requests required or permitted  hereunder or under any other Loan Document shall
be given in writing and shall be effective for all purposes if hand delivered or
sent by (a) certified or registered United States mail, postage prepaid,  or (b)
expedited  prepaid delivery  service,  either commercial or United States Postal
Service,  with proof of attempted delivery,  and by telecopier (with answer back
acknowledged),  addressed if to Agent at its address set forth on the first page
hereof, Attention:  David Vadon, if to Collateral Agent at its address set forth
on the first page hereof, and if to the Borrower at its address set forth on the
first page hereof,  or at such other  address and Person as shall be  designated
from time to time by any party hereto,  as the case may be, in a written  notice
to the other  parties  hereto in the manner  provided for in this SECTION 8.6. A
copy of all notices,  consents,  approvals  and  requests  directed to the Agent
shall be delivered to Latham & Watkins,  885 Third  Avenue,  New York,  New York
10022,  Attention:  Brian  Krisberg,  Esq.;  a copy  of all  notices,  consents,
approvals  and  requests  directed to Borrower  shall be  delivered to (i) Ocwen
Capital  Corporation,  1675 West Palm Beach Lakes Blvd.,  Suite 1002,  West Palm
Beach, Florida 33401, Attention:  Secretary, phone no.: (561) 682-8000; fax no.:
(561)  682-9177,  (ii) Ocwen  Capital  Corporation,  1675 West Palm Beach  Lakes
Blvd., Suite 900, West Palm Beach,  Florida 33401,  Attention:  Mark S. Zeidman,
phone no.: (561)  682-8600;  fax no.:  (561)  682-8174 and (iii) Gibson,  Dunn &
Crutcher LLP,  Jamboree Center,  4 Park Plaza,  Irvine,  California  92614-8557,
Attention:  Karen  Clark,  Esq.,  phone  no.:  (714)  451-3868;  fax no.:  (714)
475-4628; and a copy of all notices,  consents,  approvals and requests directed
to Collateral  Agent shall be delivered to  Collateral  Agent at its address set
forth on the first page hereof, Attention: Thomas F. Quinlan, Jr. A notice shall
be deemed  to have  been  given:  in 

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<PAGE>

the case of hand delivery, at the time of delivery; in the case of registered or
certified  mail,  when delivered or two Business Days after  mailing;  or in the
case of expedited  prepaid delivery and telecopy,  on the Business Day after the
same was  sent.  A party  receiving  a notice  which  does not  comply  with the
technical  requirements for notice under this SECTION 8.6 may elect to waive any
deficiencies and treat the notice as having been properly given.

        SECTION 8.7.       TRIAL BY JURY.  BORROWER,  TO THE FULLEST EXTENT THAT
IT MAY  LAWFULLY  DO SO,  WAIVES  TRIAL  BY JURY IN ANY  ACTION  OR  PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT BY ANY PARTY HERETO WITH
RESPECT TO THIS AGREEMENT, THE GLOBAL NOTE OR THE OTHER LOAN DOCUMENTS.

        SECTION 8.8.       HEADINGS.  The Article  and Section  headings in this
Agreement are included  herein for  convenience  of reference only and shall not
constitute a part of this Agreement for any other purpose.

        SECTION 8.9.       ASSIGNMENT. Borrower may not sell, assign or transfer
any interest in the Loan Documents or any portion  thereof  (including,  without
limitation, its rights, title, interests,  remedies, powers and duties hereunder
and thereunder)  without Agent's prior written  consent.  Each Lender shall have
the right,  without  the  consent of  Borrower,  to assign or  participate  this
Agreement  and/or any of the other Loan Documents and the obligations  hereunder
to  any  Person   (including,   without   limitation,   in  connection   with  a
securitization  transaction  of the Global Note,  either alone or together  with
other debt  instruments).  In the case of an Assignment  by any Lender,  (a) the
assignee shall have, to the extent of such Assignment, the same rights, benefits
and obligations as it would have if it were the original "Lender"  hereunder and
(b) upon any such  substitution of any Lender, a replacement or addition "Lender
signature  page" shall be executed by Lender and attached to this  Agreement and
thereupon  become  a  part  of  this  Agreement.   Each  potential  assignee  or
participant lender shall be required to sign a confidentiality  agreement, which
shall provide for protection of all proprietary and confidential  information of
Borrower and Guarantor.  Subject to the preceding  sentence,  each participating
lender shall be entitled to receive all information  received by the Agent under
this Agreement.  The Borrower shall keep confidential to the same extent as such
potential   assignee   or   participant   lender   shall  have  agreed  in  such
confidentiality  agreement all information  relating to such proposed Assignment
or  Participation  and the identity of such potential  assignee or  participant.
Notwithstanding  anything in this Agreement to the contrary, after an Assignment
by any Lender, the "Lender" (prior to the Assignment) shall continue to have the
benefits  of any  rights  or  indemnifications  and shall  continue  to have the
obligations  contained herein which such Lender had during the period such party
was "Lender" hereunder.

        SECTION 8.10.      SEVERABILITY.  Wherever  possible,  each provision of
this Agreement  shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be prohibited
by or invalid under  applicable  law, such provision shall be ineffective to the
extent of such prohibition or invalidity,  without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

        SECTION 8.11.      PREFERENCES.  The Lenders shall have no obligation to
marshal  any  assets in favor of  Borrower  or any other  party or against or in
payment of any or all of the obligations of Borrower pursuant to this Agreement,
the  Global  Note or any  other  Loan  Document.  The  Lenders  shall  have  the
continuing  and  exclusive  right to apply or reverse  and  reapply  any and all
payments by Borrower to any portion of the  obligations  of Borrower  hereunder,
PROVIDED that such  application or  reapplication is performed by the Lenders in
accordance  with the  terms  of this  Agreement  or any  other  applicable  Loan
Document.  To the extent the Borrower  makes a payment or payments to any Lender
for the  Borrower's  benefit,  which payment or proceeds or any part thereof are
subsequently invalidated,  declared to be fraudulent or preferential,  set aside
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 payment or proceeds  received,  the obligations  hereunder or
part  thereof  intended to be  satisfied  

                                       103
<PAGE>

shall be revived and  continue in full force and effect,  as if such  payment or
proceeds had not been received by such Lender.

        SECTION 8.12.      WAIVER OF NOTICE.  Borrower  shall not be entitled to
any notices of any nature  whatsoever from any Lender or Collateral Agent except
with  respect to matters for which this  Agreement  or the other Loan  Documents
specifically  and  expressly  provides  for the giving of notice by such  Lender
and/or Collateral Agent to Borrower and except with respect to matters for which
Borrower are not, pursuant to applicable Legal Requirements,  permitted to waive
the giving of notice.  Borrower hereby expressly waives the right to receive any
notice from any Lender and Collateral Agent with respect to any matter for which
this Agreement or the other Loan Documents does not  specifically  and expressly
provide for the giving of notice by such Lender or Collateral Agent to Borrower.

        SECTION 8.13.      FAILURE TO CONSENT.  If the  Borrower  shall seek the
approval by or consent of the Agent or the Lenders hereunder or under the Global
Note, or any of the other Loan Documents and the Agent or the Lenders shall fail
or refuse to give such consent or approval,  the Borrower  shall not be entitled
to any damages for any  withholding  or delay of such approval or consent by the
Agent or the Lenders, it being intended that the Borrower's sole remedy shall be
to bring an action for an  injunction or specific  performance  which remedy for
injunction or specific  performance shall be available only in those cases where
the Agent has expressly  agreed  hereunder or under the Global Note or under any
of the other Loan Documents not to unreasonably withhold or delay its consent or
approval.

        SECTION 8.14.      EXHIBITS  INCORPORATED.  The information set forth on
the cover,  heading and recitals hereof,  and the Exhibits attached hereto,  are
hereby  incorporated  herein as a part of this Agreement with the same effect as
if set forth in the body hereof.

        SECTION 8.15.      OFFSETS,  COUNTERCLAIMS AND DEFENSES. Any assignee of
any Lender's  interest in and to this  Agreement,  the Global Note and the other
Loan Documents shall take the same free and clear of all offsets,  counterclaims
or defenses which are unrelated to this Agreement, the Global Note and the other
Loan  Documents  which  Borrower may otherwise have against any assignor or this
Agreement,  the Global Note and the other Loan Documents,  and no such unrelated
counterclaim  or defense  shall be  interposed  or  asserted  by Borrower in any
action or  proceeding  brought by any such  assignee  upon this  Agreement,  the
Global Note and other Loan  Documents  and any such right to interpose or assert
any such  unrelated  offset,  counterclaim  or  defense  in any such  action  or
proceeding is hereby expressly waived by Borrower.

        SECTION 8.16.      NO JOINT  VENTURE OR  PARTNERSHIP.  Borrower and each
Lender intend that the relationship created hereunder be solely that of borrower
and lender.  Nothing herein is intended to create a joint venture,  partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and any Lender
nor to grant any  Lender  any  interest  in the  Collateral  other  than that of
mortgagee or lender.

        SECTION 8.17.      WAIVER  OF  MARSHALLING  OF  ASSETS  DEFENSE.  To the
fullest  extent  Borrower  may  legally do so,  Borrower  waives all rights to a
marshalling  of the assets of Borrower,  and others with  interests in Borrower,
and of the Collateral,  or to a sale in inverse order of alienation in the event
of  foreclosure  of the interests  hereby  created,  and agree not to assert any
right  under any laws  pertaining  to the  marshalling  of  assets,  the sale in
inverse order of alienation,  homestead exemption, the administration of estates
of decedents,  or any other matters  whatsoever to defeat,  reduce or affect the
right of any Lender under the Loan Documents to a sale of any Collateral for the
collection  of the  Indebtedness  without  any  prior or  different  resort  for
collection, or the right of any Lender to the payment of the Indebtedness out of
the Net  Proceeds  of the  Collateral  in  preference  to every  other  claimant
whatsoever.

                                       104
<PAGE>

        SECTION 8.18.      RESERVED.

        SECTION 8.19.      CONFLICT;  CONSTRUCTION OF DOCUMENTS. In the event of
any conflict  between the provisions of this Agreement and the provisions of the
Global Note or any of the other Loan Documents, the provisions of this Agreement
shall prevail.  The parties  hereto  acknowledge  that they were  represented by
counsel in connection  with the  negotiation  and drafting of the Loan Documents
and that the Loan Documents  shall not be subject to the principle of construing
their meaning against the party which drafted same.

        SECTION 8.20.      BROKERS  AND  FINANCIAL  ADVISORS.  Borrower  and the
initial Lender hereby represent that they have dealt with no financial advisors,
brokers,  underwriters,  placement agents,  agents or finders in connection with
the  transactions  contemplated  by this  Agreement.  Subject  to the  preceding
sentence,  Borrower and initial  Lender  hereby agree to indemnify  and hold the
other  and  Collateral  Agent  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 the transactions contemplated herein. The provisions of
this Section 8.20 shall survive the expiration and termination of this Agreement
and the repayment of the Indebtedness.

        SECTION 8.21.      COUNTERPARTS.  This  Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original,  but  all  of  which  shall  together  constitute  one  and  the  same
instrument.

        SECTION 8.22.      ESTOPPEL  CERTIFICATES.   Borrower  and  each  Lender
hereby  agree at any time and from time to time upon not less than  fifteen (15)
days prior written notice by Borrower or such Lender to execute, acknowledge and
deliver  to the  party  specified  in such  notice,  a  statement,  in  writing,
certifying that this Agreement is unmodified and in full force and effect (or if
there have been modifications,  that the same, as modified, is in full force and
effect and stating the modifications hereto), and stating whether or not, to the
knowledge of such certifying party, any Default or Event of Default has occurred
and is then  continuing,  and, if so,  specifying  each such Default or Event of
Default;  PROVIDED,  HOWEVER,  that it shall  be a  condition  precedent  to any
Lender's obligation to deliver the statement pursuant to this Section 8.22, that
such Lender  shall have  received,  together  with  Borrower's  request for such
statement,  an Officer's Certificate stating that no Default or Event of Default
exists as of the date of such  certificate  (or specifying such Default or Event
of Default).

        SECTION 8.23.      PAYMENT   OF   EXPENSES.   Borrower   shall  pay  all
Transaction  Costs,  which shall  include,  without  limitation,  (a) reasonable
out-of-pocket  costs  and  expenses  of  Lenders  in  connection  with  (i)  the
negotiation,  preparation,  execution and delivery of the Loan Documents and the
documents and instruments referred to therein, (ii) the creation,  perfection or
protection of Lenders' Liens in the  Collateral  both prior to and following the
Closing Date  (including,  without  limitation,  fees and expenses for title and
lien searches or amended or replacement REO Mortgages,  UCC Financing Statements
or Collateral  Security  Instruments,  title  insurance  premiums and filing and
recording  fees,  third party due diligence  expenses for the REO Properties and
Mortgaged  Properties plus travel  expenses,  accounting firm fees, costs of the
Appraisals,  Environmental  Reports (and an environmental  consultant),  and the
Engineering Reports), (iii) the negotiation, preparation, execution and delivery
of any  amendment,  waiver or consent  relating to any of the Loan Documents and
(iv) the  preservation of rights under and enforcement of the Loan Documents and
the documents and instruments  referred to therein,  including any restructuring
or  rescheduling  of the  Indebtedness,  (b) the reasonable  fees,  expenses and
disbursements of counsel to Lenders in connection with all of the foregoing, (c)
all fees and expenses of  Collateral  Agent and its counsel and (d) any Lender's
reasonable   out-of-pocket  travel  expenses  in  connection  with  site  visits
contemplated in this Agreement.

                                       105
<PAGE>

        SECTION 8.24.      NONRECOURSE. Anything contained herein, in the Global
Note or in any other Loan Document to the contrary notwithstanding,  no recourse
shall be had for the payment of the  principal or interest on the Global Note or
for any other Indebtedness, obligation or liability hereunder or under any other
Loan  Document or for any claim based  hereon or thereon or otherwise in respect
hereof or thereof against (i) any partner, agent, contractor, director, officer,
member,  consultant,   manager,   stockholder,   subscriber  to  capital  stock,
incorporator,  beneficiary, participant, trustee or advisor of the Borrower, any
partner or member in the Borrower,  or any partner or member  therein;  (ii) any
legal representative,  heir, estate,  successor or assign of any thereof;  (iii)
any corporation  (or any officer,  director,  employee or shareholder  thereof),
limited  liability  company  (or member  thereof),  partnership  (or any partner
thereof),  individual or entity to which any ownership  interest in the Borrower
shall have been  directly or indirectly  transferred;  (iv) any purchaser of any
asset of the Borrower;  or (v) any other Person (except the  Borrower),  for any
deficiency  or other sum owing  with  respect  to the  Global  Note or any other
Indebtedness,  obligation  or liability or arising  under this  Agreement or any
Loan  Document.  It is  understood  that  neither  the Global Note nor any other
Indebtedness,  obligation or liability  under or with respect to this  Agreement
and any other Loan  Document  may be enforced  against any Person  described  in
clauses (i) through (v) above; PROVIDED,  HOWEVER, that the foregoing provisions
of this paragraph shall not:

                                        (1)      prevent    recourse    to   the
                                                 Borrower,   any  Collateral  or
                                                 other assets  encumbered by the
                                                 REO  Mortgages,  any Collateral
                                                 Security   Instrument   or  any
                                                 other  instrument  or  document
                                                 granting    the   Lenders   any
                                                 security   interest   or   lien
                                                 pursuant to the Loan Documents;

                                        (2)      in  the  event  of  any  actual
                                                 fraud,     misapplication    or
                                                 misappropriation  of  funds  or
                                                 intentional  misrepresentation,
                                                 estop the Agent or the  Lenders
                                                 from instituting or prosecuting
                                                 a legal action or proceeding or
                                                 otherwise    making   a   claim
                                                 against  the  Person or Persons
                                                 committing  such actual  fraud,
                                                 misapplying or misappropriating
                                                 such   funds  or  making   such
                                                 intentional  misrepresentation,
                                                 or the recipient or beneficiary
                                                 of such fraud,  misapplication,
                                                 misappropriation or intentional
                                                 misrepresentation,  whether  or
                                                 not such  Person,  recipient or
                                                 beneficiary,   is  any   Person
                                                 described    in   CLAUSES   (i)
                                                 through  (v) above  for  losses
                                                 relating  to  or  arising  from
                                                 such       actual        fraud,
                                                 misapplication,
                                                 misappropriation or intentional
                                                 misrepresentation;

                                        (3)      have     any      applicability
                                                 whatsoever    to   the   Pledge
                                                 Agreement,   the   Guaranty  of
                                                 Payment  or  the   Guaranty  of
                                                 Non-Recourse Obligations or the
                                                 liability    of   the   parties
                                                 thereunder;

                                        (4)      prevent    recourse    to   the
                                                 Borrower or the Guarantor  (but
                                                 not  any of the  other  Persons
                                                 described    in   CLAUSES   (i)
                                                 through (v) above) with respect
                                                 to the breach of any  provision

                                       106
<PAGE>

                                                 in the Environmental  Indemnity
                                                 Agreement  or  this   Agreement
                                                 concerning  Environmental Laws,
                                                 Hazardous  Substances  and  any
                                                 indemnification of the Agent or
                                                 any Lender with respect thereto
                                                 contained in either document;

                                        (5)      constitute a waiver, release or
                                                 discharge  of any  indebtedness
                                                 or obligation  evidenced by the
                                                 Global  Note or  secured by the
                                                 Loan  Documents,  and the  same
                                                 shall  continue  until  paid or
                                                 discharged in full; or

                                        (6)      apply with respect to the right
                                                 of the  Lenders  after an Event
                                                 of Default to recover  security
                                                 deposits    received   by   the
                                                 Borrower    or    any    Person
                                                 described    in   CLAUSES   (i)
                                                 through  (v) above (or that the
                                                 Borrower    or   such    Person
                                                 received   credit   for)   from
                                                 tenants   and  not   previously
                                                 refunded or turned over.

                                  ARTICLE IX.
                                   THE AGENT

        SECTION 9.1.       APPOINTMENT.   POWERS  AND  IMMUNITIES.  Each  Lender
hereby  irrevocably  appoints  and  authorizes  the  Agent  to act as its  agent
hereunder  and  under  the  other  Loan   Documents  with  such  powers  as  are
specifically  delegated to the Agent by the terms of this  Agreement  and of the
other  Loan  Documents,  together  with  such  other  powers  as are  reasonably
incidental  thereto.  The  Agent  (which  term as used in this  sentence  and in
SECTION 9.5 and the first sentence of Section 9.6 hereof shall include reference
to its Affiliates and its own and its Affiliates' officers, directors, employees
and agents): (a) shall have no duties or responsibilities except those expressly
set forth in this  Agreement and in the other Loan  Documents,  and shall not by
reason of this Agreement or any other Loan Document be a trustee for any Lender;
(b)  shall not be  responsible  to the  Lenders  for any  recitals,  statements,
representations  or warranties  contained in this Agreement or in any other Loan
Document,  or in any  certificate or other document  referred to or provided for
in, or received by any of them under, this Agreement or any other Loan Document,
or for  the  value,  validity,  effectiveness,  genuineness,  enforceability  or
sufficiency of this Agreement, the Global Note or any other Loan Document or any
other document  referred to or provided for herein or therein or for any failure
by the  Borrower  or any  other  Person  to  perform  any of  their  obligations
hereunder  or  thereunder;  (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Loan Document;
and (d) shall not be responsible  for any action taken or omitted to be taken by
it  hereunder  or under any other Loan  Document or under any other  document or
instrument  referred  to or  provided  for herein or  therein  or in  connection
herewith  or  therewith,   except  for  its  own  gross  negligence  or  willful
misconduct.  The Agent may employ agents and  attorneys-in-fact and shall not be
responsible   for  the   negligence   or   misconduct  of  any  such  agents  or
attorneys-in-fact selected by it in good faith.

        SECTION 9.2.       RELIANCE  BY AGENT.  The Agent  shall be  entitled to
rely upon any certification,  notice or other communication (including,  without
limitation,  any  thereof by  telephone,  telecopy,  telex,  telegram  or cable)
believed  by it to be genuine  and correct and to have been signed or sent by or
on behalf of the proper  Person or Persons,  and upon advice and  statements  of
legal counsel,  independent accountants and other experts selected by the Agent.
As to any matters not expressly provided for by this Agreement or any other Loan
Document,  the Agent  shall in all cases be fully  protected  in  acting,  or in
refraining  from  acting,   hereunder  or  thereunder  in  accordance  

                                       107
<PAGE>

with the instructions given by all of the Lenders, and such instructions of such
Lenders and any action taken or failure to act pursuant thereto shall be binding
on all of the Lenders.

        SECTION 9.3.       DEFAULTS.  The  Agent  shall  not be  deemed  to have
knowledge or notice of the  occurrence  of a Default or Event of Default  unless
the Agent has received  written notice from a Lender or the Borrower  specifying
such Default and stating that such notice is a "Notice of Default." In the event
that the Agent receives such a notice of the occurrence of a Default or Event of
Default,  the Agent shall give prompt notice  thereof to the Lenders.  The Agent
shall  (subject  to SECTION 9.7  hereof)  take such action with  respect to such
Default or Event of Default as shall be directed by all Lenders,  PROVIDED that,
unless and until the Agent shall have  received such  directions,  the Agent may
(but shall not be obligated  to) take such  action,  or refrain from taking such
action,  with  respect  to such  Default  or Event of  Default  as it shall deem
advisable  in the best  interest of the  Lenders  except to the extent that this
Agreement  expressly  requires that such action be taken, or not be taken,  only
with the consent or upon the authorization of all of the Lenders.

        SECTION 9.4.       RIGHTS AS A LENDER.  With respect to the Loan made by
it, the Agent in its capacity as a Lender  hereunder  shall have the same rights
and powers  hereunder as any other Lender and may exercise the same as though it
were not acting as the Agent, and the term "Lender" or "Lenders"  shall,  unless
the context otherwise  indicates,  include the Agent in its individual capacity.
The Agent and its  Affiliates  may  (without  having to account  therefor to any
Lender) lend money to, make  investments in and generally  engage in any kind of
business with the Borrower or any of its  Affiliates as if it were not acting as
the  Agent,  and  the  Agent  and its  Affiliates  may  accept  fees  and  other
consideration  from the Borrower or such  Affiliate  for services in  connection
with this  Agreement or otherwise  without having to account for the same to the
Lenders.

        SECTION 9.5.       INDEMNIFICATION.  The Lenders  agree to indemnify the
Agent (to the extent not reimbursed  under SECTION 5.1(J),  but without limiting
the  obligations  of Borrower under said SECTION  5.1(J))  ratably in accordance
with  their  respective  portion  of the  Loan,  for any  and  all  liabilities,
obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs,
expenses or disbursements of any kind and nature  whatsoever that may be imposed
on, incurred by or asserted  against the Agent (including by any Lender) arising
out of or by reason of any investigation in or in any way relating to or arising
out of  this  Agreement  or any  other  Loan  Document  or any  other  documents
contemplated   by  or  referred  to  herein  or  therein  or  the   transactions
contemplated  hereby or thereby (including,  without  limitation,  the costs and
expenses  that the  Borrower is  obligated  to pay under  SECTION  5.1(J)),  but
excluding,  unless a Default or Event of Default has occurred and is continuing,
normal  administrative  costs and expenses  incident to the  performance  of its
agency  duties  hereunder)  or the  enforcement  of any of the  terms  hereof or
thereof or of any such other documents,  PROVIDED that no Lender shall be liable
for any of the  foregoing to the extent they arise from the gross  negligence or
willful misconduct of the party to be indemnified.

        SECTION 9.6.       NON-RELIANCE ON AGENT AND OTHER LENDERS.  Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender,   and  based  on  such  documents  and  information  as  it  has  deemed
appropriate,  made its own credit analysis of Borrower and their  Affiliates and
decision  to enter  into  this  Agreement  and that it will,  independently  and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem  appropriate at the time,  continue to make its
own analysis and decisions in taking or not taking  action under this  Agreement
or under any other Loan Document. The Agent shall not be required to keep itself
informed as to the  performance  or observance by Borrower of this  Agreement or
any of the  other  Loan  Documents  or to  inspect  the  properties  or books of
Borrower  or any of their  Affiliates.  Except for  notices,  reports  and other
documents and information  expressly  required to be furnished to the Lenders by
the Agent  hereunder,  the Agent  shall not have any duty or  responsibility  to
provide any Lender with any credit or other information  concerning the affairs,
financial  condition or business of Borrower or any of their Affiliates that may
come into the possession of the Agent or any of its Affiliates.

                                       108
<PAGE>

        SECTION 9.7.       FAILURE TO ACT. Except for action expressly  required
of the Agent  hereunder and under the other Loan  Documents,  the Agent shall in
all cases be fully  justified  in  failing  or  refusing  to act  hereunder  and
thereunder  unless it shall receive further  assurances to its satisfaction from
the  Lenders  of their  indemnification  obligations  under  SECTION  9.5 hereof
against any and all  liability  and expense that may be incurred by it by reason
of taking or continuing to take any such action.

        SECTION 9.8.       RESIGNATION OF AGENT.  Subject to the appointment and
acceptance  of a successor  Agent as provided  below,  the Agent may resign upon
giving notice thereof to the Lenders and the Borrower;  PROVIDED,  HOWEVER, that
such  resignation  shall not be effective until such time as the successor Agent
is in place.  Upon any such  resignation,  the  Lenders  shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Lenders and shall have  accepted such  appointment  within 30 days after the
retiring  Agent's giving of notice of resignation,  then the retiring Agent may,
on  behalf  of  the  Lenders,  appoint  a  successor  Agent,  that  shall  be  a
sophisticated  financial institution.  Upon the acceptance of any appointment as
Agent  hereunder by a successor  Agent,  such  successor  Agent shall  thereupon
succeed to and become vested with all the rights, powers,  privileges and duties
of the retiring  Agent,  and the  retiring  Agent shall be  discharged  from its
duties and  obligations  hereunder.  After any retiring  Agent's  resignation or
removal  hereunder as Agent, the provisions of this Article IX shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent.

        SECTION 9.9.       AGENCY  FEE.  Each  Lender  will pay to the  Agent an
agency fee as may be agreed upon  between  such  Lender and the Agent.  Borrower
shall not be liable for the payment of such fee.

        SECTION 9.10.      CONSENTS UNDER LOAN DOCUMENTS.  The Agent may consent
to any  modification,  supplement  or waiver  under  any of the Loan  Documents;
PROVIDED  that,  without the prior  consent of each Lender,  the Agent shall not
release any  Collateral or otherwise  terminate any Lien under any Loan Document
providing for  collateral  security,  or agree to additional  obligations  being
secured  by such  collateral  security  (unless  the Lien  for  such  additional
obligations  shall be junior to the Lien in favor of the  Indebtedness),  except
that no such consent shall be required,  and the Agent is hereby authorized,  to
release  any Lien  covering  Collateral  that is the  subject  of a  disposition
permitted hereunder.

        SECTION 9.11.      NOTICES, REPORTS AND OTHER COMMUNICATIONS.  The Agent
shall  provide,  at its  expense,  copies  of  each  notice,  report,  document,
correspondence or other written communication delivered to the Agent by Borrower
or any  Affiliate  of  Borrower  pursuant to any Loan  Document,  to each Lender
identified in such notice,  report,  document,  correspondence  or other written
communication  or reasonably  determined by the Agent to be entitled  thereto or
affected thereby, as soon as practicable after the Agent's receipt thereof.

                                   ARTICLE X.
                                    WAIVERS

        SECTION 10.1.      WAIVER OF  SUBROGATION  AND  CONTRIBUTION.  Until all
amounts due under the Loan  Documents  are paid in full,  each  Borrower  hereby
absolutely  and  irrevocably  waives any and all (a) rights which it may have or
may now or hereafter  acquire by way of subrogation,  reimbursement or indemnity
against any Borrower by virtue of any' action taken by Agent with respect to any
of its  rights  or  remedies  under  any  of the  Loan  Documents  or  otherwise
(including,  without limitation,  by reason of any payments made by any Borrower
with respect to the Note),  and (b) other claims or rights  against any Borrower
relating to this Agreement,  the Loan Documents or any of the obligations of any
Borrower to Lender.

                                       109
<PAGE>

                  EACH  BORROWER  ACKNOWLEDGES  AND AGREES THAT  PURSUANT TO THE
FOREGOING PARAGRAPH, IT HAS WAIVED, AMONG OTHER SPECIFIC RIGHTS GRANTED TO IT AT
LAW OR IN EQUITY,  ITS RIGHTS,  IF ANY,  TO  SUBROGATION,  REIMBURSEMENT  AND/OR
INDEMNITY  AGAINST EACH OF THE OTHER BORROWERS.  SUCH WAIVER  INCLUDES,  WITHOUT
LIMITATION,  A WAIVER  OF EACH  BORROWER'S  RIGHTS  THROUGH  SUBROGATION,  AFTER
PAYMENT  OF ITS  OBLIGATIONS  UNDER ANY OF THE LOAN  DOCUMENTS  TO WHICH IT IS A
PARTY AND THE APPLICATION OF SUCH PAYMENT BY AGENT TO THE INDEBTEDNESS EVIDENCED
BY ANY NOTE(S) WITH RESPECT TO WHICH IT IS NOT THE MAKER,  TO BE  SUBSTITUTED IN
PLACE OF AGENT WITH RESPECT TO THE  OBLIGATIONS OF SUCH OTHER BORROWER SUCH THAT
IT COULD SUCCEED TO AGENT'S RIGHTS,  REMEDIES  AND/OR SECURITY  RELATING TO SUCH
OBLIGATIONS AND ASSERT A CLAIM AGAINST SUCH OTHER BORROWER.  CERTAIN AUTHORITIES
HAVE DETERMINED THAT, IN THE ABSENCE OF AN EFFECTIVE WAIVER,  PARTICULAR ACTIONS
OF A LENDER THAT IMPAIR OR DESTROY A GUARANTOR'S OR OTHER  SURETY'S  SUBROGATION
RIGHTS  COULD  PROVIDE  SUCH  GUARANTOR  OR OTHER  SURETY  WITH A DEFENSE TO THE
PAYMENT AND  PERFORMANCE OF ITS  OBLIGATIONS  UNDER ITS GUARANTY OR OTHER SURETY
OBLIGATION.  BY WAY OF EXAMPLE,  BUT NOT OF  LIMITATION,  COURTS HAVE HELD THAT,
ABSENT AN EFFECTIVE  WAIVER,  A GUARANTOR OR OTHER SURETY MAY BE EXONERATED FROM
ITS OBLIGATIONS UNDER A GUARANTY OR OTHER SURETY OBLIGATION, AS APPLICABLE, IF A
LENDER  COMPROMISES OR EXTINGUISHES  THE  GUARANTOR'S OR OTHER SURETY'S,  AS THE
CASE MAY BE,  SUBROGATION  RIGHTS BY ELECTING TO  FORECLOSE  NON-JUDICIALLY,  BY
POWER OF SALE, ON REAL PROPERTY  SECURITY THEREBY INVOKING THE DEFICIENCY BAR OF
CALIFORNIA CODE OF CIVIL PROCEDURE  SECTION 580D. EACH BORROWER AGREES THAT SUCH
DEFENSES ARE  INAPPLICABLE  IN LIGHT OF ITS  IRREVOCABLE  WAIVER OF SUBROGATION,
REIMBURSEMENT  AND/OR  INDEMNITY RIGHTS AGAINST EACH OTHER BORROWER SET FORTH IN
THE FOREGOING  PARAGRAPH AND THAT NO ACTION BY AGENT IN ENFORCING ITS RIGHTS AND
REMEDIES  AGAINST SUCH OTHER  BORROWER OR OTHERWISE MAY COMPROMISE OR EXTINGUISH
SUCH RIGHTS BECAUSE EACH SUCH RIGHT HAS BEEN IRREVOCABLY WAIVED BY IT HEREUNDER.
EACH BORROWER HEREBY ACKNOWLEDGES THAT IT HAS BEEN NOTIFIED OF THE NATURE OF ALL
OF ITS RIGHTS AND DEFENSES AS A GUARANTOR OR SURETY AND HAS  KNOWINGLY  AND WITH
THE ADVICE OF LEGAL COUNSEL WAIVED SUCH RIGHTS AND DEFENSES AS SET FORTH HEREIN.
EACH OF THE WAIVERS CONTAINED HEREIN WERE SEPARATELY BARGAINED FOR.

INITIALS:  __________   ___________   ___________

        SECTION 10.2.      OBLIGATIONS INDEPENDENT: WAIVERS.
                                        (i)      Each  Borrower  agrees that (i)
                                                 its obligations and liabilities
                                                 under    each   of   the   Loan
                                                 Documents  to  which  it  is  a
                                                 party are joint and several and
                                                 are   independent   of  and  in
                                                 addition to the undertakings of
                                                 any other Borrower  pursuant to
                                                 the  Loan  Documents  to  which
                                                 such other Borrower is a party,
                                                 any Note(s) made and  delivered
                                                 by  such  other   Borrower   in
                                                 connection   therewith  or  any
                                                 other collateral security given
                                                 to  secure  the  same,  (ii)  a
                                                 separate  action may be brought
                                                 to enforce  the  provisions  of
                                                 such Loan Documents whether any
                                                 other  Borrower  is a party  in
                                                 any such  action or not,  (iii)
                                                 Agent may at any time,  or from
                                                 time  to  time,   in  its  sole
                                                 discretion,   (a)   extend   or
                                                 change   the  time  of  payment
                                                 and/or  performance  and/or the
                                                 manner,   place   or  terms  of
                                                 payment  and/or  performance of
                                                 all or  any of the  obligations
                                                 secured 

                                       110
<PAGE>

                                                 by  such  Loan  Documents;  (b)
                                                 exchange,     release    and/or
                                                 surrender  all  or  any  of the
                                                 collateral  security,   or  any
                                                 part  thereof,   by  whomsoever
                                                 deposited,  which is now or may
                                                 hereafter  be held by  Agent in
                                                 connection  with  all or any of
                                                 such   obligations;   (c)  sell
                                                 and/or purchase all or any such
                                                 collateral at public or private
                                                 sale, or at any broker's board,
                                                 in the manner  permitted by law
                                                 and  after  giving  any  notice
                                                 which  may  be  required,   and
                                                 after  deducting  all costs and
                                                 expenses   of  every  kind  for
                                                 collection,  sale or  delivery,
                                                 the net  proceeds  of any  such
                                                 sale may be  applied  by Lender
                                                 upon   all  or   any  of   such
                                                 obligations;  and (d) settle or
                                                 compromise   with  such   other
                                                 Borrower,   and/or   any  other
                                                 person liable thereon,  any and
                                                 all of such obligations, and/or
                                                 subordinate   the   payment  of
                                                 same, or any part  thereof,  to
                                                 the  payment of any other debts
                                                 or  claims,  which  may  at any
                                                 time be due or  owing  to Agent
                                                 and/or  any  other   person  or
                                                 corporation,   and  (iv)  Agent
                                                 shall be under no obligation to
                                                 marshal  any assets in favor of
                                                 any Borrower,  or in payment of
                                                 any or all of such Obligations.

                                        (ii)     Except  as  expressly  required
                                                 herein  or in  the  other  Loan
                                                 Documents, each Borrower hereby
                                                 waives (i) presentment, demand,
                                                 protest,  notice of acceptance,
                                                 notice of  dishonor,  notice of
                                                 nonperformance  and  any  other
                                                 notice  with  respect to any of
                                                 the obligations  secured by any
                                                 of the Loan  Documents to which
                                                 it   is  a   party   and   this
                                                 Agreement,  and  promptness  in
                                                 commencing   suit  against  any
                                                 party    thereto    or   liable
                                                 thereon,  and/or in giving  any
                                                 notice to or  making  any claim
                                                 or  demand  hereunder  upon it,
                                                 (ii) any right to require Agent
                                                 to (a)  proceed  against  other
                                                 Borrower liable with respect to
                                                 such  obligations  (b)  proceed
                                                 against or exhaust any security
                                                 held from such other  Borrower,
                                                 or (c)  pursue  any  remedy  in
                                                 Agent's power whatsoever; (iii)
                                                 any  defense  arising by reason
                                                 of  any   disability  or  other
                                                 defense of such other  Borrower
                                                 or by reason  of the  cessation
                                                 from any  cause  whatsoever  of
                                                 the  liability  of  such  other
                                                 Borrower    other   than   full
                                                 payment  of  such  obligations;
                                                 (iv) any defense it may acquire
                                                 by reason of  Agent's  election
                                                 of any remedy against it or any
                                                 other    Borrower    or   both,
                                                 including,  without limitation,
                                                 any defense which,  absent this
                                                 waiver,  it would have that its
                                                 obligations   and   liabilities
                                                 under  the  Loan  Documents  to
                                                 which  it is a party  could  be
                                                 exonerated  based upon  Agent's
                                                 election to  foreclosure on its
                                                 collateral   by   conducting  a
                                                 non-judicial  foreclosure under
                                                 the  power of sale set forth in
                                                 any   Mortgage    even   though
                                                 certain   of  its   rights  may
                                                 thereby    be    impaired    or
                                                 extinguished  under  applicable
                                                 law     (including,     without
                                                 limitation, the anti-deficiency

                                       111
<PAGE>

                                                 statutes   of  the   State   of
                                                 California and any similar laws
                                                 in any other state); (v) to the
                                                 fullest  extent   permitted  by
                                                 applicable  law, all rights and
                                                 benefits purporting to reduce a
                                                 guarantor  s   obligations   in
                                                 proportion   to  the  principal
                                                 obligation (including,  without
                                                 limitation,  those set forth in
                                                 Section 2809 of the  California
                                                 Civil Code and any  similar law
                                                 in any  other  state);  (vi) to
                                                 the fullest extent permitted by
                                                 law,  all rights  and  benefits
                                                 under  (a)Section  580a  of the
                                                 California    Code   of   Civil
                                                 Procedure,   and/or  any  other
                                                 similar law in any other state,
                                                 purporting  to limit the amount
                                                 of  any   deficiency   judgment
                                                 which   might  be   recoverable
                                                 following  the  occurrence of a
                                                 trustee's  sale under a deed of
                                                 trust,  (b) Section 580b of the
                                                 California    Code   of   Civil
                                                 Procedure   and/or   any  other
                                                 similar  law in any other state
                                                 stating that no deficiency  may
                                                 be recovered on a real property
                                                 purchase money obligation,  (c)
                                                 Section 580d of the  California
                                                 Code of Civil Procedure  and/or
                                                 any  other  similar  law in any
                                                 other  state  stating  that  no
                                                 deficiency  may be recovered on
                                                 a note  secured  by a  deed  of
                                                 trust on real  property in case
                                                 such  real   property  is  sold
                                                 under   the   power   of   sale
                                                 contained   in  such   deed  of
                                                 trust,  and  (d)Section  726 of
                                                 the  California  Code of  Civil
                                                 Procedure   and/or   any  other
                                                 similar  law in any other state
                                                 stating  that  there may be but
                                                 one  form  of   action   on  an
                                                 indebtedness  secured  by  real
                                                 property,  if such sections, or
                                                 any   of    them,    have   any
                                                 application   hereto   or  any'
                                                 application to the  undersigned
                                                 and (vii) to the fullest extent
                                                 permitted   by  law,   (a)  any
                                                 defense  arising as a result of
                                                 Agent's   election,    in   any
                                                 proceeding instituted under the
                                                 Bankruptcy    Code,    of   the
                                                 application   of  Section  1111
                                                 (b)(2) of the Bankruptcy  Code,
                                                 (b) any  defense  based  on any
                                                 borrowing   or   grant   or   a
                                                 security interest under Section
                                                 364 of the Bankruptcy Code, and
                                                 (c)   without    limiting   the
                                                 generality  of the foregoing or
                                                 any other provision hereof, all
                                                 rights and benefits which might
                                                 otherwise  be  available to the
                                                 undersigned   under  California
                                                 Civil Code Sections 2810, 2819,
                                                 2822,  2839,  2845, 2849, 2850,
                                                 2899,  and  3433,   and/or  any
                                                 other  similar law in any other
                                                 state.

                                        (iii)    Each Borrower warrants that (i)
                                                 to the  extent  any of the Loan
                                                 Documents  to  which  it  is  a
                                                 party secure the obligations of
                                                 any  other  Borrower  to Agent,
                                                 such   Loan    Documents   were
                                                 executed  and/or amended at the
                                                 request of such other Borrower,
                                                 (ii)    Agent   has   made   no
                                                 representation  to any Borrower
                                                 as to the  creditworthiness  of
                                                 any other  Borrower,  and (iii)
                                                 it  has  established   adequate
                                                 means of  obtaining  from  each
                                                 other  Borrower on a continuing
                                                 basis   financial   and   other
                                                 information  pertaining to such
                                                 other   Borrower's    financial
                                                 condition. Each Borrower 

                                       112
<PAGE>

                                                 agrees   to   keep   adequately
                                                 informed  from such means as it
                                                 deems appropriate of any facts,
                                                 events or  circumstances  which
                                                 might  in any  way  affect  its
                                                 risks  and  liabilities   under
                                                 such Loan Documents and further
                                                 agrees that  Lender  shall have
                                                 no   further    obligation   to
                                                 disclose to it  information  or
                                                 materials   required   in   the
                                                 course of Agent's  relationship
                                                 with such other Borrower.

                                        (iv)     Borrower    hereby    expressly
                                                 waives  any  right  it may have
                                                 under   California  Civil  Code
                                                 2954.10  or under any other law
                                                 to prepay the Note, in whole or
                                                 in  part,   without  prepayment
                                                 charge,  upon  acceleration  of
                                                 the maturity date of this Note,
                                                 and  agrees  that  if  for  any
                                                 reason,  a prepayment of any or
                                                 all  of  this   Note  is  made,
                                                 whether  voluntarily or upon or
                                                 following any  acceleration  of
                                                 the maturity  date of this Note
                                                 by Agent,  then Borrowers shall
                                                 pay any charge,  fee or penalty
                                                 set forth herein. By initialing
                                                 this  provision  in  the  space
                                                 provided below, Borrower hereby
                                                 declares   that   the   Agent's
                                                 agreement  to make  the Loan at
                                                 the  interest  rate and for the
                                                 term  set  forth  in this  Note
                                                 constitutes            adequate
                                                 consideration, given individual
                                                 weight  by  Borrower,  for this
                                                 waiver and agreement.

                                                    Initials of Borrower: ______

                            (SIGNATURE PAGE FOLLOWS)

                                       113
<PAGE>

                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be duly executed by their duly authorized  representatives,  all as
of the day and year first above written.

                      AGENT AND INITIAL LENDER:
                      SALOMON BROTHERS REALTY CORP., a New York corporation


                      By:  /s/ MARY ANN MEROLA
                           -----------------------------
                      Name:    Mary Ann Merola
                      Title:   Authorized Agent


                      BORROWER:
                      OAIC CALIFORNIA PARTNERSHIP, L.P., a California limited
                      partnership

                      By:  Ocwen California General, Inc., its general partner


                      By:  /s/ JOHN R. BARNES
                           -----------------------------
                      Name:    John R. Barnes
                      Title:   Senior Vice President
                      OAIC CALIFORNIA PARTNERSHIP II, L.P., a California limited
                      partnership

                      By:  Ocwen California General, Inc., its general partner


                      By:  /s/ JOHN R. BARNES
                           -----------------------------
                      Name:    John R. Barnes
                      Title:   Senior Vice President


                      COLLATERAL AGENT:
                      LASALLE  NATIONAL  BANK, a nationally chartered bank (as
                      Collateral Agent for Salomon Brothers Realty Corp. only)


                      By:   THOMAS F. QUINLAN, JR.
                           -----------------------------
                      Name: Thomas F. Quinlan, Jr.
                      Title:Trust Officer

                                       1
<PAGE>

EXHIBITS

The following  exhibits have been omitted from this filing,  but copies  thereof
are available to the Commission upon request:

A        -       Assignment  of  Contracts,   Licenses,   Permits,   Agreements,
                 Warranties and Approvals (Form)
C        -       Deed  of  Trust,  Assignment  of  Leases  and  Rents,  Security
                 Agreement and Fixture Filing (Form)
D        -       Management Agreement
E        -       Manager's  Consent and  Subordination  of Management  Agreement
                 (Form)
F-1      -       Closing Date Opinion of Gibson,  Dunn & Crutcher LLP (corporate
                 matters,  Loan  Document  (other than Florida Deed of Trust and
                 Assignment of Rents and Leases) enforceability)
F-2      -       Closing  Date  Opinion of  In-house  Counsel  to the  Guarantor
                 (corporate matters)
F-3      -       Closing Date Opinion of Jones, Foster,  Johnston & Stubbs, P.A.
                 (Florida  Deed of Trust  and  Assignment  of Rents  and  Leases
                 enforceability)
H        -       Financing Statements (Form)
I        -       Lien Search Jurisdictions
J        -       Assignment of Rents and Leases (Form)
L        -       Pledge Agreement (Form)
N        -       Request for Advance
O        -       Collateral Assignment, Pledge and Security Agreement (Form)
P        -       Collateral Assignment of Mortgage (Form)
Q        -       Collateral Assignment of Assignment of Leases (Form)
R-1      -       Initial Collateral Agent Certification (Form)
R-2      -       Final Collateral Agent Certification (Form)
S        -       Joinder (Form)
T        -       Unilateral Notice of Collateral Assignment of Mortgage Loan
U        -       Request for Release

                                       2
<PAGE>


                                   EXHIBIT B-1


                                   GLOBAL NOTE


$200,000,000                                                      APRIL 30, 1998
                                                              NEW YORK, NEW YORK


                  FOR VALUE  RECEIVED,  OAIC  CALIFORNIA  PARTNERSHIP,  L.P.,  a
California  limited  partnership,  and OAIC  CALIFORNIA  PARTNERSHIP II, L.P., a
California limited partnership (collectively, the "BORROWER"), hereby promise to
pay to the  order of  SALOMON  BROTHERS  REALTY  CORP.,  a New York  corporation
("SALOMON";  Salomon  together  with any  subsequent  holder of this Global Note
being  hereinafter  referred to as the "HOLDER"),  at its principal  office at 7
World Trade Center, 29th Floor, New York, New York 10048, the sum of TWO HUNDRED
MILLION  DOLLARS  ($200,000,000)  (or such portion thereof as may be outstanding
from time to time) in  lawful  money of the  United  States  of  America  and in
immediately  available  funds,  on  the  date  provided  in the  Loan  Agreement
(hereinafter  defined), and to pay interest on the unpaid Principal Indebtedness
(as such term is defined in the Loan Agreement),  at such office,  in like money
and funds,  for the period  commencing on the initial  Advance  Closing Date (as
such term is defined in the Loan  Agreement)  until such Principal  Indebtedness
shall be paid in full,  at the rates per annum and on the dates  provided in the
Loan Agreement.

                  The date and amount of each  Advance  (as such term is defined
in the Loan  Agreement) on each Advance  Closing Date and the date and amount of
each  payment  of  interest,  principal  and  other  amounts  due under the Loan
Documents (as such term is defined in the Loan Agreement),  shall be recorded by
Agent (as such term is  hereinafter  defined) on the  schedule  attached  hereto
PROVIDED that the failure of Agent to make any such recordation shall not affect
the  obligations  of the Borrower to make a payment when due of any amount owing
under the Loan Agreement or hereunder.

                  This Global  Note is the Global  Note  referred to in the Loan
Agreement,  dated as of the date hereof (as  modified  and  supplemented  and in
effect from time to time, the "LOAN AGREEMENT") among the Borrower,  Salomon (as
initial  lender  and as agent for  administration  of the Loan  ("AGENT")),  and
LaSalle  National Bank, as collateral  agent for the Lenders,  and evidences the
Principal Indebtedness loaned thereunder.

                  Reference to the Loan Agreement is hereby made for a statement
of the rights of the Agent and the duties and  obligations of the Borrower,  but
neither this  reference to the Loan  Agreement nor any  provision  thereof shall
affect or impair the obligation of the Borrower to pay the  principal,  interest
and other  amounts,  if any,  payable with respect to this Global Note when due.
Capitalized  terms  used  herein  without  definition  shall  have the  meanings
ascribed to such terms in the Loan Agreement.

                  This Global Note is secured by the Mortgages and certain other
Loan Documents.

                  The principal sum evidenced by this Global Note, together with
accrued  interest  and all other sums or amounts  due  hereunder,  shall  become
immediately  due and payable at the option of the Holder upon the  occurrence of
any Event of Default in accordance with the provisions of the Loan Agreement.

                  With  respect to the amounts due pursuant to this Global Note,
Borrower  hereby waives the  following:  (1) all rights of exemption of property
from levy or sale under  execution or other process for the  collection of debts
under the  Constitution  or laws of the United States or any state thereof;  (2)
demand,  presentment,  protest, notice of dishonor,  notice of nonpayment,  suit
against any party,  diligence in collection  of this Global Note,  

                                       3
<PAGE>

and all other  requirements  necessary to enforce  this Global Note,  except for
notices  required by Governmental  Authorities and notices  required by the Loan
Agreement;  and (3) any further receipt by or  acknowledgement of any Collateral
now or hereafter deposited as security for the Loan.

                  In no event shall the amount of  interest  (and any other sums
or  amounts  that are  deemed to  constitute  interest  under  applicable  Legal
Requirements) due or payable  hereunder  (including  interest  calculated at the
Default Rate) exceed the maximum rate of interest designated by applicable Legal
Requirements  (the  "MAXIMUM  AMOUNT"),   and  in  the  event  such  payment  is
inadvertently paid by the Borrower or inadvertently received by the Holder, then
such excess sum shall be credited as a payment of principal, and if in excess of
such  balance,   shall  be  immediately  returned  to  the  Borrower  upon  such
determination. It is the express intent hereof that the Borrower not pay and the
Holder not receive,  directly or  indirectly,  interest in excess of the Maximum
Amount.

                  The Holder shall not by any act, delay,  omission or otherwise
be deemed to have modified, amended, waived, extended,  discharged or terminated
any  of  its  rights  or  remedies,  and  no  modification,  amendment,  waiver,
extension, discharge or termination of any kind shall be valid unless in writing
and signed by the Holder.  All rights and remedies of the Holder under the terms
of this Global Note and applicable Legal Requirements  shall be cumulative,  and
may be exercised  successively or  concurrently.  Borrower agrees that as of the
date  hereof  there are no  defenses,  equities or setoffs  with  respect to the
obligations set forth herein, and to the extent any such defenses,  equities, or
setoffs may exist, the same are hereby expressly released,  forgiven, waived and
forever discharged.

                  Wherever possible, each provision of this Global Note shall be
interpreted in such manner as to be effective and valid under  applicable  Legal
Requirements, but if any provision of this Global Note shall be prohibited by or
invalid under applicable Legal Requirements, such provision shall be ineffective
to the  extent of such  prohibition  or  invalidity,  without  invalidating  the
remainder of such provision or the remaining provisions of this Global Note.

                  The Holder  may, at its option,  release to the  Borrower  any
Collateral  given to  secure  the  Indebtedness  evidenced  hereby,  and no such
release shall impair the obligations of any Borrower to the Holder.

                  This Global Note was  negotiated in New York,  and made by the
Borrower and  accepted by the Holder in the State of New York,  and the proceeds
of this Global Note were disbursed from New York,  which state the parties agree
has a substantial relationship to the parties and to the underlying transactions
embodied hereby, and in all respects (including,  without limitation, matters of
construction,  validity, performance and maximum permissible rates of interest),
this global note and the obligations arising hereunder shall be governed by, and
construed in accordance  with,  the laws of the State of New York  applicable to
contracts  made and performed in such state and any applicable law of the United
States of America.

                  Any legal suit, action or proceeding against the Holder by the
Borrower  arising out of or relating to this Global Note shall be  instituted in
any federal or state  court in New York,  New York.  Any legal  suit,  action or
proceeding  against the Borrower by the Holder arising out of or related to this
Global Note shall be instituted  in any federal or state court in New York,  New
York  or the  state  where  any  Collateral  is  located.  Borrower  hereby  (i)
irrevocably  waives,  to the fullest  extent  permitted by  applicable  law, any
objection  which it may now or hereafter have to the laying of venue of any such
suit,  action or proceeding  brought in such a court and any claim that any such
proceeding  brought in such a court has been brought in an  inconvenient  forum,
and (ii)  irrevocably  submits to the jurisdiction of any such court in any such
court in any such suit, action or proceeding.

                  BORROWER,  TO THE FULLEST  EXTENT THAT IT MAY  LAWFULLY DO SO,
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING, WITHOUT LIMITATION,
ANY TORT  ACTION),  BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS GLOBAL NOTE
OR THE OTHER LOAN DOCUMENTS.  BORROWER AGREES THAT THE HOLDER MAY FILE A COPY OF
THIS 

                                       4
<PAGE>

WAIVER  WITH  ANY  COURT AS  WRITTEN  EVIDENCE  OF THE  KNOWING,  VOLUNTARY  AND
BARGAINED  AGREEMENT OF THE BORROWER TO IRREVOCABLY  WAIVE ITS RIGHT TO TRIAL BY
JURY, AND THAT, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, ANY DISPUTE OR
CONTROVERSY WHATSOEVER BETWEEN BORROWER AND THE HOLDER SHALL INSTEAD BE TRIED IN
A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

                  The  provisions  of this  Global  Note shall be subject to the
provisions of SECTION 8.24 of the Loan  Agreement,  which  provisions are hereby
incorporated herein by reference as if set forth in full.

                  The  Loan  Agreement  provides  for  the  acceleration  of the
maturity  of this  Global  Note upon the  occurrence  of certain  events and for
prepayment of this Global Note upon the terms and conditions specified therein.

                           [SIGNATURE PAGE TO FOLLOW]

                                       5
<PAGE>



                  IN WITNESS  WHEREOF,  the Borrower has caused this Global Note
to be properly  executed on the date first above written and has authorized this
Global Note to be dated as of the day and year first above written.

                        BORROWER:

                        OAIC CALIFORNIA PARTNERSHIP, L.P.
                        a California limited partnership


                        By: Ocwen California General, Inc.
                              a Delaware corporation,
                              its general partner

                        By: _________________________________
                            Name:
                            Title:


                        OAIC CALIFORNIA PARTNERSHIP II, L.P.
                        a California limited partnership


                        By: Ocwen California General, Inc.
                               a Delaware corporation,
                               its general partner

                        By: _________________________________
                            Name:
                            Title:


                                       6
<PAGE>

                                SCHEDULE OF NOTES


         This Global  Note,  together  with any  Registered  Note  delivered  in
exchange for any portion of this Global Note,  evidences the aggregate principal
amount of the Loan  outstanding  or which may be  outstanding  from time to time
under the Loan  Agreement,  subject to the payments and prepayments of principal
set forth below:


      DATE OF         AMOUNT OF    AMOUNT PAID    AGGREGATE UNPAID   NOTATION
   LOAN ADVANCE     LOAN ADVANCE   OR PREPAID     PRINCIPAL AMOUNT    MADE BY
   ------------     ------------   ----------     ----------------    -------


                                       7
<PAGE>


                                   EXHIBIT B-2


                                       8
<PAGE>


                                    EXHIBIT G

                      GUARANTY OF NON-RECOURSE OBLIGATIONS


                  GUARANTY OF  NON-RECOURSE  OBLIGATIONS  (this  "AGREEMENT"  or
"GUARANTY"), made as of April 30, 1998, between OCWEN PARTNERSHIP,  L.P., having
an address at The Forum, Suite 1000, 1675 Palm Beach Lakes Boulevard,  West Palm
Beach,  Florida 33401  ("GUARANTOR"),  and SALOMON  BROTHERS REALTY CORP., a New
York  corporation,  having an office at Seven World Trade Center,  New York, New
York 10048 ("AGENT").


                              W I T N E S S E T H :


                  WHEREAS,  Agent has  agreed to make a loan to OAIC  CALIFORNIA
PARTNERSHIP,  L.P.,  a  California  limited  partnership,  and  OAIC  CALIFORNIA
PARTNERSHIP  II, L.P.,  a  California  limited  partnership,  (individually  and
collectively,  as the context requires, the "BORROWER"),  in the amount of up to
Two Hundred Million Dollars ($200,000,000) (the "LOAN"); and

                  WHEREAS, to evidence the Loan, Borrower is this day giving its
Global  Note,  dated  the  date  hereof,  in the  maximum  principal  amount  of
$200,000,000 (as modified,  supplemented,  amended, extended, renewed, replaced,
exchanged or  substituted  and in effect from time to time, the "NOTE") to Agent
pursuant to a Loan  Agreement  dated the date hereof,  among the  Borrower,  the
Agent and LaSalle National Bank, as collateral agent (the "LOAN AGREEMENT"); and

                  WHEREAS, Borrower shall, pursuant to the Loan Agreement, grant
to Agent certain Mortgages with respect to the Mortgaged Property (as such terms
are defined in the Loan Agreement) in order to secure the Note; and

                  WHEREAS,  Guarantor  directly  or  indirectly  owns the entire
limited  partnership  interest in each Borrower,  and shall derive a substantial
economic benefit from the making of the Loan by Agent to Borrower; and

                  WHEREAS,  as a condition  precedent to the making of the Loan,
Borrower has agreed to procure and deliver to Agent this Agreement; and

                  WHEREAS,  Agent  has  declined  to make the Loan  unless  this
Agreement is duly executed by Guarantor and delivered to Agent.

                  NOW, THEREFORE, in consideration for, and as an inducement to,
Agent's making the Loan, and for other good and valuable consideration the legal
sufficiency  of  which  and  receipt  thereof  are  hereby   acknowledged,   and
notwithstanding  any provision to the contrary  contained in the Loan Agreement,
the Note,  the  Mortgages  or any of the other Loan  Documents  (as such term is
defined in the Loan Agreement), including without limitation, any "non-recourse"
provision, Agent and Guarantor do hereby agree as follows:

                  1.  Guarantor,  on  behalf of itself  and its  successors  and
assigns  (collectively,  "SUCCESSORS") does hereby absolutely,  unconditionally,
irrevocably and personally: (i) guaranty to Agent payment and performance of all
of the obligations,  representations,  covenants,  warranties and liabilities of
Borrower  under  clauses (2) and (5) of the proviso to Section  8.24 of the Loan
Agreement and (ii) agrees to reimburse  Agent for, and hold Agent  harmless from


                                       9
<PAGE>

and  against,  any and all  losses,  damages,  claims,  expenses,  deficiencies,
liabilities and costs (including, without limitation, reasonable attorneys' fees
and  disbursements)  incurred,   suffered  or  sustained  by  Agent  and/or  its
successors  and assigns as a result of or arising out of, in connection  with or
resulting  from,  the  enforcement  of this  Agreement  against  Guarantor  (the
obligations  of  Guarantor  under  clauses "i" and "ii" above being  referred to
hereinafter, collectively, as "GUARANTOR'S OBLIGATION").

                  2. It is agreed that the  obligations  of Guarantor  hereunder
shall be primary and this Agreement shall be enforceable  against  Guarantor and
its  Successors  without the necessity for any suit or proceeding of any kind or
nature whatsoever brought by Agent against Borrower or its respective successors
or assigns or any other  party or against  any  security  for the payment of the
Guarantor's Obligation and without the necessity of any notice of non-payment or
non-observance or of any notice of acceptance of this Agreement or of any notice
of demand to which  Guarantor might  otherwise be entitled  (including,  without
limitation,  diligence,  presentment,  notice of  maturity,  extension  of time,
protest,  notice  of  dishonor  or  default,  change  in  nature  or form of the
Guarantor's  Obligation,  acceptance  of  further  security,  release of further
security, imposition or agreement arrived at as to the amount of or the terms of
the  Guarantor's  Obligation,  notice of adverse change in Borrower's  financial
condition  and any  other  fact  that  might  materially  increase  the  risk to
Guarantor),  all of which Guarantor  hereby expressly  waives.  Guarantor hereby
expressly  agrees that the validity of this  Agreement  and the  obligations  of
Guarantor  hereunder  shall  in no  way  be  terminated,  affected,  diminished,
modified or impaired by reason of the  assertion  of or the failure to assert by
Agent  against  Borrower,  or its  successors  or assigns,  any of the rights or
remedies reserved to Agent pursuant to the provisions of the Loan Agreement, the
Note, the Mortgages or any other Loan Documents.

                  3. Guarantor waives, and covenants and agrees that it will not
at any time insist  upon,  plead or in any manner  whatsoever  claim or take the
benefit or advantage  of, any and all  appraisal,  valuation,  stay,  extension,
marshalling-of-assets  or  redemption  laws, or right of homestead or exemption,
whether  now or at any time  hereafter  in force,  that may  delay,  prevent  or
otherwise  affect the performance by Guarantor of its obligations  under, or the
enforcement by Agent of, this Agreement.  Guarantor further covenants and agrees
not to set up or claim any defense, counterclaim,  cross-claim, offset, set-off,
right of  recoupment,  or other  objection  of any kind to any  action,  suit or
proceeding in law,  equity or  otherwise,  or to any demand or claim that may be
instituted  or made by Agent  hereunder  other  than the  defense  of the actual
timely performance of Guarantor's  Obligations hereunder.  Guarantor represents,
warrants and agrees  that,  as of the date hereof,  its  obligations  under this
Agreement  are  not  subject  to  any  counterclaims,  cross-claims,  rights  of
recoupment, offsets or affirmative or other defenses of any kind against Agent.

                  4. Guarantor  agrees that any notice or directive given at any
time by Guarantor  to Agent that is  inconsistent  with any waiver  contained in
this Agreement shall be void and may be ignored by Agent, and, in addition,  may
not be pleaded or  introduced  as  evidence in any  litigation  relating to this
Agreement for the reason that such pleading or introduction would be at variance
with the written terms of this Agreement,  unless Agent has specifically  agreed
otherwise  in  a  writing,  signed  by  a  duly  authorized  officer.  Guarantor
specifically  acknowledges  and agrees  that the  foregoing  waivers  are of the
essence  of the Loan  transaction  and  that,  but for this  Agreement  and such
waivers, Agent would not make the Loan to Borrower.

                  5. The  provisions  of this  Agreement  are for the benefit of
Agent and its successors and assigns, and nothing herein contained shall impair,
as between  Borrower  and Agent,  the  obligations  of  Borrower  under the Loan
Agreement, the Note, the Mortgages or any of the other Loan Documents.

                  6. This Agreement  shall be a continuing  guaranty  (until the
full  satisfaction  of  Guarantor's  Obligation)  and the liability of Guarantor
hereunder  shall  in no way  be  terminated,  affected,  modified,  impaired  or
diminished  (to the extent  permitted by law) by reason of the  happening,  from
time to time, of any of the  following,  although  without notice or the further
consent of Guarantor:


                                       10
<PAGE>

                  (a) any  assignment,  amendment,  modification or waiver of or
change in any of the terms,  covenants,  conditions  or  provisions  of the Loan
Agreement,  the Note,  any  Mortgage or any of the other Loan  Documents  or the
invalidity or unenforceability of any of the foregoing; or

                  (b) any  extension  of time  that may be  granted  by Agent to
Borrower, Guarantor or Guarantor's Successors; or

                  (c) any action that Agent or Borrower may take or fail to take
under or in respect of any of the Loan  Documents or by reason of any waiver of,
or  failure  to  enforce  any of the  rights,  remedies,  powers  or  privileges
available to Agent under this Agreement or available to Agent at law,  equity or
otherwise, or any action on the part of Agent or Borrower granting indulgence or
extension in any form whatsoever; or

                  (d) any  dealing,  transaction,   matter  or  thing  occurring
between Agent, Borrower, Guarantor or Guarantor's Successors; or

                  (e) any sale,  exchange,  release, or other disposition of any
property pledged, mortgaged or conveyed, or any property in which Agent has been
granted a lien or security  interest to secure any  indebtedness  of Borrower to
Agent; or

                  (f) any  release  of any person or entity who may be liable in
any manner for the payment  and  collection  of any amounts  owed by Borrower to
Agent; or

                  (g) the  application of any sums by whomsoever paid or however
realized to any amounts owing by Borrower to Agent in such manner as Agent shall
determine in its sole discretion; or

                  (h) any Event of Default  (as such term is defined in the Loan
Agreement), whether or not Agent has exercised any of its rights and remedies as
set forth in the Loan  Agreement or any Mortgage  upon the happening of any such
Event of Default; or

                  (i) Borrower's  and/or  Guarantor's  voluntary or  involuntary
liquidation,  dissolution,  sale of all or substantially all of their respective
assets  and  liabilities,   appointment  of  a  trustee,  receiver,  liquidator,
sequestrator  or  conservator  for all or any part of Borrower's or  Guarantor's
assets,  insolvency,  bankruptcy,  assignment  for  the  benefit  of  creditors,
reorganization, arrangement, composition or readjustment, or the commencement of
other similar  proceedings  affecting Borrower or Guarantor or any of the assets
of either of them, including,  without limitation,  (A) the release or discharge
of Borrower from the payment and performance of its obligations under any of the
Loan  Documents  by  operation  of law,  or (B) the  impairment,  limitation  or
modification  of the  liability of  Borrower,  any of its partners or members or
Guarantor in bankruptcy, or of any remedy for the enforcement of the Guarantor's
Obligation, under any of the Loan Documents, or Guarantor's liability under this
Agreement,  resulting from the operation of any present or future  provisions of
the  Federal  Bankruptcy  Code or other  present  or  future  federal,  state or
applicable statute of law or from the decision in any court; or

                  (j) any change in or termination of the ownership  interest of
Guarantor in [any entity comprising] Borrower (whether direct or indirect); or

                  (k) any conveyance of any Mortgaged  Property,  whether or not
pursuant  to a  foreclosure  sale,  a deed in lieu of  foreclosure,  a  transfer
through bankruptcy, or otherwise; or

                  (l) the addition of any joinder  party to the Loan  Agreement,
the Note, any Mortgage or any other Loan Document under any joinder agreement or
any  increase  or other  change in any  individual  or  aggregate  liability  or
obligation of Borrower under the Loan Agreement,  the Note, any Mortgage, or any
other Loan Document as a result thereof.


                                       11
<PAGE>

                  7. Guarantor  acknowledges  that this Guaranty and Guarantor's
Obligations are and shall (until full  satisfaction  of Guarantor's  Obligation)
continue to be absolute,  unconditional  and  irrevocable  in all respects,  and
shall at all times be valid and enforceable  irrespective of any other agreement
or  circumstances  of any nature  whatsoever that might  otherwise  constitute a
defense  to this  Guaranty  or the  obligations  of any  other  person  or party
(including,  without  limitation,  Borrower or any other guarantor)  relating to
this Guaranty or the obligations of Guarantor hereunder.

                  8. Guarantor agrees that if at any time all or any part of any
payment at any time received by Agent from  Borrower or Guarantor  under or with
respect  to this  Agreement  is or must be  returned  by  Agent  for any  reason
whatsoever  (including,  without  limitation,  the  insolvency,   bankruptcy  or
reorganization of Borrower or Guarantor), then Guarantor's Obligations hereunder
shall,  to the extent of the payment  returned,  be deemed to have  continued in
existence  notwithstanding  such  previous  receipt  by Agent,  and  Guarantor's
Obligations hereunder shall continue to be effective or reinstated,  as the case
may be, as to such returned  payment,  as though such returned  payment to Agent
had never been made.

                  9. Guarantor  (a) shall have no right of  subrogation  against
Borrower  by reason of any  payments  or acts of  performance  by  Guarantor  in
compliance  with the obligations of Guarantor  hereunder;  (b) hereby waives any
right to enforce any remedy that  Guarantor now or hereafter  shall have against
Borrower  by  reason  of any one or more  payments  or  acts of  performance  in
compliance  with  the  obligations  of  Guarantor   hereunder,   to  the  extent
enforcement  of such remedy would impair any right or remedy  available to Agent
under any Loan Document;  (c) shall subordinate any liability or indebtedness of
Borrower now or hereafter held by Guarantor or any affiliate of Guarantor to the
obligations of Borrower under the Loan Documents;  (d) shall not file, assert or
receive payment on any claim, whether now existing or hereafter arising, against
Borrower in the event of the commencement of a case by or against Borrower under
federal or state  insolvency laws; (e) hereby waives the benefit of any right to
participate  in any  security  now or  hereafter  held by Agent;  and (f) hereby
waives any defense based upon the institution or consummation of any judicial or
nonjudicial  foreclosure  proceeding  against Borrower or any other person,  and
acknowledges  that its liability shall not be affected by the fact that any such
proceeding  might  operate under any  antideficiency  (or other) law to limit or
deprive  Guarantor of rights of subrogation  or recovery,  whether or not it had
notice or opportunity to participate in such proceeding.

                  10.Guarantor  represents  and  warrants  to  Agent,  with  the
knowledge that Agent is relying upon the same, as follows:

                           (a)  Guarantor  is solvent and has the legal right to
                  enter into this Agreement and to perform its obligations under
                  the terms hereof;

                           (b)  there  is  no  action,   suit,   proceeding   or
                  investigation  pending or, to  Guarantor's  Actual  Knowledge,
                  threatened  against or affecting  Guarantor at law, in equity,
                  in  admiralty  or before any  arbitrator  or any  governmental
                  department,    commission,    board,    bureau,    agency   or
                  instrumentality (domestic or foreign) that is likely to result
                  in any  material  adverse  change in the  property,  assets or
                  condition  (financial  or  otherwise)  of Guarantor or that is
                  likely  to impair  materially  the  ability  of  Guarantor  to
                  perform its obligations under this Agreement;

                           (c)  all financial  statements  that have  heretofore
                  been  furnished by Guarantor to Agent in connection  with this
                  Agreement,  and all such financial  statements  that hereafter
                  may be furnished to Agent by Guarantor, have been and shall be

                                       12
<PAGE>

                  prepared  by  an  independent   certified  public   accountant
                  approved by Agent in accordance with the Loan Agreement, shall
                  be  consistent  in form  with  prior  statements  and shall be
                  certified  by  Guarantor   (provided  no  default  shall  have
                  occurred and be continuing  under the Loan, in which event any
                  such  statements   shall  be  certified  by  such  independent
                  certified public  accountant);  are and shall be true, correct
                  and  complete;  and do and shall fairly  present the financial
                  condition  of  Guarantor,  all  as  of  the  respective  dates
                  thereof; and

                           (d)  Guarantor   shall  own  the  entire   membership
                  interest in each entity which is a limited  liability  company
                  or the entire  partnership  interest in each entity which is a
                  limited  partnership  which  executes  a  joinder  to any Loan
                  Document.

                  11.  As long as this Agreement shall be outstanding, Guarantor
shall  furnish  to Agent,  within 45 days after the end of each  calendar  year,
Guarantor's  financial statement for such period, in scope and detail reasonably
satisfactory to Agent.

                  12.  Guarantor  and  Agent  acknowledge  and  agree  that this
Agreement is a guaranty of payment and  performance  and not of  collection  and
enforcement in respect of any of the Guarantor's  Obligation.  Nothing contained
in any of the other Loan Documents shall in any event or under any circumstances
modify,  qualify  or affect  the  personal  recourse  obligations  of  Guarantor
hereunder.

                  13.  Agent may freely  assign  any or all of its rights  under
this  Agreement,  but any such  assignment  shall be made in compliance with the
Loan Agreement and no such assignment shall increase Guarantor's  Obligations or
diminish its rights hereunder. In the event of any such assignment,  Agent shall
give Guarantor  prompt notice of same, but the consent of Guarantor shall not be
required  for any such  assignment  and  failure to give such  notice  shall not
affect the validity or enforceability of any such assignment or subject Agent to
any liability and Guarantor  shall  continue to remain bound by and obligated to
perform under and with respect to this Agreement.

                  14.  The   representations,   warranties  and  obligations  of
Guarantor set forth in this Agreement  shall survive until this Agreement  shall
terminate in accordance with the terms hereof.

                  15.  This Agreement  contains the entire agreement between the
parties  hereto with respect to the subject  matter  hereof and  supersedes  all
prior  agreements  relating  to such  subject  matter  and may not be  modified,
amended,  supplemented  or discharged  except by a written  agreement  signed by
Guarantor and Agent.  This Agreement also may be discharged by full  performance
of the  Guarantor's  Obligation  in  accordance  with the  terms  hereof,  or as
otherwise provided herein.

                  16.  If all or any portion of any provision  contained in this
Agreement  shall be determined to be invalid,  illegal or  unenforceable  in any
respect  for any  reason,  such  provision  or portion  thereof  shall be deemed
stricken  and  severed  from this  Agreement  and the  remaining  provision  and
portions thereof shall continue in full force and effect.

                  17.  All notices,  requests,  demands and other communications
under or in  connection  with this  Agreement  shall be in writing  and shall be
deemed to have been given or made for all purposes  when  delivered in person to
the  addresses  set forth below or three (3) business days after same is sent by
registered or certified mail, return receipt requested,  postage prepaid, to the
following addresses:

                                       13
<PAGE>

         If to Guarantor:           The address listed above

         With a copy to:            Gibson, Dunn & Crutcher LLP
                                            Jamboree Center
                                            4 Park Plaza
                                            Irvine, California 92614-8557
                                            Attn:  Karen H. Clark, Esq.

                                            and

         If to Agent:                       The address listed above

         With a copy to:            Latham & Watkins
                                            885 Third Avenue, Suite 1000
                                            New York, New York  10022-4802
                                            Attn:  Brian Krisberg, Esq.

The above  addresses  may be  changed  on written  notice  given as  hereinabove
provided.  Notices  may be  sent  by a  party  hereto  or on its  behalf  by its
attorney.

                  18.  This  Agreement  shall be binding upon  Guarantor and its
Successors  and  shall  inure to the  benefit  of Agent and its  successors  and
assigns.

                  19.  The  failure  of Agent to  enforce  any  right or  remedy
hereunder, or promptly to enforce any such right or remedy, shall not constitute
a waiver  thereof,  nor give rise to any  estoppel  against  Agent,  nor  excuse
Guarantor from its obligations hereunder. Any waiver of any such right or remedy
to be enforceable against Agent must be expressly set forth in writing signed by
Agent.

                  20.  (a) Any suit  initiated by Agent against  Guarantor or in
connection with or arising, directly or indirectly,  out of or relating to, this
Agreement  (an  "ACTION")  may,  at Agent's  option,  be brought in any state or
federal  court in the State of New York  having  jurisdiction  over the  subject
matter hereof.  Guarantor hereby submits himself to the jurisdiction of any such
court and agrees that  service of process  against  Guarantor in any such action
may be effected by any means  permissible under federal law or under the laws of
the state in which such Action is brought.  Guarantor hereby agrees that insofar
as is permitted  under  applicable  law,  this consent to personal  jurisdiction
shall be self-operative and no further instrument or action,  other than service
of process in one of the manners  specified  in this  Guaranty,  or as otherwise
permitted  by law,  shall be  necessary  in order to  confer  jurisdiction  upon
Guarantor.

                       (b)  Guarantor  agrees  that,  provided  that  service of
process is effected upon Guarantor in one of the manners  hereinafter  specified
or as otherwise  permitted by law, Guarantor  irrevocably waives, to the fullest
extent  permitted  by law,  and  agrees not to  assert,  by way of motion,  as a
defense or otherwise, (i) any objection that Guarantor may have or may hereafter
have to the laying of the venue of any Action  brought in any court as  provided
for by this Agreement,  (ii) any claim that any Action brought in any such court
has been brought in an inconvenient  forum, or (iii) any claim that Guarantor is
not personally subject to the jurisdiction of such court. Guarantor agrees that,
provided  that  service of  process is  effected  upon  Guarantor  in one of the
manners  specified in this  Guaranty or as  otherwise  permitted by law, a final
judgment  from which  Guarantor has not appealed or may not appeal in any Action
brought in any such court shall be  conclusive  and binding upon  Guarantor  and
may, so far as permitted under  applicable law, be enforced in the courts of any
state or any federal court or in any other courts to the  jurisdiction  of which
it is subject,  by a suit upon such judgment and that Guarantor shall not assert
any defense, counterclaim or set-off in any such suit upon such judgment.

                                       14
<PAGE>

                       (c)  Guarantor  agrees to  execute,  deliver and file all
such further  instruments or documents as may be necessary under the laws of the
State of New York or the laws of the  United  States in order to make  effective
Guarantor's consent to jurisdiction as provided for in this Guaranty.

                       (d) Guarantor  hereby consents to process being served in
any Action by the mailing of a copy thereof by  registered  or  certified  mail,
postage prepaid,  return receipt requested,  to the notice address for Guarantor
as set forth in this  Guaranty.  Guarantor  hereby  agrees  that  provided  that
service is made in accordance  with this paragraph or as otherwise  permitted by
law, Guarantor  irrevocably  waives, to the fullest extent permitted by law, all
claim of error in connection  with any such service and agrees that such service
(i) shall be deemed in every respect effective service of process upon it in any
Action,  and (ii) shall,  to the fullest  extent  permitted by law, be taken and
held to be valid personal service upon and personal delivery to Guarantor.

                       (e) Nothing in this  Agreement  shall limit Agent's right
to serve  process in any manner  permitted by law or limit  Agent's right or the
right of any of its successors or assigns to bring proceedings against Guarantor
in the courts of any jurisdiction(s).

                       (f) To the extent that  Guarantor  has or  hereafter  may
acquire any immunity  from  jurisdiction  of any court or from any legal process
(whether through service or notice,  attachment  before judgment,  attachment in
aid  of  execution,  execution  or  otherwise)  with  respect  to  Guarantor  or
Guarantor's  property,  Guarantor  hereby  irrevocably  waives such  immunity in
respect of its obligations under this Agreement.

                       (g) As a further inducement to Agent's making of the Loan
to Borrower, and in consideration thereof, Agent and Guarantor each covenant and
agree that in any action or  proceeding  brought on,  under or by virtue of this
Agreement,  Agent and  Guarantor  each shall and do hereby  unconditionally  and
irrevocably waive trial by jury.

                       (h) Guarantor hereby further  covenants and agrees to and
with  Agent  that  Guarantor  may be joined in any action  against  Borrower  in
connection with the Loan Agreement, the Note, the Mortgages, or any of the other
Loan Documents, solely with respect to the subject matter of this Agreement.

                       (i) Guarantor  covenants and agrees to indemnify and save
Agent  harmless  of  and  from,  and  defend  it  against,  all  losses,  costs,
liabilities,  expenses,  damages  or claims  suffered  by reason of  Guarantor's
failure to perform its obligations hereunder.

                  21.  All  of  Agent's  rights  and  remedies  under  the  Loan
Agreement,  the Note,  the Mortgages or any of the other Loan Documents or under
this Agreement are intended to be distinct,  separate and cumulative and no such
right or remedy therein or herein mentioned is intended to be in exclusion of or
a waiver of any other right or remedy available to Agent.

                  22.  Guarantor hereby consents that from time to time,  before
or after any default by Borrower,  with or without  further  notice to or assent
from  Guarantor,  any security at any time held by or available to Agent for any
obligation  of  Borrower,  or any  security at any time held by or  available to
Agent for any  obligation of any other person or party  secondarily or otherwise
liable for all or any  portion of the Loan,  may be  exchanged,  surrendered  or
released and any  obligation of Borrower,  or of any such other person or party,
may be changed, altered, renewed, extended, continued, surrendered, compromised,
waived or released  in whole or in part,  or any default  with  respect  thereto
waived, and Agent may fail to set off and may release,  in whole or in part, any
balance of any deposit  account or credit on its books in favor of Borrower,  or
of any such other person or party,  and may extend  further credit in any manner
whatsoever to Borrower, and generally deal with Borrower or any such security or
other  person or party as Agent may see fit;  and  Guarantor  shall remain bound
under this  Agreement  notwithstanding  any such exchange,  surrender,  release,

                                       15
<PAGE>

change, alteration, renewal, extension, continuance, compromise, waiver, action,
inaction,  extension  of further  credit or other  dealing.  This  Agreement  is
independent of, and in addition to, all collateral granted,  pledged or assigned
under the Loan Documents.

                  23.  The terms of this  Agreement  have been  negotiated,  and
this  Agreement  has been  delivered  in the  State of New  York,  and it is the
intention of the parties hereto that this Agreement be construed and enforced in
accordance with the laws of such State.

                  24.  This Agreement may not be changed orally,  but only by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or discharge is sought.

                  25.  This  Agreement  may be executed in  counterparts,  which
together shall constitute the same instrument.


                            [SIGNATURE PAGE FOLLOWS]

                                       16
<PAGE>


                  IN WITNESS WHEREOF,  Guarantor has executed and delivered this
Guaranty  of  Non-Recourse  Obligations  as of the  date and  year  first  above
written.

                                       GUARANTOR

                                       OCWEN PARTNERSHIP, L.P.,
                                       a Virginia limited partnership,

                                       By:    Ocwen General, Inc.,
                                              its general partner

                                              By:   ____________________________
                                                    Name:
                                                    Title:

                                       17
<PAGE>

                                    EXHIBIT K


                        ENVIRONMENTAL INDEMNITY AGREEMENT


                  THIS  ENVIRONMENTAL  INDEMNITY  AGREEMENT (this  "INDEMNITY"),
dated as of the 30th day of April,  1998,  is made by and among OAIC  CALIFORNIA
PARTNERSHIP,  L.P.,  and OAIC  CALIFORNIA  PARTNERSHIP  II,  L.P.,  a California
limited  partnership,  each having an office at The Forum, Suite 1000, 1675 Palm
Beach  Lakes  Boulevard,  West  Palm  Beach,  Florida  33401  (individually  and
collectively, as the context requires, the "BORROWER"), OCWEN PARTNERSHIP, L.P.,
a Virginia limited  partnership  having an office at The Forum, Suite 1000, 1675
Palm Beach Lakes Boulevard, West Palm Beach, Florida 33401 (the "Guarantor"; the
Guarantor  and  the  Borrower,  collectively,  the  "INDEMNITOR"),  and  SALOMON
BROTHERS  REALTY CORP., a New York  corporation  having an office at Seven World
Trade Center, New York, New York 10048 ("AGENT").

                              W I T N E S S E T H :

                  WHEREAS,  contemporaneously  with the  execution  and delivery
hereof (i) the  Borrower,  as maker,  has  executed and  delivered to Agent,  as
payee, a note, dated the date hereof (the "NOTE"), in the maximum principal face
amount of up to Two Hundred  Million Dollars  ($200,000,000)  in evidence of the
loan being made this day by Agent to the  Borrower in said amount (the  "LOAN"),
and (ii) the Borrower,  as borrower and Agent, as initial lender,  have executed
and delivered that certain Loan Agreement (the "LOAN  AGREEMENT"),  of even date
herewith,  pursuant to which the Loan is being made (capitalized  terms used but
not  defined  herein  shall  have  the  meanings  ascribed  to them in the  Loan
Agreement);

                  WHEREAS, the Loan is secured by the Borrower's interest in and
to the real property (the "PROPERTY") more  particularly  described in EXHIBIT A
attached hereto and made a part hereof;

                  WHEREAS,  the Guarantor owns the entire [limited]  partnership
interest in each Borrower;

                  WHEREAS,  the  Indemnitor  will derive  significant  financial
benefits from the making of the Loan;

                  WHEREAS,  in  order  to  induce  Agent to make the Loan to the
Borrower,  the  Indemnitor  has  agreed  to  indemnify  and hold  Agent  and its
successors  and  assigns  (for  purposes  of  this  Indemnity,  Agent  and  such
successors and assigns being sometimes  referred to collectively  hereinafter as
"AGENT")  harmless  from  and  against  any  and all  Indemnified  Environmental

                                       1
<PAGE>

Liabilities  (as  defined in Section 1 hereof) of any kind or nature  whatsoever
which may be imposed on,  incurred  by, or asserted  against  Agent,  Collateral
Agent and each of their respective parents, subsidiaries, Affiliates, directors,
officers,  employees,  representatives,   agents,  successors  and  assigns  and
attorneys (collectively, the "INDEMNIFIED PARTIES").

                  NOW,  THEREFORE,  in consideration of the premises and the sum
of One Dollar in hand paid by Agent to the  Indemnitor,  receipt and sufficiency
whereof is hereby acknowledged,  the Indemnitor,  intending to be legally bound,
hereby agrees for itself and its successors and assigns as follows:

                  1. The Indemnitor shall indemnify, reimburse, defend, and hold
harmless 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 the  Agent  and  the  Collateral  Agent))  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,  or  the  violation  of  any  applicable  law  by,  any
Indemnified Party and except that any Indemnified Party shall not be indemnified

                                       2
<PAGE>

against  claims  resulting from acts or omissions with respect to the applicable
Property  after the Agent  forecloses  its Lien or  security  interest  upon the
Property  or  accepts  a  deed  in  lieu  of  foreclosure  and  is  a  so-called
"mortgagee-in-possession", unless and to the extent such indemnification relates
to any of the following  which occurred  while the Indemnitor  owned the related
Property (any such demand,  claim,  action, cause of action,  assessment,  loss,
damage,  liability,  cost or expense (including,  without limitation,  interest,
penalties,   reasonable  attorneys'  fees,   disbursements  and  expenses,   and
reasonable consultants' fees, disbursements and expenses) relating to any of the
following, collectively, the "INDEMNIFIED ENVIRONMENTAL LIABILITIES")):

                    (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 the  Indemnitor's  or any
         previous owner's or operator's management,  use, control,  ownership or
         operation of the applicable  Property  (including,  without limitation,
         all on-site and off-site activities  involving  Hazardous  Substances),
         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 the Indemnitor 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  4.1(q) of the Loan Agreement or Article VI of any
         Mortgage.

                  2. The liability of the Indemnitor  hereunder  shall,  without
however limiting the indemnity  provided in the preceding  paragraph,  extend to
and include all costs,  expenses and  attorneys'  fees  incurred or sustained by
Agent  in  making  any   investigation   on  account  of  any  such  Indemnified
Environmental  Liability or in  prosecuting  or defending any action  brought in
connection therewith,  in obtaining or seeking to obtain a release therefrom and
in enforcing any of the agreements herein contained.

                  3. Agent,  upon giving the Indemnitor  thirty (30) days' prior
notice,  shall have the right, in good faith,  to pay, settle or compromise,  or
litigate any  Indemnified  Environmental  Liability  under the belief that it is
liable  therefor,  whether  liable or not,  without  the  consent or approval of
Indemnitor  unless Indemnitor shall protest in writing and  simultaneously  with
such protest deposit with Agent collateral  satisfactory to it sufficient to pay
and satisfy any penalty or interest which may accrue as a result of such protest
with respect to such Indemnified Environmental Liability.

                  4. It  is  agreed  that  the  obligations  of  the  Indemnitor
hereunder  are  primary  and this  Indemnity  shall be  enforceable  against the
Indemnitor,  and its respective successors and assigns without (i) the necessity
for any suit or proceeding of any kind or nature whatsoever  brought by Agent or
any  party  against  any party or  against  any  security  with  respect  to the
Indemnified  Environmental  Liability,  and (ii) the  necessity of any notice of
non-payment or  non-observance  or of any notice of acceptance of this Indemnity
or of any notice or demand to which the Indemnitor  might  otherwise be entitled
(including,  without  limitation,  diligence,  presentment,  notice of maturity,
extension  of time,  change in nature or form of the  Indemnified  Environmental
Liability,  or  acceptance  of further  security,  release of further  security,
imposition  or  agreement  arrived  at as to the  amount  of or the terms of the
Indemnified   Environmental   Liability,   notice  of  adverse   change  in  the
Indemnitor's,  or any other party's financial condition and any other fact which
might  materially  increase  the  risk  to the  Indemnitor),  all of  which  the
Indemnitor hereby expressly waives.  The Indemnitor hereby expressly agrees that
the validity of this Indemnity and the  obligations of the Indemnitor  hereunder
shall in no way be  terminated,  affected,  diminished,  modified or impaired by
reason of the  assertion of or the failure to assert by Agent or any other party
against the  Indemnitor,  or any other  party or its  respective  successors  or
assigns, any of the rights or remedies reserved to Agent, or such other party or
pursuant to the provisions of the Note,  the Mortgages  given to secure the Note
or any other Loan Document or other document or agreement. The Indemnitor agrees
that any notice or  directive  given at any time to Agent which is  inconsistent
with the waiver in the sentence  preceding the  immediately  preceding  sentence
shall be void and may be ignored by Agent, and, in addition,  may not be pleaded
or introduced as evidence in any  litigation  relating to this Indemnity for the

                                       3
<PAGE>

reason that such pleading or introduction  would be at variance with the written
terms of this Indemnity,  unless Agent has  specifically  agreed  otherwise in a
writing,  signed  by a duly  authorized  officer.  The  Indemnitor  specifically
acknowledges  and agrees  that the  foregoing  waivers are of the essence of the
Loan  transaction  and that, but for this Indemnity  Agreement and such waivers,
Agent would decline to make the Loan.

                  5. This Indemnity  shall be a continuing  indemnification  and
the liability of the Indemnitor  hereunder shall,  except as otherwise  provided
herein, in no way be terminated,  affected,  modified, impaired or diminished by
reason of the  happening,  from time to time, of any of the  following,  without
notice or the further consent of the Indemnitor:

                           (a) any assignment, amendment, modification or waiver
                  of or change in any of the  terms,  covenants,  conditions  or
                  provisions of any of the Loan Documents,  or the invalidity or
                  unenforceability of any of the foregoing; or

                           (b) any  extension  of time  that may be  granted  by
                  Agent to the Indemnitor or its successors or assigns; or

                           (c) any action  which  Agent may take or fail to take
                  under or in respect of any of the Loan  Documents  against the
                  Indemnitor  or any other  party  thereto,  or by reason of any
                  waiver of, or failure to enforce any of the rights,  remedies,
                  powers or privileges  available to Agent under this  Indemnity
                  or available to Agent,  or other  parties,  at law,  equity or
                  otherwise,  or any  action  on the part of Agent or any  other
                  parties   granting   indulgence   or  extension  in  any  form
                  whatsoever; or

                           (d) any   dealing,   transaction,   matter  or  thing
                  occurring  between  Agent  and  the  Indemnitor  or any  other
                  parties or their respective successors and assigns; or

                           (e) any sale, exchange, release, or other disposition
                  of any  property  pledged,  mortgaged,  conveyed or  otherwise
                  encumbered  by any of the Loan  Documents,  or any property in
                  which Agent has been  granted a lien or  security  interest to
                  secure any indebtedness of the Indemnitor to Agent; or

                           (f) any  release  of any  person or entity who may be
                  liable in any manner for (i) the payment and collection of any
                  amounts owed by the  Indemnitor to Agent,  or (ii) any matters
                  included within the Indemnified Environmental Liabilities; or

                           (g) the application of any sums by whomsoever paid or
                  howsoever  realized to any amounts owing by the  Indemnitor to
                  Agent in such  manner  as Agent  shall  determine  in its sole
                  discretion; or

                           (h) any Event of Default under the Loan  Agreement or
                  any  Mortgage,  whether or not Agent has  exercised any of its
                  rights and  remedies  as set forth in such  Mortgage  upon the
                  happening of any such Event of Default; or

                           (i) the  Indemnitor's,  its managing  member's or its
                  general  partner's   voluntary  or  involuntary   liquidation,
                  dissolution,  sale  of  all  or  substantially  all  of  their
                  respective  assets and liabilities,  appointment of a trustee,
                  receiver,  liquidator,  sequestrator or conservator for all or
                  any  part  of  any of  their  respective  assets,  insolvency,
                  bankruptcy,   assignment   for  the   benefit  of   creditors,
                  reorganization,  arrangement,  composition or readjustment, or
                  the commencement of other similar proceedings affecting any of
                  the  foregoing or any of the  respective  assets of any of the
                  foregoing,  including,  without limitation, (i) the release or
                  discharge  of  any of  the  foregoing  from  the  payment  and
                  performance of their respective  obligations  under any of the
                  Loan Documents,  by operation of law or otherwise, or (ii) the
                  impairment, limitation or modification of the liability of any
                  of the foregoing in bankruptcy,  or of any remedy  relating to
                  the    Indemnified    Environmental    Liabilities    or   the
                  indemnification contained herein or the Indemnitor's liability

                                       4
<PAGE>

                  under this  Indemnity,  resulting  from the  operation  of any
                  present or future provisions of the Federal Bankruptcy Code or
                  other present or future federal,  state or applicable  statute
                  or law or from the decision in any court; or

                           (j) satisfaction  and payment of the Indebtedness and
                  termination of the Loan Agreement.

                  6. That the failure of Agent to insist upon strict  compliance
with any of the terms hereof shall not be considered to be nor be deemed to be a
waiver of any of such terms nor shall it militate  against the right of Agent to
insist upon strict compliance herewith at any time thereafter.

                  7. That if any provision of this  Indemnity  shall be contrary
to the  laws of the  jurisdiction  in  which  the same  shall  be  sought  to be
enforced,  the illegality or  unenforceability  of any such provision  shall not
affect the other terms,  covenants or conditions  hereof,  and the same shall be
binding  upon the  Indemnitor  with the same  force and  effect  as though  such
illegal or unenforceable provision were not contained herein.

                  8. (a) All notices, demands, requests and other communications
under or in  connection  with this  Indemnity  shall be in writing  and shall be
deemed to have been given or made for all purposes  when  delivered in person to
the  addresses  set forth below or two (2)  business  days after same is sent by
registered or certified  mail,  return receipt  requested:  if to Agent,  at the
address set forth above, to the attention of David Vadon,  and Latham & Watkins,
885 Third  Avenue,  Suite  1000,  New York,  New York  10022,  Attention:  Brian
Krisberg, Esq.; if to the Indemnitor, at the address set forth above, Attention:
Andrew Pellman,  with copies to Gibson,  Dunn & Crutcher LLP, Jamboree Center, 4
Park Plaza, Irvine, California 92614-8557,  Attention:  Karen H. Clark, Esq. The
above addresses may be changed on written notice given as hereinabove provided.

                     (b) This Indemnity  contains the entire  agreement  between
the  parties  hereto  with  respect  to the  terms,  conditions  and  agreements
contained  herein and supersedes all prior  agreements  relating thereto and may
not be  modified,  amended,  supplemented  or  discharged  except  by a  written
agreement signed by the Indemnitor and Agent.

                     (c) THIS  INDEMNITY  SHALL BE GOVERNED BY AND  CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                     (d) This  Indemnity  may  be  executed  in  any  number  of
counterparts, all of which when taken together shall constitute one and the same
instrument  and either of the  parties  hereto may  execute  this  Indemnity  by
signing any such counterpart.

                     (e) TO THE FULLEST  EXTENT  PERMITTED BY LAW THE INDEMNITOR
HEREBY  IRREVOCABLY  WAIVES TRIAL BY JURY IN ANY JUDICIAL  PROCEEDING BROUGHT BY
THE INDEMNITOR OR AGENT INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR IN CONNECTION WITH THIS INDEMNITY.

                     (f) This  Indemnity  shall  inure  to  the  benefit  of the
Indemnified Parties and their successors and assigns and shall be binding on the
Indemnitor and its respective successors and assigns.

                     (g) THE  INDEMNITOR  HEREBY  SUBMITS  TO  THE  NONEXCLUSIVE
JURISDICTION  OF THE UNITED STATES  DISTRICT COURT FOR THE SOUTHERN  DISTRICT OF
NEW  YORK AND OF ANY NEW  YORK  STATE  COURT  SITTING  IN NEW YORK  CITY FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS  ARISING OUT OF OR RELATING TO THIS INDEMNITY,
ANY  OF  THE  OTHER  LOAN  DOCUMENTS  TO  WHICH  IT IS A  PARTY  OR  ANY  OF THE
TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY.  THE INDEMNITOR HEREBY IRREVOCABLY
WAIVES,  TO THE FULLEST EXTENT  PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH  PROCEEDING  BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING  BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.

                     (h) Notwithstanding  anything to the contrary  contained in
this  Indemnity,  Agent shall not have the right to be  indemnified  for its own
fraud, bad faith, gross negligence or willful misconduct.

                     (i) Notwithstanding  anything to the contrary  contained in
this  Indemnity,  the liability of the Persons  described in clauses (i) through
(v) in  SECTION  8.24 of the Loan  Agreement  is subject  to the  limitation  on
liability  provisions of such SECTION 8.24 (which provisions are incorporated by
this reference as if herein set forth in full).


                            [SIGNATURE PAGE FOLLOWS]

                                       5
<PAGE>


                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Indemnity to be duly executed under seal as of the day first above written.

                               INDEMNITOR:

                               OAIC CALIFORNIA PARTNERSHIP, L.P.
                               a California limited partnership

                               By:  Ocwen California General, Inc., a
                                    Delaware corporation, its general partner


                                    By: _________________________________
                                        Name:
                                        Title:

                               OAIC CALIFORNIA PARTNERSHIP II, L.P.
                               a California limited partnership

                               By:  Ocwen California General, Inc., a
                                    Delaware corporation, its general partner
     

                                    By: _________________________________
                                        Name:
                                        Title:

                               OCWEN PARTNERSHIP, L.P.,
                               a Virginia limited partnership,

                               By:  Ocwen General, Inc.,
                                    its general partner


                                    By: ____________________________
                                        Name:
                                        Title:

                               AGENT:

                               SALOMON BROTHERS REALTY CORP.,
                               a New York corporation


                               By:    ______________________________
                                      Name:
                                      Title:


                                       6
<PAGE>

                                    EXHIBIT A

                             DESCRIPTION OF PROPERTY

                                 [see attached]

                                      
<PAGE>

                                    EXHIBIT M




                               GUARANTY OF PAYMENT


                  GUARANTY OF PAYMENT (this  "AGREEMENT"),  made as of April 30,
1998, by and between OCWEN  PARTNERSHIP,  L.P., a Virginia limited  partnership,
having an office at The Forum, Suite 1000, 1675 Palm Beach Lakes Boulevard, West
Palm Beach, Florida 33401 (the "GUARANTOR"),  and SALOMON BROTHERS REALTY CORP.,
a New York corporation,  having an office at Seven World Trade Center, New York,
New York 10048 as agent for the lenders ("AGENT").


                              W I T N E S S E T H :


                  WHEREAS,  Agent has  agreed to make a loan to OAIC  CALIFORNIA
PARTNERSHIP,  L.P.,  a  California  limited  partnership,  and  OAIC  CALIFORNIA
PARTNERSHIP  II,  L.P.,  a  California  limited  partnership  (individually  and
collectively,  as the context requires,  "BORROWER"), in the amount of up to TWO
HUNDRED MILLION DOLLARS ($200,000,000) (the "LOAN"); and

                  WHEREAS, to evidence the Loan, Borrower is this day giving its
Global Note, dated the date hereof, in the maximum principal amount of up to TWO
HUNDRED  MILLION DOLLARS  ($200,000,000)  (as modified,  supplemented,  amended,
extended, renewed, replaced,  exchanged or substituted as in effect from time to
time the "NOTE") to Agent; and

                  WHEREAS,  Borrower,  as borrower,  Agent, as agent and initial
lender,  and LaSalle  National Bank, as collateral  agent, are parties to a Loan
Agreement,  dated as of the date  hereof,  with  respect  to the Loan (said Loan
Agreement,  as modified and  supplemented  and in effect from time to time,  the
"LOAN AGREEMENT";  capitalized terms used but not otherwise defined herein shall
have the respective meanings given to them in the Loan Agreement); and

                  WHEREAS,   Guarantor  owns  the  entire  limited   partnership
interest in each Borrower,  and shall derive a substantial economic benefit from
the making by Agent to Borrower of the Loan; and

                  WHEREAS,  as a condition  precedent to the making of the Loan,
Borrower has agreed to procure and deliver to Agent this Agreement; and

                  WHEREAS,  Agent  has  declined  to make the Loan  unless  this
Agreement is duly executed by Guarantor and delivered to Agent; and

                  NOW, THEREFORE, in consideration for, and as an inducement to,
Agent's making the Loan, and for other good and valuable consideration the legal
sufficiency  of  which  and  receipt  thereof  are  hereby   acknowledged,   and
notwithstanding  any provision to the contrary  contained in the Note,  the Loan
Agreement or any of the other Loan Documents,  including without limitation, any
"non-recourse" provision, Agent and Guarantor do hereby agree as follows:


                                       1
<PAGE>

                  GUARANTOR,  ON BEHALF OF ITSELF AND ITS SUCCESSORS AND ASSIGNS
(COLLECTIVELY,    "SUCCESSORS")   DOES   HEREBY   ABSOLUTELY,   UNCONDITIONALLY,
IRREVOCABLY  AND PERSONALLY:  (i) GUARANTY TO AGENT PAYMENT OF THE  INDEBTEDNESS
PAYABLE  UNDER THE LOAN  DOCUMENTS,  AND (ii) AGREE TO REIMBURSE  AGENT FOR, AND
HOLD AGENT  HARMLESS  FROM AND  AGAINST,  ANY AND ALL LOSSES,  DAMAGES,  CLAIMS,
EXPENSES,  DEFICIENCIES,  LIABILITIES AND COSTS (INCLUDING,  WITHOUT LIMITATION,
ATTORNEYS'  FEES AND  DISBURSEMENTS)  INCURRED,  SUFFERED OR  SUSTAINED BY AGENT
AND/OR  ITS  SUCCESSORS  AND  ASSIGNS  AS A  RESULT  OF OR  ARISING  OUT OF,  IN
CONNECTION  WITH OR RESULTING  FROM, THE  ENFORCEMENT OF THIS AGREEMENT  AGAINST
GUARANTOR (THE  OBLIGATIONS OF GUARANTOR  UNDER CLAUSES "i" AND "ii" ABOVE BEING
REFERRED TO HEREINAFTER, COLLECTIVELY, AS "GUARANTOR'S OBLIGATION").


                  IT IS AGREED THAT THE OBLIGATIONS OF GUARANTOR HEREUNDER SHALL
BE PRIMARY AND THIS  AGREEMENT  SHALL BE ENFORCEABLE  AGAINST  GUARANTOR AND ITS
SUCCESSORS  WITHOUT  THE  NECESSITY  FOR ANY SUIT OR  PROCEEDING  OF ANY KIND OR
NATURE WHATSOEVER BROUGHT BY AGENT AGAINST BORROWER OR ITS RESPECTIVE SUCCESSORS
OR ASSIGNS OR ANY OTHER  PARTY OR AGAINST  ANY  SECURITY  FOR THE PAYMENT OF THE
GUARANTOR'S OBLIGATION AND WITHOUT THE NECESSITY OF ANY NOTICE OF NON-PAYMENT OR
NON-OBSERVANCE OR OF ANY NOTICE OF ACCEPTANCE OF THIS AGREEMENT OR OF ANY NOTICE
OF DEMAND TO WHICH  GUARANTOR MIGHT  OTHERWISE BE ENTITLED  (INCLUDING,  WITHOUT
LIMITATION,  DILIGENCE,  PRESENTMENT,  NOTICE OF  MATURITY,  EXTENSION  OF TIME,
PROTEST,  NOTICE  OF  DISHONOR  OR  DEFAULT,  CHANGE  IN  NATURE  OR FORM OF THE
GUARANTOR'S  OBLIGATION,  ACCEPTANCE  OF  FURTHER  SECURITY,  RELEASE OF FURTHER
SECURITY, IMPOSITION OR AGREEMENT ARRIVED AT AS TO THE AMOUNT OF OR THE TERMS OF
THE  GUARANTOR'S  OBLIGATION,  NOTICE OF ADVERSE CHANGE IN BORROWER'S  FINANCIAL
CONDITION  AND ANY  OTHER  FACT  THAT  MIGHT  MATERIALLY  INCREASE  THE  RISK TO
GUARANTOR),  ALL OF WHICH GUARANTOR  HEREBY EXPRESSLY  WAIVES.  GUARANTOR HEREBY
EXPRESSLY  AGREES THAT THE VALIDITY OF THIS  AGREEMENT  AND THE  OBLIGATIONS  OF
GUARANTOR  HEREUNDER  SHALL  IN NO  WAY  BE  TERMINATED,  AFFECTED,  DIMINISHED,
MODIFIED OR IMPAIRED BY REASON OF THE  ASSERTION  OF OR THE FAILURE TO ASSERT BY
AGENT  AGAINST  BORROWER,  OR ITS  SUCCESSORS  OR ASSIGNS,  ANY OF THE RIGHTS OR
REMEDIES  RESERVED TO AGENT  PURSUANT TO THE PROVISIONS OF THIS  AGREEMENT,  THE
LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENTS.


                  GUARANTOR WAIVES, AND COVENANTS AND AGREES THAT IT WILL NOT AT
ANY TIME  INSIST  UPON,  PLEAD  OR IN ANY  MANNER  WHATSOEVER  CLAIM OR TAKE THE
BENEFIT OR ADVANTAGE  OF, ANY AND ALL  APPRAISAL,  VALUATION,  STAY,  EXTENSION,
MARSHALLING-OF-ASSETS  OR  REDEMPTION  LAWS, OR RIGHT OF HOMESTEAD OR EXEMPTION,
WHETHER  NOW OR AT ANY TIME  HEREAFTER  IN FORCE,  THAT MAY  DELAY,  PREVENT  OR
OTHERWISE  AFFECT THE PERFORMANCE BY GUARANTOR OF ITS OBLIGATIONS  UNDER, OR THE
ENFORCEMENT BY AGENT OF, THIS AGREEMENT.  GUARANTOR FURTHER COVENANTS AND AGREES
NOT TO SET UP OR CLAIM ANY DEFENSE, COUNTERCLAIM,  CROSS-CLAIM, OFFSET, SET-OFF,
RIGHT OF  RECOUPMENT,  OR OTHER  OBJECTION  OF ANY KIND TO ANY  ACTION,  SUIT OR
PROCEEDING IN LAW,  EQUITY OR  OTHERWISE,  OR TO ANY DEMAND OR CLAIM THAT MAY BE
INSTITUTED  OR MADE BY AGENT  HEREUNDER  OTHER  THAN THE  DEFENSE  OF THE ACTUAL
TIMELY PERFORMANCE OF GUARANTOR'S  OBLIGATIONS HEREUNDER.  GUARANTOR REPRESENTS,
WARRANTS AND AGREES  THAT,  AS OF THE DATE HEREOF,  ITS  OBLIGATIONS  UNDER THIS
AGREEMENT  ARE  NOT  SUBJECT  TO  ANY  COUNTERCLAIMS,  CROSS-CLAIMS,  RIGHTS  OF
RECOUPMENT, OFFSETS OR AFFIRMATIVE OR OTHER DEFENSES OF ANY KIND AGAINST AGENT.


                  GUARANTOR  AGREES  THAT ANY NOTICE OR  DIRECTIVE  GIVEN AT ANY
TIME BY GUARANTOR  TO AGENT THAT IS  INCONSISTENT  WITH ANY WAIVER  CONTAINED IN
THIS AGREEMENT SHALL BE VOID AND MAY BE IGNORED BY AGENT, AND, IN ADDITION,  MAY
NOT BE PLEADED OR  INTRODUCED  AS  EVIDENCE IN ANY  LITIGATION  RELATING TO THIS
AGREEMENT FOR THE REASON THAT SUCH PLEADING OR INTRODUCTION WOULD BE AT VARIANCE
WITH THE WRITTEN TERMS OF THIS AGREEMENT,  UNLESS AGENT HAS SPECIFICALLY  AGREED
OTHERWISE  IN  A  WRITING,  SIGNED  BY  A  DULY  AUTHORIZED  OFFICER.  GUARANTOR
SPECIFICALLY  ACKNOWLEDGES  AND AGREES  THAT THE  FOREGOING  WAIVERS  ARE OF THE
ESSENCE  OF THE LOAN  TRANSACTION  AND  THAT,  BUT FOR THIS  AGREEMENT  AND SUCH
WAIVERS, AGENT WOULD NOT MAKE THE LOAN TO BORROWER.

                                       2
<PAGE>

                  THE  PROVISIONS OF THIS AGREEMENT ARE FOR THE BENEFIT OF AGENT
AND ITS SUCCESSORS AND ASSIGNS,  AND NOTHING HEREIN  CONTAINED SHALL IMPAIR,  AS
BETWEEN BORROWER AND AGENT, THE OBLIGATIONS OF BORROWER UNDER THE NOTE, THE LOAN
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.


                  THIS AGREEMENT SHALL BE A CONTINUING  GUARANTY (UNTIL THE FULL
SATISFACTION OF GUARANTOR'S OBLIGATION) AND THE LIABILITY OF GUARANTOR HEREUNDER
SHALL IN NO WAY BE TERMINATED,  AFFECTED,  MODIFIED,  IMPAIRED OR DIMINISHED (TO
THE EXTENT  PERMITTED BY LAW) BY REASON OF THE HAPPENING,  FROM TIME TO TIME, OF
ANY OF  THE  FOLLOWING,  ALTHOUGH  WITHOUT  NOTICE  OR THE  FURTHER  CONSENT  OF
GUARANTOR:


          ANY ASSIGNMENT,  AMENDMENT, MODIFICATION OR WAIVER OF OR CHANGE IN ANY
OF THE  TERMS,  COVENANTS,  CONDITIONS  OR  PROVISIONS  OF THE  NOTE,  THE  LOAN
AGREEMENT   OR  ANY  OF  THE  OTHER  LOAN   DOCUMENTS  OR  THE   INVALIDITY   OR
UNENFORCEABILITY OF ANY OF THE FOREGOING; OR


          ANY  EXTENSION  OF TIME  THAT MAY BE  GRANTED  BY  AGENT TO  BORROWER,
GUARANTOR  OR  THEIR  RESPECTIVE  SUCCESSORS  OR  ASSIGNS,   HEIRS,   EXECUTORS,
ADMINISTRATORS OR PERSONAL REPRESENTATIVES; OR


          ANY ACTION THAT AGENT OR BORROWER MAY TAKE OR FAIL TO TAKE UNDER OR IN
RESPECT OF ANY OF THE LOAN  DOCUMENTS  OR BY REASON OF ANY WAIVER OF, OR FAILURE
TO ENFORCE ANY OF THE RIGHTS, REMEDIES,  POWERS OR PRIVILEGES AVAILABLE TO AGENT
UNDER THIS AGREEMENT OR AVAILABLE TO AGENT AT LAW,  EQUITY OR OTHERWISE,  OR ANY
ACTION ON THE PART OF AGENT OR BORROWER GRANTING  INDULGENCE OR EXTENSION IN ANY
FORM WHATSOEVER; OR


          ANY DEALING,  TRANSACTION,  MATTER OR THING  OCCURRING  BETWEEN AGENT,
BORROWER, GUARANTOR OR THEIR RESPECTIVE SUCCESSORS AND ASSIGNS; OR


          ANY SALE,  EXCHANGE,  RELEASE,  OR OTHER  DISPOSITION  OF ANY PROPERTY
PLEDGED,  MORTGAGED OR CONVEYED, OR ANY PROPERTY IN WHICH AGENT HAS BEEN GRANTED
A LIEN OR SECURITY INTEREST TO SECURE ANY INDEBTEDNESS OF BORROWER TO AGENT; OR


          ANY  RELEASE  OF ANY  PERSON OR ENTITY WHO MAY BE LIABLE IN ANY MANNER
FOR THE PAYMENT AND COLLECTION OF ANY AMOUNTS OWED BY BORROWER TO AGENT; OR


          THE APPLICATION OF ANY SUMS BY WHOMSOEVER PAID OR HOWEVER  REALIZED TO
ANY AMOUNTS  OWING BY BORROWER TO AGENT IN SUCH MANNER AS AGENT SHALL  DETERMINE
IN ITS SOLE DISCRETION; OR


          ANY EVENT OF DEFAULT,  WHETHER OR NOT AGENT HAS  EXERCISED  ANY OF ITS
RIGHTS AND REMEDIES AS SET FORTH IN THE LOAN AGREEMENT UPON THE HAPPENING OF ANY
SUCH EVENT OF DEFAULT; OR


          BORROWER'S AND/OR  GUARANTOR'S  VOLUNTARY OR INVOLUNTARY  LIQUIDATION,
DISSOLUTION,  SALE OF ALL OR SUBSTANTIALLY  ALL OF THEIR  RESPECTIVE  ASSETS AND
LIABILITIES,  APPOINTMENT OF A TRUSTEE,  RECEIVER,  LIQUIDATOR,  SEQUESTRATOR OR
CONSERVATOR FOR ALL OR ANY PART OF BORROWER'S OR GUARANTOR'S ASSETS, INSOLVENCY,
BANKRUPTCY,   ASSIGNMENT   FOR  THE   BENEFIT  OF   CREDITORS,   REORGANIZATION,


                                       3
<PAGE>

ARRANGEMENT,  COMPOSITION OR READJUSTMENT,  OR THE COMMENCEMENT OF OTHER SIMILAR
PROCEEDINGS  AFFECTING  BORROWER OR  GUARANTOR OR ANY OF THE ASSETS OF EITHER OF
THEM,  INCLUDING,  WITHOUT LIMITATION,  (A) THE RELEASE OR DISCHARGE OF BORROWER
FROM THE  PAYMENT  AND  PERFORMANCE  OF ITS  OBLIGATIONS  UNDER  ANY OF THE LOAN
DOCUMENTS BY OPERATION OF LAW, OR (B) THE IMPAIRMENT, LIMITATION OR MODIFICATION
OF THE  LIABILITY  OF  BORROWER,  ANY OF ITS PARTNERS OR MEMBERS OR GUARANTOR IN
BANKRUPTCY,  OR OF ANY REMEDY FOR THE ENFORCEMENT OF THE GUARANTOR'S OBLIGATION,
UNDER ANY OF THE LOAN DOCUMENTS,  OR GUARANTOR'S LIABILITY UNDER THIS AGREEMENT,
RESULTING FROM THE OPERATION OF ANY PRESENT OR FUTURE  PROVISIONS OF THE FEDERAL
BANKRUPTCY CODE OR OTHER PRESENT OR FUTURE FEDERAL,  STATE OR APPLICABLE STATUTE
OF LAW OR FROM THE DECISION IN ANY COURT; OR


          ANY CHANGE IN OR TERMINATION OF THE OWNERSHIP INTEREST OF GUARANTOR IN
BORROWER (WHETHER DIRECT OR INDIRECT); OR


          ANY CONVEYANCE OF ANY MORTGAGED PROPERTY, WHETHER OR NOT PURSUANT TO A
FORECLOSURE SALE, A DEED IN LIEU OF FORECLOSURE,  A TRANSFER THROUGH BANKRUPTCY,
OR OTHERWISE; OR


          THE ADDITION OF ANY JOINDER PARTY TO THE LOAN AGREEMENT, THE NOTE, ANY
MORTGAGE OR ANY OTHER LOAN DOCUMENT UNDER ANY JOINDER  AGREEMENT OR ANY INCREASE
OR OTHER CHANGE IN ANY  INDIVIDUAL  OR  AGGREGATE  LIABILITY  OR  OBLIGATION  OF
BORROWER UNDER THE LOAN  AGREEMENT,  THE NOTE,  ANY MORTGAGE,  OR ANY OTHER LOAN
DOCUMENT.


                           GUARANTOR   ACKNOWLEDGES   THAT  THIS  AGREEMENT  AND
GUARANTOR'S OBLIGATIONS UNDER THIS AGREEMENT ARE AND SHALL AT ALL TIMES CONTINUE
TO BE ABSOLUTE,  UNCONDITIONAL AND IRREVOCABLE IN ALL RESPECTS, AND SHALL (UNTIL
FULL   SATISFACTION   OF  GUARANTOR'S   OBLIGATION)  BE  VALID  AND  ENFORCEABLE
IRRESPECTIVE OF ANY OTHER AGREEMENT OR  CIRCUMSTANCES  OF ANY NATURE  WHATSOEVER
THAT MIGHT  OTHERWISE  CONSTITUTE A DEFENSE TO THIS AGREEMENT OR THE OBLIGATIONS
OF ANY OTHER PERSON OR PARTY  (INCLUDING,  WITHOUT  LIMITATION,  BORROWER OR ANY
OTHER  GUARANTOR)  RELATING TO THIS  AGREEMENT OR THE  OBLIGATIONS  OF GUARANTOR
HEREUNDER.


                           GUARANTOR  AGREES THAT IF AT ANY TIME ALL OR ANY PART
OF ANY PAYMENT AT ANY TIME RECEIVED BY AGENT FROM BORROWER OR GUARANTOR UNDER OR
WITH  RESPECT TO THIS  AGREEMENT  IS OR MUST BE RETURNED BY AGENT FOR ANY REASON
WHATSOEVER  (INCLUDING,  WITHOUT  LIMITATION,  THE  INSOLVENCY,   BANKRUPTCY  OR
REORGANIZATION OF BORROWER OR GUARANTOR), THEN GUARANTOR'S OBLIGATIONS HEREUNDER
SHALL,  TO THE EXTENT OF THE PAYMENT  RETURNED,  BE DEEMED TO HAVE  CONTINUED IN
EXISTENCE  NOTWITHSTANDING  SUCH  PREVIOUS  RECEIPT  BY AGENT,  AND  GUARANTOR'S
OBLIGATIONS HEREUNDER SHALL CONTINUE TO BE EFFECTIVE OR REINSTATED,  AS THE CASE
MAY BE, AS TO SUCH RETURNED  PAYMENT,  AS THOUGH SUCH RETURNED  PAYMENT TO AGENT
HAD NEVER BEEN MADE.


                           GUARANTOR  (a)  SHALL  HAVE NO RIGHT  OF  SUBROGATION
AGAINST  BORROWER BY REASON OF ANY PAYMENTS OR ACTS OF  PERFORMANCE BY GUARANTOR
IN COMPLIANCE WITH THE OBLIGATIONS OF GUARANTOR HEREUNDER;  (b) HEREBY WAIVE ANY
RIGHT TO ENFORCE ANY REMEDY THAT  GUARANTOR NOW OR HEREAFTER  SHALL HAVE AGAINST
BORROWER  BY  REASON  OF ANY ONE OR MORE  PAYMENTS  OR  ACTS OF  PERFORMANCE  IN
COMPLIANCE  WITH  THE  OBLIGATIONS  OF  GUARANTOR   HEREUNDER,   TO  THE  EXTENT
ENFORCEMENT  OF SUCH REMEDY WOULD IMPAIR ANY RIGHT OR REMEDY  AVAILABLE TO AGENT
UNDER ANY LOAN DOCUMENT;  (c) SHALL SUBORDINATE ANY LIABILITY OR INDEBTEDNESS OF
BORROWER NOW OR HEREAFTER HELD BY GUARANTOR OR ANY AFFILIATE OF GUARANTOR TO THE
OBLIGATIONS OF BORROWER UNDER THE LOAN DOCUMENTS;  (d) SHALL NOT FILE, ASSERT OR
RECEIVE PAYMENT ON ANY CLAIM, WHETHER NOW EXISTING OR HEREAFTER ARISING, AGAINST

                                       4
<PAGE>

BORROWER IN THE EVENT OF THE COMMENCEMENT OF A CASE BY OR AGAINST BORROWER UNDER
FEDERAL OR STATE  INSOLVENCY LAWS; (e) HEREBY WAIVES THE BENEFIT OF ANY RIGHT TO
PARTICIPATE  IN ANY  SECURITY  NOW OR  HEREAFTER  HELD BY AGENT;  AND (f) HEREBY
WAIVES ANY DEFENSE BASED UPON THE INSTITUTION OR CONSUMMATION OF ANY JUDICIAL OR
NONJUDICIAL  FORECLOSURE  PROCEEDING  AGAINST BORROWER OR ANY OTHER PERSON,  AND
ACKNOWLEDGES  THAT ITS LIABILITY SHALL NOT BE AFFECTED BY THE FACT THAT ANY SUCH
PROCEEDING  MIGHT  OPERATE UNDER ANY  ANTIDEFICIENCY  (OR OTHER) LAW TO LIMIT OR
DEPRIVE  GUARANTOR OF RIGHTS OF SUBROGATION  OR RECOVERY,  WHETHER OR NOT IT HAD
NOTICE OR OPPORTUNITY TO PARTICIPATE IN SUCH PROCEEDING.


                           GUARANTOR  REPRESENTS AND WARRANTS TO AGENT, WITH THE
KNOWLEDGE THAT AGENT IS RELYING UPON THE SAME, AS FOLLOWS:


                             GUARANTOR  IS SOLVENT  AND HAS FULL POWER AND LEGAL
                  RIGHT  AND  AUTHORITY  TO ENTER  INTO  THIS  AGREEMENT  AND TO
                  PERFORM ITS OBLIGATIONS UNDER THE TERMS HEREOF;


                             THERE   IS   NO   ACTION,   SUIT,   PROCEEDING   OR
                  INVESTIGATION  PENDING OR, TO  GUARANTOR'S  ACTUAL  KNOWLEDGE,
                  THREATENED  AGAINST OR AFFECTING  GUARANTOR AT LAW, IN EQUITY,
                  IN  ADMIRALTY  OR BEFORE ANY  ARBITRATOR  OR ANY  GOVERNMENTAL
                  DEPARTMENT,    COMMISSION,    BOARD,    BUREAU,    AGENCY   OR
                  INSTRUMENTALITY (DOMESTIC OR FOREIGN) THAT IS LIKELY TO RESULT
                  IN ANY  MATERIAL  ADVERSE  CHANGE IN THE  PROPERTY,  ASSETS OR
                  CONDITION  (FINANCIAL  OR  OTHERWISE)  OF GUARANTOR OR THAT IS
                  LIKELY  TO IMPAIR  MATERIALLY  THE  ABILITY  OF  GUARANTOR  TO
                  PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT; AND


                             ALL FINANCIAL  STATEMENTS THAT HAVE HERETOFORE BEEN
                  FURNISHED  BY  GUARANTOR  TO AGENT  IN  CONNECTION  WITH  THIS
                  AGREEMENT,  AND ALL SUCH FINANCIAL  STATEMENTS  THAT HEREAFTER
                  MAY BE FURNISHED TO AGENT BY GUARANTOR, HAVE BEEN AND SHALL BE
                  AUDITED  BY  AN  INDEPENDENT   CERTIFIED   PUBLIC   ACCOUNTANT
                  ACCEPTABLE  TO  AGENT IN  ACCORDANCE  WITH  GAAP  CONSISTENTLY
                  APPLIED  AND SHALL BE  CERTIFIED  BY  GUARANTOR  (PROVIDED  NO
                  DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING  UNDER THE LOAN,
                  IN WHICH EVENT ANY SUCH STATEMENTS  SHALL BE CERTIFIED BY SUCH
                  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANT);  ARE AND SHALL BE
                  TRUE,  CORRECT AND COMPLETE;  AND DO AND SHALL FAIRLY  PRESENT
                  THE FINANCIAL CONDITION OF GUARANTOR, ALL AS OF THE RESPECTIVE
                  DATES THEREOF; AND

                           (d)  Guarantor   shall  own  the  entire   membership
                  interest in each entity that is a limited liability company or
                  the entire limited partnership interest in each entity that is
                  a limited  partnership  which  executes  a joinder to any Loan
                  Document.

                                       5
<PAGE>

                           UNTIL   THE   FULL    SATISFACTION   OF   GUARANTOR'S
OBLIGATIONS, GUARANTOR SHALL MAINTAIN (a) A MAXIMUM LEVERAGE RATIO OF NO GREATER
THAN 5 TO 1 AND (b) A TANGIBLE NET WORTH OF NO LESS THAN $200  MILLION,  IN EACH
CASE AS  MEASURED  AT THE  END OF EACH  CALENDAR  QUARTER.  GUARANTOR'S  MAXIMUM
LEVERAGE  RATIO AND TANGIBLE NET WORTH SHALL BE  DETERMINED  BY REFERENCE TO THE
DEFINITIONS SET FORTH IN EXHIBIT A HERETO.


                           AS LONG  AS  THIS  AGREEMENT  SHALL  BE  OUTSTANDING,
GUARANTOR  SHALL FURNISH TO AGENT (i) COPIES OF ALL FILINGS WITH THE  SECURITIES
AND EXCHANGE  COMMISSION  ("SEC") BY THE GUARANTOR AND (ii) COPIES OF ITS ANNUAL
REPORTS AND QUARTERLY  REPORTS  WITHIN 30 DAYS  FOLLOWING EACH DATE ON WHICH THE
GUARANTOR IS (OR WOULD HAVE BEEN, IN THE EVENT GUARANTOR CEASES TO BE SUBJECT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED) REQUIRED
TO FILE WITH THE SEC.


                           GUARANTOR AND AGENT  ACKNOWLEDGE  AND AGREE THAT THIS
AGREEMENT  IS A GUARANTY OF PAYMENT AND NOT OF  COLLECTION  AND  ENFORCEMENT  IN
RESPECT OF ANY OF THE GUARANTOR'S  OBLIGATIONS.  NOTHING CONTAINED IN ANY OF THE
OTHER  LOAN  DOCUMENTS  SHALL IN ANY  EVENT OR UNDER ANY  CIRCUMSTANCES  MODIFY,
QUALIFY OR AFFECT THE PERSONAL RECOURSE OBLIGATIONS OF GUARANTOR HEREUNDER.


                           AGENT  MAY  FREELY  ASSIGN  ANY OR ALL OF ITS  RIGHTS
UNDER THIS AGREEMENT,  BUT ANY SUCH ASSIGNMENT  SHALL BE MADE IN COMPLIANCE WITH
THE LOAN AGREEMENT AND NO SUCH ASSIGNMENT SHALL INCREASE GUARANTOR'S OBLIGATIONS
OR DIMINISH ITS RIGHTS  HEREUNDER.  IN THE EVENT OF ANY SUCH  ASSIGNMENT,  AGENT
SHALL GIVE GUARANTOR  PROMPT NOTICE OF SAME, BUT THE CONSENT OF GUARANTOR  SHALL
NOT BE REQUIRED  FOR ANY SUCH  ASSIGNMENT  AND FAILURE TO GIVE SUCH NOTICE SHALL
NOT AFFECT THE  VALIDITY OR  ENFORCEABILITY  OF ANY SUCH  ASSIGNMENT  OR SUBJECT
AGENT TO ANY  LIABILITY  AND  GUARANTOR  SHALL  CONTINUE TO REMAIN  BOUND BY AND
OBLIGATED TO PERFORM UNDER AND WITH RESPECT TO THIS  AGREEMENT.  GUARANTOR SHALL
NOT ASSIGN ANY OR ALL OF ITS RIGHTS UNDER THIS AGREEMENT.


                           THE  REPRESENTATIONS,  WARRANTIES AND  OBLIGATIONS OF
GUARANTOR SET FORTH IN THIS AGREEMENT  SHALL SURVIVE UNTIL THIS AGREEMENT  SHALL
TERMINATE IN ACCORDANCE WITH THE TERMS HEREOF.


                           THIS AGREEMENT  CONTAINS THE ENTIRE AGREEMENT BETWEEN
THE PARTIES  HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL
PRIOR  AGREEMENTS  RELATING  TO SUCH  SUBJECT  MATTER  AND MAY NOT BE  MODIFIED,
AMENDED,  SUPPLEMENTED  OR DISCHARGED  EXCEPT BY A WRITTEN  AGREEMENT  SIGNED BY
GUARANTOR AND AGENT.  THIS AGREEMENT ALSO MAY BE DISCHARGED BY FULL  PERFORMANCE
OF THE  GUARANTOR'S  OBLIGATION  IN  ACCORDANCE  WITH THE  TERMS  HEREOF,  OR AS
OTHERWISE PROVIDED HEREIN.


                           IF ALL OR ANY PORTION OF ANY  PROVISION  CONTAINED IN
THIS AGREEMENT SHALL BE DETERMINED TO BE INVALID,  ILLEGAL OR  UNENFORCEABLE  IN
ANY RESPECT FOR ANY REASON,  SUCH  PROVISION OR PORTION  THEREOF SHALL BE DEEMED
STRICKEN  AND  SEVERED  FROM THIS  AGREEMENT  AND THE  REMAINING  PROVISION  AND
PORTIONS THEREOF SHALL CONTINUE IN FULL FORCE AND EFFECT.


                    ALL  NOTICES,  REQUESTS,  DEMANDS  AND OTHER  COMMUNICATIONS
UNDER OR IN  CONNECTION  WITH THIS  AGREEMENT  SHALL BE IN WRITING  AND SHALL BE
DEEMED TO HAVE BEEN GIVEN OR MADE FOR ALL PURPOSES  WHEN  DELIVERED IN PERSON TO
THE  ADDRESSES  SET FORTH BELOW OR THREE (3) BUSINESS DAYS AFTER SAME IS SENT BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,  POSTAGE PREPAID, TO THE
FOLLOWING ADDRESSES:


                                       6
<PAGE>

      If to Guarantor:                          Ocwen Partnership, L.P.
               The Forum, Suite 1000
               1675 Palm Beach Lakes Boulevard
               West Palm Beach, Florida  33401
               Attn:  Andrew Pellman

      With a copy to:                           Gibson, Dunn & Crutcher LLP
                                                   Jamboree Center
                                                   4 Park Plaza
                                                   Irvine, California 92614-8557
                                                   Attn:  Karen H. Clark, Esq.

      If to Agent:                              Salomon Brothers Realty Corp,
               Seven World Trade Center
               New York, New York  10048
               Attn:  David Vadon

      With a copy to:                           Latham & Watkins
               885 Third Avenue, Suite 1000
               New York, New York  10022-4802
               Attn:  Brian Krisberg, Esq.

The above  addresses  may be  changed  on written  notice  given as  hereinabove
provided.  Notices  may be  sent  by a  party  hereto  or on its  behalf  by its
attorney.


                       THIS  AGREEMENT  SHALL BE BINDING UPON  GUARANTOR AND ITS
SUCCESSORS  AND  SHALL  INURE TO THE  BENEFIT  OF AGENT AND ITS  SUCCESSORS  AND
ASSIGNS.


                       THE  FAILURE  OF AGENT TO  ENFORCE  ANY  RIGHT OR  REMEDY
HEREUNDER, OR PROMPTLY TO ENFORCE ANY SUCH RIGHT OR REMEDY, SHALL NOT CONSTITUTE
A WAIVER  THEREOF,  NOR GIVE RISE TO ANY  ESTOPPEL  AGAINST  AGENT,  NOR  EXCUSE
GUARANTOR FROM ITS OBLIGATIONS HEREUNDER. ANY WAIVER OF ANY SUCH RIGHT OR REMEDY
TO BE ENFORCEABLE AGAINST AGENT MUST BE EXPRESSLY SET FORTH IN WRITING SIGNED BY
AGENT.


                       (a) ANY SUIT  INITIATED BY AGENT AGAINST  GUARANTOR OR IN
CONNECTION WITH OR ARISING, DIRECTLY OR INDIRECTLY,  OUT OF OR RELATING TO, THIS
AGREEMENT  (AN  "ACTION")  MAY,  AT AGENT'S  OPTION,  BE BROUGHT IN ANY STATE OR
FEDERAL  COURT IN THE STATE OF NEW YORK  HAVING  JURISDICTION  OVER THE  SUBJECT
MATTER HEREOF.  GUARANTOR  HEREBY SUBMITS ITSELF TO THE JURISDICTION OF ANY SUCH
COURT AND AGREES THAT  SERVICE OF PROCESS  AGAINST  GUARANTOR IN ANY SUCH ACTION
MAY BE EFFECTED BY ANY MEANS  PERMISSIBLE UNDER FEDERAL LAW OR UNDER THE LAWS OF
THE STATE IN WHICH SUCH ACTION IS BROUGHT.  GUARANTOR HEREBY AGREES THAT INSOFAR
AS IS PERMITTED  UNDER  APPLICABLE  LAW,  THIS CONSENT TO PERSONAL  JURISDICTION
SHALL BE SELF-OPERATIVE AND NO FURTHER INSTRUMENT OR ACTION,  OTHER THAN SERVICE
OF PROCESS IN ONE OF THE MANNERS  SPECIFIED IN THIS  AGREEMENT,  OR AS OTHERWISE
PERMITTED  BY LAW,  SHALL BE  NECESSARY  IN ORDER TO  CONFER  JURISDICTION  UPON
GUARANTOR.


                       GUARANTOR  AGREES THAT,  PROVIDED THAT SERVICE OF PROCESS
IS EFFECTED  UPON  GUARANTOR IN ONE OF THE MANNERS  HEREINAFTER  SPECIFIED OR AS
OTHERWISE PERMITTED BY LAW, GUARANTOR  IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED  BY LAW, AND AGREES NOT TO ASSERT,  BY WAY OF MOTION,  AS A DEFENSE OR
OTHERWISE,  (i) ANY OBJECTION  THAT  GUARANTOR MAY HAVE OR MAY HEREAFTER HAVE TO

                                       7
<PAGE>

THE LAYING OF THE VENUE OF ANY ACTION  BROUGHT IN ANY COURT AS  PROVIDED  FOR BY
THIS  AGREEMENT,  (ii) ANY CLAIM THAT ANY  ACTION  BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT  FORUM, OR (iii) ANY CLAIM THAT GUARANTOR IS NOT
PERSONALLY  SUBJECT TO THE  JURISDICTION OF SUCH COURT.  GUARANTOR  AGREES THAT,
PROVIDED  THAT  SERVICE OF  PROCESS IS  EFFECTED  UPON  GUARANTOR  IN ONE OF THE
MANNERS  SPECIFIED IN THIS  AGREEMENT OR AS OTHERWISE  PERMITTED BY LAW, A FINAL
JUDGMENT  FROM WHICH  GUARANTOR HAS NOT APPEALED OR MAY NOT APPEAL IN ANY ACTION
BROUGHT IN ANY SUCH COURT SHALL BE  CONCLUSIVE  AND BINDING UPON  GUARANTOR  AND
MAY, SO FAR AS PERMITTED UNDER  APPLICABLE LAW, BE ENFORCED IN THE COURTS OF ANY
STATE OR ANY FEDERAL COURT OR IN ANY OTHER COURTS TO THE  JURISDICTION  OF WHICH
IT IS SUBJECT,  BY A SUIT UPON SUCH JUDGMENT AND THAT GUARANTOR SHALL NOT ASSERT
ANY DEFENSE, COUNTERCLAIM OR SET-OFF IN ANY SUCH SUIT UPON SUCH JUDGMENT.


                       GUARANTOR  AGREES TO  EXECUTE,  DELIVER AND FILE ALL SUCH
FURTHER INSTRUMENTS OR DOCUMENTS AS MAY BE NECESSARY UNDER THE LAWS OF THE STATE
OF NEW  YORK  OR THE  LAWS OF THE  UNITED  STATES  IN  ORDER  TO MAKE  EFFECTIVE
GUARANTOR'S CONSENT TO JURISDICTION AS PROVIDED FOR IN THIS AGREEMENT.


                       GUARANTOR  HEREBY CONSENTS TO PROCESS BEING SERVED IN ANY
ACTION BY THE MAILING OF A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID,  RETURN RECEIPT  REQUESTED,  TO THE NOTICE ADDRESS FOR GUARANTOR AS SET
FORTH IN THIS AGREEMENT.  GUARANTOR  HEREBY AGREES THAT PROVIDED THAT SERVICE IS
MADE IN  ACCORDANCE  WITH  THIS  PARAGRAPH  OR AS  OTHERWISE  PERMITTED  BY LAW,
GUARANTOR  IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL CLAIM
OF ERROR IN  CONNECTION  WITH ANY SUCH  SERVICE AND AGREES THAT SUCH SERVICE (i)
SHALL BE DEEMED IN EVERY  RESPECT  EFFECTIVE  SERVICE OF PROCESS  UPON IT IN ANY
ACTION,  AND (ii) SHALL,  TO THE FULLEST  EXTENT  PERMITTED BY LAW, BE TAKEN AND
HELD TO BE VALID PERSONAL SERVICE UPON AND PERSONAL DELIVERY TO GUARANTOR.


                       NOTHING IN THIS  AGREEMENT  SHALL LIMIT  AGENT'S RIGHT TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR LIMIT AGENT'S RIGHT OR THE RIGHT
OF ANY OF ITS SUCCESSORS OR ASSIGNS TO BRING  PROCEEDINGS  AGAINST  GUARANTOR IN
THE COURTS OF ANY JURISDICTION(S).


                       TO THE EXTENT THAT GUARANTOR HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM  JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS  (WHETHER
THROUGH  SERVICE OR NOTICE,  ATTACHMENT  BEFORE  JUDGMENT,  ATTACHMENT IN AID OF
EXECUTION,  EXECUTION OR  OTHERWISE)  WITH  RESPECT TO GUARANTOR OR  GUARANTOR'S
PROPERTY,  GUARANTOR HEREBY  IRREVOCABLY  WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT.


                       AS A FURTHER  INDUCEMENT TO AGENT'S MAKING OF THE LOAN TO
BORROWER,  AND IN CONSIDERATION  THEREOF,  AGENT AND GUARANTOR EACH COVENANT AND
AGREE THAT IN ANY ACTION OR  PROCEEDING  BROUGHT ON,  UNDER OR BY VIRTUE OF THIS
AGREEMENT,  AGENT AND  GUARANTOR  EACH SHALL AND DO HEREBY  UNCONDITIONALLY  AND
IRREVOCABLY WAIVE TRIAL BY JURY.


                       GUARANTOR DOES HEREBY  FURTHER  COVENANT AND AGREE TO AND
WITH  AGENT  THAT  GUARANTOR  MAY BE JOINED IN ANY ACTION  AGAINST  BORROWER  IN
CONNECTION  WITH  THE  NOTE,  THE  LOAN  AGREEMENT,  OR ANY OF  THE  OTHER  LOAN
DOCUMENTS, SOLELY WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT.

                                        8
<PAGE>

                       GUARANTOR  COVENANTS  AND  AGREES TO  INDEMNIFY  AND SAVE
AGENT  HARMLESS  OF  AND  FROM,  AND  DEFEND  IT  AGAINST,  ALL  LOSSES,  COSTS,
LIABILITIES,  EXPENSES,  DAMAGES  OR CLAIMS  SUFFERED  BY REASON OF  GUARANTOR'S
FAILURE TO PERFORM ITS OBLIGATIONS HEREUNDER.


                       ALL OF AGENT'S  RIGHTS AND REMEDIES  UNDER THE NOTE,  THE
LOAN  AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS OR UNDER THIS  AGREEMENT ARE
INTENDED TO BE  DISTINCT,  SEPARATE AND  CUMULATIVE  AND NO SUCH RIGHT OR REMEDY
THEREIN OR HEREIN MENTIONED IS INTENDED TO BE IN EXCLUSION OF OR A WAIVER OF ANY
OTHER RIGHT OR REMEDY AVAILABLE TO AGENT.


                       GUARANTOR HEREBY CONSENTS THAT FROM TIME TO TIME,  BEFORE
OR AFTER ANY DEFAULT BY BORROWER,  WITH OR WITHOUT  FURTHER  NOTICE TO OR ASSENT
FROM  GUARANTOR,  ANY SECURITY AT ANY TIME HELD BY OR AVAILABLE TO AGENT FOR ANY
OBLIGATION  OF  BORROWER,  OR ANY  SECURITY AT ANY TIME HELD BY OR  AVAILABLE TO
AGENT FOR ANY  OBLIGATION OF ANY OTHER PERSON OR PARTY  SECONDARILY OR OTHERWISE
LIABLE FOR ALL OR ANY  PORTION OF THE LOAN,  MAY BE  EXCHANGED,  SURRENDERED  OR
RELEASED AND ANY  OBLIGATION OF BORROWER,  OR OF ANY SUCH OTHER PERSON OR PARTY,
MAY BE CHANGED, ALTERED, RENEWED, EXTENDED, CONTINUED, SURRENDERED, COMPROMISED,
WAIVED OR RELEASED  IN WHOLE OR IN PART,  OR ANY DEFAULT  WITH  RESPECT  THERETO
WAIVED, AND AGENT MAY FAIL TO SET OFF AND MAY RELEASE,  IN WHOLE OR IN PART, ANY
BALANCE OF ANY DEPOSIT  ACCOUNT OR CREDIT ON ITS BOOKS IN FAVOR OF BORROWER,  OR
OF ANY SUCH OTHER PERSON OR PARTY,  AND MAY EXTEND  FURTHER CREDIT IN ANY MANNER
WHATSOEVER TO BORROWER, AND GENERALLY DEAL WITH BORROWER OR ANY SUCH SECURITY OR
OTHER  PERSON OR PARTY AS AGENT MAY SEE FIT;  AND  GUARANTOR  SHALL REMAIN BOUND
UNDER THIS  AGREEMENT  NOTWITHSTANDING  ANY SUCH EXCHANGE,  SURRENDER,  RELEASE,
CHANGE, ALTERATION, RENEWAL, EXTENSION, CONTINUANCE, COMPROMISE, WAIVER, ACTION,
INACTION,  EXTENSION  OF FURTHER  CREDIT OR OTHER  DEALING.  THIS  AGREEMENT  IS
INDEPENDENT OF, AND IN ADDITION TO, ALL COLLATERAL GRANTED,  PLEDGED OR ASSIGNED
UNDER THE LOAN DOCUMENTS.


                       THE TERMS OF THIS  AGREEMENT  HAVE BEEN  NEGOTIATED,  AND
THIS  AGREEMENT  HAS BEEN  DELIVERED  IN THE  STATE OF NEW  YORK,  AND IT IS THE
INTENTION OF THE PARTIES HERETO THAT THIS AGREEMENT BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF SUCH STATE.


                       THIS AGREEMENT MAY NOT BE CHANGED ORALLY,  BUT ONLY BY AN
AGREEMENT IN WRITING SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT OF ANY WAIVER,
CHANGE, MODIFICATION OR DISCHARGE IS SOUGHT.


                       THIS  AGREEMENT  MAY BE EXECUTED IN  COUNTERPARTS,  WHICH
TOGETHER SHALL CONSTITUTE THE SAME INSTRUMENT.


                       AS  SECURITY  FOR THE PAYMENT  AND  PERFORMANCE  WHEN DUE
(WHETHER AT STATED  MATURITY,  BY  ACCELERATION  OR  OTHERWISE)  OF  GUARANTOR'S
OBLIGATIONS  HEREUNDER,  INCLUDING WITHOUT  LIMITATION  GUARANTOR'S  OBLIGATION,
GUARANTOR  HEREBY ASSIGNS,  TRANSFERS AND PLEDGES TO AGENT, AND HEREBY GRANTS TO
AGENT A SECURITY INTEREST IN, ALL OF GUARANTOR'S  RIGHT,  TITLE AND INTEREST IN,
TO AND UNDER (a) THAT CERTAIN  PURCHASE MONEY PROMISSORY NOTE (THE "NOTE") DATED
AS OF NOVEMBER 17, 1997 MADE BY OAIC FLORIDA PARTNERSHIP, LIMITED PARTNERSHIP, A
FLORIDA LIMITED  PARTNERSHIP  ("OAIC FLORIDA"),  TO GUARANTOR,  (b) THAT CERTAIN
PURCHASE MONEY FEE AND LEASEHOLD FIRST MORTGAGE,  SECURITY AGREEMENT,  FINANCING
STATEMENT AND  ASSIGNMENT  OF LEASES,  RENTS AND INCOME DATED AS OF NOVEMBER 17,
1997  MADE  BY OAIC  FLORIDA  TO  GUARANTOR,  (c)  THAT  CERTAIN  ASSIGNMENT  OF
LANDLORD'S  INTEREST IN LEASES AND GUARANTEES DATED AS OF NOVEMBER 17, 1997 MADE
BY OAIC  FLORIDA TO  GUARANTOR  AND (d) ANY AND ALL  AGREEMENTS,  DOCUMENTS  AND
INSTRUMENTS  RELATED TO THE ABOVE. IN FURTHERANCE OF THE ABOVE,  GUARANTOR SHALL
(x) DELIVER THE NOTE,  ENDORSED IN BLANK, TO AGENT OR ITS DESIGNEE,  (y) EXECUTE
AND DELIVER AN APPROPRIATE  COLLATERAL ASSIGNMENT OF MORTGAGE AND AN APPROPRIATE
COLLATERAL  ASSIGNMENT  OF  ASSIGNMENT  OF LEASES  IN FAVOR OF AGENT,  IN A FORM
ACCEPTABLE TO AGENT AND (z) TAKE ANY AND ALL ACTIONS AND EXECUTE AND DELIVER ANY
AND ALL FURTHER AGREEMENTS,  DOCUMENTS AND INSTRUMENTS,  AS AGENT MAY REASONABLE
REQUEST.

                            [SIGNATURE PAGE FOLLOWS]


                                        9
<PAGE>

                       IN WITNESS WHEREOF,  Guarantor has executed and delivered
this Guaranty of Payment as of the date and year first above written.

                                        GUARANTOR

                                        OCWEN PARTNERSHIP, L.P.,
                                        a Virginia limited partnership,

                                        By:  Ocwen General, Inc.,
                                             its general partner

                                             By:   ____________________________
                                                   Name:
                                                   Title:


<PAGE>

                                 REGISTERED NOTE

$15,250,000                                                        JUNE __, 1998
NO. _______________                                           NEW YORK, NEW YORK

         FOR VALUE RECEIVED,  OAIC FLORIDA PARTNERSHIP,  LIMITED PARTNERSHIP,  a
Florida limited partnership (collectively,  "BORROWER"),  hereby promises to pay
to  the  order  of  SALOMON  BROTHERS  REALTY  CORP.,  a  New  York  corporation
("SALOMON";  Salomon together with any subsequent holder of this registered note
being  hereinafter  referred to as the "HOLDER"),  at its principal  office at 7
World Trade Center,  29th Floor,  New York,  New York 10048,  the sum of Fifteen
Million Two Hundred Fifty  Thousand  Dollars  ($15,250,000.00)  (or such portion
thereof as may be  outstanding  from time to time) in lawful money of the United
States of America and in immediately  available  funds,  on the date provided in
the Loan  Agreement  (hereinafter  defined),  and to pay  interest on the unpaid
Principal Indebtedness (as such term is defined in the Loan Agreement),  at such
office,  in like  money and  funds,  for the period  commencing  on the  initial
Advance Closing Date (as such term is defined in the Loan Agreement)  until such
Principal  Indebtedness shall be paid in full, at the rates per annum and on the
dates provided in the Loan Agreement.

         The date and  amount of each  Advance  (as such term is  defined in the
Loan  Agreement)  on each  Advance  Closing Date and the date and amount of each
payment of interest,  principal and other  amoutns due under the Loan  Documents
(as such term is defined in the Loan Agreement),  shall be recorded by Agent (as
such term is hereinafter defined) on the schedule attached hereto; PROVIDED that
the  failure  of Agent  to make  any  such  recordation  shall  not  affect  the
obligations of the Borrower to make a payment when due of any amount owing under
the Loan Agreement or hereunder.

         This  Registered  Note is a Registered  Note referred to in the Amended
and Restated Loan  Agreement and Restated Loan  Agreement,  dated as of June __,
1998 (as modified and  supplemented  and in effect from time to time,  the "LOAN
AGREEMENT") among Borrower and others,  as borrower,  Salomon (as initial lender
and as agent for  administration  of the Loan  ("AGENT")),  and LaSalle National
Bank,  as  collateral  agent  for  the  Lenders,  and  evidences  the  Principal
Indebtedness loaned thereunder.

         Reference  to the Loan  Agreement is hereby made for a statement of the
rights of the Agent and the duties and obligations of the Borrowers, but neither
this reference to the Loan  Agreement nor any provision  thereof shall affect or
impair the obligations of the Borrower to pay the principal,  interest and other
amounts,  if any,  payable  with  respect  to this  Registered  Note  when  due.
Capitalized  terms  used  herein  without  definition  shall  have the  meanings
ascribed to such terms in the Loan Agreement.

         This Registered Note is secured by the Mortgages and certain other Loan
Documents.

         The  principal  sum evidenced by this  Registered  Note,  together with
accrued  interest  and all other sums or amounts  due  hereunder,  shall  become
immediately  due and payable at the option of the Holder upon the  occurrence of
any Event of Default in accordance with the provision of the Loan Agreement.

         With  respect to the amounts  due  pursuant  to this  Registered  Note,
Borrower  hereby waives the  following:  (1) all rights of exemption of property
from levy or sale under  execution or other process for the  collection of debts
under the  Constitution  or laws of the United States or any state thereof;  (2)
demand,  presentment,  protest, notice of dishonor,  notice of nonpayment,  suit
against any party,  diligence in collection  of this  Registered  Note,  and all
other requirements necessary to enforce this Registered Note, except for notices
required by Governmental Authorities and notices required by the Loan Agreement;
and (3) any  further  receipt by or  acknowledgement  of any  Collateral  now or
hereafter deposited as security for the Loan.


<PAGE>


         In no event shall the amount of interest (and any other sums or amounts
that are deemed to constitute  interest under applicable Legal Requirements) due
or payable hereunder  (including interest calculated at the Default Rate) exceed
the maximum rate of interest  designated by applicable Legal  Requirements  (the
"MAXIMUM  Amount"),  and in the event such payment is inadvertently  paid by the
Borrower or inadvertently  received by the Holder, then such excess sum shall be
credited as a payment of principal,  and if in excess of such balance,  shall be
immediately returned to the Borrower upon such determination.  It is the express
intent hereof that the Borrower not pay and the Holder not receive,  directly or
indirectly, interest in excess of the Maximum Amount.

         The Holder shall not by any act, delay, omission or otherwise be deemed
to have modified, amended, waived, extended, discharged or terminated any of its
rights or remedies, and no modification, amendment, waiver, extension, discharge
or  termination  of any kind shall be valid  unless in writing and signed by the
Holder. All rights and remedies of the Holder under the terms of this Registered
Note and applicable Legal Requirements shall be cumulative, and may be exercised
successively or  concurrently.  Borrower agrees that as of the date hereof there
are no defenses,  equities or setoffs with respect to the  obligations set forth
herein, and to the extent any such defenses, equities, or setoffs may exist, the
same are hereby expressly released, forgiven, waived and forever discharged.

         Wherever  possible,  each  provision of this  Registered  Note shall be
interpreted in such manner as to be effective and valid under  applicable  Legal
Requirements,  but if any provision of this  Registered Note shall be prohibited
by or invalid under  applicable  Legal  Requirements,  such  provision  shall be
ineffective  to  the  extent  of  such   prohibition   or  invalidity,   without
invalidating the remainder of such provision or the remaining provisions of this
Registered Note.

         The Holder may, at its option,  release to the Borrower any  Collateral
given to secure the  Indebtedness  evidenced  hereby,  and no such release shall
impair the obligations of any Borrower to the Holder.

         This  Registered  Note  was  negotiated  in New  York,  and made by the
Borrower and  accepted by the Holder in the State of New York,  and the proceeds
of this  Registered  Note were disbursed from New York,  which state the parties
agree  has a  substantial  relationship  to the  parties  and to the  underlying
transactions   embodied  hereby,  and  in  all  respects   (including,   without
limitation,   matters  of  construction,   validity,   performance  and  maximum
permissible rates of interest), this Registered Note and the obligations arising
hereunder  shall be governed by, and construed in accordance  with,  the laws of
the State of New York  applicable to contracts  made and performed in such state
and any applicable law of the United States of America.

         Any legal suit, action or proceeding against the Holder by the Borrower
arising out of or relating to this  Registered  Note shall be  instituted in any
federal  or state  court in New  York,  New  York.  Any  legal  suit,  action or
proceeding  against the Borrower by the Holder arising out of or related to this
Registered  Note shall be  instituted in any federal or state court in New York,
New York or the state  where any  Collateral  is  located.  Borrower  hereby (i)
irrevocably  waives,  to the fullest  extent  permitted by  applicable  law, any
objection  which it may now or hereafter have to the laying of venue of any such
suit,  action or proceeding  brought in such a court and any claim that any such
proceeding  brought in such a court has been brought in an  inconvenient  forum,
and (ii)  irrevocably  submits to the jurisdiction of any such court in any such
court in any such suit, action or proceeding.

         BORROWER,  TO THE  FULLEST  EXTENT THAT IT MAY  LAWFULLY DO SO,  WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING  (INCLUDING,  WITHOUT LIMITATION,  ANY
TORT ACTION),  BROUGHT BY ANY PARTY HERETO WITH RESPECT TO THIS  REGISTERED NOTE
OR THE OTHER LOAN DOCUMENTS.  BORROWER AGREES THAT THE HOLDER MAY FILE A COPY OF
THIS WAIVER WITH ANY COURT AS WRITTEN  EVIDENCE OF THE  KNOWING,  VOLUNTARY  AND
BARGAINED  AGREEMENT OF THE BORROWER TO IRREVOCABLY  WAIVE ITS RIGHT TO TRIAL BY
JURY, AND THAT, TO THE FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, ANY DISPUTE OR
CONTROVERSY WHATSOEVER BETWEEN BORROWER AND THE HOLDER SHALL INSTEAD BE TRIED IN
A COURT OF COMPENTENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.


<PAGE>

         The  provisions  of  this  Registered  Note  shall  be  subject  to the
provisions of SECTION 8.24 of the Loan  Agreement,  which  provisions are hereby
incorporated herein by reference as if set forth in full.

         The Loan  Agreement  provides for the  acceleration  of the maturity of
this Registered Note upon the occurrence of certain events and for prepayment of
this Registered Note upon the terms and conditions specified therein.

         This Registered Note is note  exchangeable  for interests in the Global
Note issued under the Loan Agreement in the name of Salomon.

         This Registered Note is issued in renewal of the outstanding  principal
indebtedness  previously  evidenced by a certain  Purchase Money Promissory Note
dated as of November  17,  1997,  made by  Borrower  and payable to the order of
Ocwen Partnership, L.P., in the original principal amount of $15,250,000.00 (the
"ORIGINAL NOTE"). The payment of this Registered Note is secured by, INTER ALIA,
a Purchase Money Fee and Leasehold First Mortgage, Security Agreement, Financing
Statement  and  Assignment  of Leases,  Rents and Income  recorded  in  Official
Records Book 2221 at Page 780 of the Public Records of Manatee  County,  Florida
(the  "ORIGINAL  MORTGAGE"),  as  amended  and  restated  pursuant  to a certain
Mortgage  Modification and Future Advance  Agreement dated of even date herewith
between  Borrower  and  Salomon.  All  State of  Florida  documentary  stamp and
intangible  taxes  payable with  respect to the  Original  Note and the Original
Mortgage were paid, and such payment was noted, on the Original  Mortgage at the
time of its recordation in the Public Records of Manatee County, Florida.



                          NO FURTHER TEXT ON THIS PAGE.


<PAGE>

         IN WITNESS WHEREOF,  the Borrower has caused this Registered Note to be
properly  executed  on the date first  above  written  and has  authorized  this
Registered Note to be dated as of the day and year first above written.

                                               BORROWER:



                                               OAIC FLORIDA PARTNERSHIP, LIMITED
                                               PARTNERSHIP
                                               a Florida limited partnership



                                               BY:  Ocwen Florida General, Inc.
                                                    a Florida corporation,
                                                    its general partner


                                               BY:______________________
                                                  Name:
                                                  Title: